Russian VTB: capitalization of the banking sector is probably not necessary

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VTB Bank CEO Andrey Kostin attends the Saint Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 17, 2022. REUTERS/Anton Vaganov

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VLADIVOSTOK, Russia, Sept 7 (Reuters) – Andrei Kostin, head of Russia’s VTB (VTBR.MM), said on Wednesday that the country’s banking sector had largely weathered the worst effects of Western sanctions and that the systemic capitalization of banks Russians was likely. no need.

Hit by unprecedented economic sanctions from the West, the Russian banking sector recorded heavy losses in the first six months of the year and the authorities pushed lenders to drastically reduce their exposure to the US dollar and the euro.

“It may be too early to say that the central bank is now analyzing the information, but maybe some kind of systemic recapitalization of the banking sector is not necessary,” Kostin said during a session on the transformation of the Russian financial sector at the Eastern Economic Conference. Forum in Vladivostok.

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VTB, Russia’s second-largest lender, returned to profit in July after record losses in the first six months of the year, and will start lending in Chinese yuan and other non-Western currencies later this year. year, he announced on Tuesday. Read more

Kostin later added that there was room for the Russian central bank to cut its key rate to 7.5% and then to 7% from 8% now to boost lending in the Russian banking sector. Read more

The Bank of Russia will next meet on rates on September 16.

Western sanctions against Russia for its actions in Ukraine have cut Moscow off from the global financial system and nearly half of its $640 billion in gold and currency reserves.

CEO Kostin had said in April that Russian banks would likely need broader recapitalization to deal with losses.

Russian officials have heralded the performance of the economy in recent months, saying it is holding up much better than expected in the face of sanctions.

Russian Economy Minister Maxim Reshetnikov said on Tuesday that the economic contraction this year would be 2.9%, less deep than expected. Read more

Kostin said on Wednesday that VTB expects a 4% contraction in GDP, followed by a 1.5% decline in 2023.

Kostin and other panelists, including Igor Shuvalov, Chairman of Russian State Development Bank VEB, discussed Russia’s de-dollarization drive and the need to further develop settlements and interactions with other currencies , such as the yuan and the Turkish lira. Read more

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Reporting by Alexander Marrow and Vladimir Soldatkin; Editing by Tom Hogue and Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

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