Harde landing voor een aantal economien (Rusland).

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Russian Banking System Teetering, Accelerated Withdrawals Underway

The Financial Times reports that the freeze on depositor withdrawals at Russian bank Globex is leading to high levels of withdrawals at other Russian banks, which doesn't qualify as being a run.....yet.

From the Financial Times (hat tip reader Michael):

Globex on Wednesday banned depositors from withdrawing their money as confidence in the Russian banking system began to show signs of evaporating.

Globex, a mid-sized retail bank with assets of $4bn (¤2.95bn, £2.32bn), is the first Russian bank to experience a run on deposits during the crisis. It lost 13 per cent of its deposits last month, according to Maxim Raskosnov, an analyst at Renaissance capital, and a further 15 per cent this month according to Emilya Alieva, Globex’s vice-president.

At least a dozen other Russian banks have reported a sharp rise in withdrawals and account closures.

An economist with a leading western bank in Moscow said Globex was probably the first in what could be a number of bank panics, if the government did not take concerted action soon. “I think there are a large number of small and medium sized banks that are in the same situation,” she said.

Despite a Kremlin promise of $200bn in relief funds – $87bn this week – the fall-out of a stock market plunge and the global credit crunch appears to be worse than anticipated, analysts say.

So far, the crunch has not affected the living standards of ordinary Russians, but a rash of bank failures could.

Banks across Russia have faced a rise in outflows as depositors have begun to lose trust in all but the biggest state banks, VTB and Sberbank, which have received most of the government’s liquidity support.

Tatyana Sadovskaya, the director of a branch of Khnati Mansisk Bank in the city of Nizhnevartovsk, on Wednesday told Interfax news agency that in response to rumours of her bank’s insolvency: “People have formed long lines at cashiers and at bankomats, people are taking their deposits and closing their accounts.”


From a later FT article "The East is in the red":

Across central and eastern Europe, the global crisis is biting hard, albeit very unevenly. In Russia, the authorities have set aside nearly $200bn (£116bn, ¤149bn) for a financial market rescue, Ukraine is in talks with the International Monetary Fund over emergency loans of up to $14bn, Hungary was on Thursday bailed out with a ¤5bn ($6.7bn, £3.9bn) loan facility from the European Central Bank.

Latvia and Estonia are suffering the region’s first recessions in a decade, while growth in oil-rich Kazakhstan has slowed to a crawl. Even in Poland, where Donald Tusk, the prime minister, insists his country is “an island of stability”, the crisis has raised doubts about Warsaw’s euro entry plans.

Stock markets have plunged accordingly, with Polish shares trading at less than half their peak levels and Ukraine’s down by three-quarters. Property markets have slowed, even if developers are still trying to hold up prices. After riding high earlier in 2008, some currencies have come under pressure, notably the Hungarian forint. In Ukraine, where the central bank has intervened to support the hryvnia, the credit default swap rate, a risk measure, has soared 1,400 points to 1,900, among the world’s worst.

The financial whipsaw has cut billionaires down to size, not least Oleg Deripaska, the Russian metals oligarch, who has sold valuable stakes to raise cash. Others are grabbing opportunities to buy cheaply: Mikhail Prokhorov, the Russian nickel investor, acquired 50 per cent of Renaissance Capital, a Moscow bank, for $500m – about one-quarter of its value of a year ago.

With the global crisis still raging, despite the calming effects of this week’s support moves in the US and the European Union, it is impossible to predict how events will play themselves out in a region increasingly important to the west as an export market and low-cost production base. But hopes it might escape unscathed have evaporated. Apart from corporate casualties, some countries could run into difficulties funding current account deficits. Erik Berglof, chief economist of the European Bank for Reconstruction and Development, says: “There is enormous uncertainty right now . . . These countries could deal with rising borrowing costs and an economic slowdown coming from the US and western Europe, but a complete shutdown of international borrowing – nobody can withstand that.”

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A Russian friend once told me a joke she heard in Moscow in the early 90s. Most of the jokes she told me do not translate very well, but this one does, I think.

A man goes into a bank and says to the teller, “I would like to open an account. Who should I see?”

“A psychiatrist.”

