Finance News

Banks may lose licenses if interest rates remain high

Licenses of Russian banks, which have been bailed out by the government but are now reluctant to cut down interest rates for the real sector, may be revoked, Chairman of the Russian Audit Chamber Sergei Stepashin announced at a regional meeting of heads of audit agencies of the Siberian Federal District.

"All we actually need is to revoke the licenses of a couple of banks, and it will provide an impetus to the rest," Stepashin warned. Yet he noted that this was not an attempt to bully the banks, adding that it was high time they started to act fairly. Stepashin reiterated that the government had forked out nearly RUB 5 trillion (approx. $170.3bn) in taxpayer money to support the banking sector.

Additionally, inflation had slowed considerably over the past months, which permitted the Bank of Russia to slash the discount rate to 10 percent. Nevertheless, the interest rates for the real sector charged by commercial banks have remained high, Stepashin observed.

The regulator's chief also stated that his employees would launch an overhaul of how commercial banks had been using the government’s money and whether “they had honored their commitments."

Earlier, the Deposit Insurance Agency stated that the banks were no longer entitled to any government aid, and rehabilitation would only be undertaken on a selective basis.

Source: RosBusinessConsulting
Date: 21.10.2009 [ID: 237]

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