The Banking Sector Depends Completely on the Central Bank of Russia
In conditions of limitation of access of Russian companies to Western debt markets, the banking sector has become completely dependent on the Central Bank of Russia.
The funds of the monetary authorities compensate both the outflow of capital from the banking sector and slowdown of the inflow of private depositors. In such a situation, banks virtually stopped building up foreign assets. So, if in 2013 9.5% of all the resources of the banking sector were directed into foreign assets, in 2014 that index fell to 0.7%.
During the last year, the resources of the banking sector were mainly formed by means of loans of the Central Bank of Russia: in 2014 the mega-regulator accounts for 40.9% of growth in the banking sector's resource base. Foreign liabilities actually disappeared from the pattern of bank funding: banks pay out more loans made earlier than attract new ones.
If in 2013 term deposits accounted for a considerable share in the pattern of funding of the banking sector (33.2%), in 2014 households reduced dramatically their share in formation of banking liabilities to 14.8%. To a great extent, the factor behind that was both depreciation of the ruble due to which households started to invest more funds in foreign currency and the policy of the Central Bank of Russia which was aimed at "cleansing" of the banking sector. As a result of that policy depositors have became at a loss as they do not know which bank may happen to be the next one to be closed down and the number of small banks which offer more advantageous interest rates on deposits has become smaller.
Mikhail Khromov, Director of the Structural Research Center