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Op vrijdag 17 oktober 2008 12:57 schreef shilizous_88 het volgende:
Wat is de kans dat er van die Russische banken gaan omvallen?

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Wat zouden de wereldwijde economische gevolgen van zoiets zijn?

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Russian Default Risk Soars: LTCM Repeat Play

The Telegraph is reporting Russian default risk tops Iceland as crisis deepens.

Russia's financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.

The cost of insuring Russian bonds against bankruptcy rocketed to extreme levels yesterday. Spreads on credit default swaps (CDS) reached 1,123, higher than Iceland's debt before it sought a rescue from the International Monetary Fund.

Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe. Romania had to raise overnight interest rates to 900pc on Wednesday to stem capital flight, recalling the wild episodes of Europe's ERM crisis in 1992. The CDS spreads on Ukraine's debt have topped 2,800, signalling total revulsion by investors.

Rating agency Standard & Poor's issued a downgrade alert on Russian bonds yesterday, warning that a series of state rescue packages worth $200bn (£124bn) could start to erode the credit-worthiness of the state.

Russian companies must roll over $47bn of foreign loans over the next two months, and a further $150bn or so next year, a task that has become close to impossible as investors flee Eastern Europe.

"The surge in Russian CDS spreads is paralysing the whole system. The government can offer very little help to the banks at this point because its own sovereign debt is in question," he said.

"This crisis is starting to look like the Black Wednesady in 1992. Unless we see an extension of central bank swaps in dollars and euros to Eastern Europe within days to stop this uncontrolled process of deleveraging, this could get out of control and do serious damage to Western Europe. We could see the euro fall to parity against the dollar by next year," he said.

Genius Fails Again

It is fitting that Russia is back in the news because it was the demise of Long Term Capital Management that kicked off a string of moral hazard interventions by the Fed that continues to this day.

Please see Genius Fails Again for a recap of LTCM and the 1997 Russian Bond market collapse that then threatened the financial system. The derivatives mess today is thousands of times greater.

Let's explore a chart of the Russian Stock Market to see if we can find a pattern similar to the bond collapse in 1997.

LETRX Russia Fund


There was probably no better place to be than Russia right after the collapse of the Russian bond market in 1997. Any bets this time? Let's flashback to September 5th looking for clues that might help.

Russian Fund Outflows No Surprise

Reuters is reporting Russian stock fund outflows at 9 weeks

Russian equity funds had a ninth consecutive week of cash outflows amid concerns over property rights, Boston-based fund tracker EPFR Global said on Friday.

Recent harsh criticism from Prime Minister Vladimir Putin against coal company Mechel, harassment of non-Russian managers at oil company TNK-BP, the flexing of Russia's military might in Georgia and its drawn-out removal of forces has left foreign investors shaken.

"No real surprise. If there is any surprise it is that people are not taking their money out faster given the pretty clear evidence of any hopes that (President Dmitry) Medvedev will moderate Putin or do much to protect property rights," said Cameron Brandt, global markets analyst at EPFR.

It seems like sentence should read "No real surprise. If there is any surprise it is that people are not taking their money out faster given there is no evidence of any hopes that (President Dmitry) Medvedev will moderate Putin or do much to protect property rights".

An exact repeat play percentage wise would take LETRX down to 6.72. I do not think it goes that far, but then again I am known for being widely optimistic.

Developing Nation Bond Yields Soar on Russia Rating-Cut Outlook

Bloomberg is reporting Developing Nation Bond Yields Soar on Russia Rating-Cut Outlook.

Developing nations' borrowing costs neared a six-year high after Standard & Poor's threatened to cut Russia's debt ratings as the global credit crisis deepened.

The extra yield investors demand to own emerging-market government bonds instead of U.S. Treasuries rose 27 basis points, or 0.27 percentage point, to 8.29 percentage points, the biggest since November 2002, according to JPMorgan Chase & Co.'s EMBI+ index. The annual cost to protect Russia's bonds from default soared as S&P lowered Russia's ratings outlook to negative on concern the cost of the government's bank rescue will climb.

