Expert says more challenges ahead for the banking sector as crisis worsens
For the rescue of our financial system, a lot has been done, but more still needs to be done, Troika Dialog Group Managing Director Andrei Sharonov said recently, while calling for a balance between banks’ crisis management policies and financing real sectors of the Russian economy.
“The first step has been taken, and this has enabled us to avoid large bankruptcies, ensured that bank runs were short and not critical for the banking system, significantly expanded the channels of boosting liquidity from the Central Bank, and smooth functioning of the financial system’s sanitation mechanisms,” he added. “Consequently, Russian banks now appear more ready today to absorb harder blows than in September and October 2008, and thus were able to significantly prop up their liquidity and boosted their rates of creating larger reserves to compensate for losses in credit deposits in the 4th quarter of 2008.”
Sharonov specifically noted that the fact that more challenges still lie ahead in the financial services sector, as the quality of banks’ assets are increasingly worsening both in the retail and corporate segments. “At this moment, it is necessary to assess the steps already taken and adopt new plans of further actions and policy strategies in the field of regulation, reorganization of the financial sector,” he said.
The banker also called on the government and financial services providers to define the needs and opportunities in the expansion of refinancing, roles in management of problematic debts and other toxic assets and establish a concrete level of the state participations in bank ownership structures. “And, finally, there is an urgent need to find a practicable balance between crisis management policies in the financial system and stimulation of banks toward enhancing provision of more loans to real sectors of the national economy."
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