Russia has committed as much as 15 percent of its gross domestic product to propping up banks, including a $50 billion credit line to development bank Vnesheconombank. Russia's international reserves, the world's third largest, declined by $14.9 billion last week after the central bank sold currency to support the ruble as investors pulled money out of the country.

"There is now no safe haven globally other than a deeply indebted U.S. government," said Jim Reid, head of fundamental credit strategy at Deutsche Bank AG in London.

No Safe Havens

"There is now no safe haven globally other than a deeply indebted U.S. government." That unfortunately appears to be the very sad state of affairs.

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Russia's banal reality lies in between energy superpower and bankrupt state

Russia has been losing $10bn in foreign reserves a week since it snatched South Ossetia and ramped up the new Cold War with nuclear threats.

Russia's banal reality lies in between energy superpower and bankrupt state

Shoppers in downtown Moscow Photo: AP

A fifth of the Kremlin’s fire-fighting fund has gone before the economic crisis even starts. Would the Medvedev-Putin duo have provoked the West so nonchalantly had they known that global recession would soon cut the price of Urals crude oil to $49.35 a barrel, knocking away the chief prop of Kremlin finance and Russian power?

The pace of capital flight quickened last week to $16bn after a botched mini-devaluation by the central bank. Tinkering with currency bands is hazardous in a country where memories of the 1998 savings wipeout are still fresh.

The Kremlin already faces a run on Russia’s banks as depositors rush to switch their roubles into dollars, despite the $200bn financial rescue package. Russia’s Globex bank suspended withdrawals by depositors on Wednesday. Kommersant newspaper reports that the deposit loss from rouble accounts reached 54pc at Sobinbank in October, 27pc at Globex, 25pc at Raiffeisenbank, 24pc at Unicredit, and 22pc at Alfa.

“The deposit run has intensified to dramatic levels. The government’s attempts to slow panic migration to foreign currencies has failed,” said Marina Vlasenko, from Commerzbank.

The central bank is caught in a fixed exchange rate trap. Pegs create the illusion of currency stability just long enough to lull everybody into a false sense of security (note Greece and Spain inside EMU). Russia either burns reserves propping up the rouble, or it risks a self-feeding devaluation spiral.

There is a third way, of course. Premier Vladimir Putin issued a veiled threat on Monday to impose capital controls. Money flows out of the country would be strictly monitored, and “corporate egotism, any kind of corruption or abuse” would not be tolerated. Yes, he also said that “legal movement of capital overseas is a civilized financial transaction. There is no question of any state bans”. Take your pick.

The cost of insuring against Kremlin default tells us that somebody is worried. Credit default swaps (CDS) on Russia’s debt traded at 827 last week, higher than Hungary’s debt (605) before it secured an IMF rescue. Gazprom debt was off the charts at 1155.

CDS contracts can overstate a case. But investors have rediscovered that the Russia story — stripped of BRIC’s happy talk — is still not much more than a leveraged play on oil and gas. Commodities made up 85pc of export revenues at bubble peak in May, just before the RTS index on Moscow’s bourse began its 73pc crash. A trillion dollars of paper wealth has vanished.

The government’ spending plan for 2009-2011 is based on a Urals oil price of $95. Finance minister Alexei Kudrin said the state would dip into its Reserve Fund (now 8.2pc of GDP) to cover any shortfall.

This is not a strategy that can survive the global slump we face next year. The Kremlin lives off energy taxes. It has no other income to speak of. The domestic bond market is tiny.

That is why it had to order oil companies last week to renew export shipments. They were selling at near $10 a barrel in the domestic market because crude prices have fallen to a level that no longer makes it rational to sell abroad given the state’s $40 export tariff.

Russia must soon choose: either bleed its oil industry to death, or slash spending and face street riots. It is already mobilizing the apparatus of coercion. The Moscow Times bravely ran the headline “Police get orders to crush crisis unrest”.

Interior minister Rashid Nurgaliyev said: “Anti-crisis groups are to be set up in the regions to intercept any early indications of destabilization.”

Marie Mendras, a Russia advisor to French president Nicolas Sarkozy, said the Kremlin is responding the only way it knows how. “The Putin regime is politically closed, won’t listen, and is incapable of adapting to this sort of financial cr