Lyubov Pronina London
As the rouble rallied last month amid signs of a detente in Ukraine, Russians were not so optimistic.
Deposits at banks dropped at the fastest pace in almost six years last month, as customers braced for possible sanctions against the nation’s lenders. Customer holdings fell 2 percent in the period to 16.6 trillion roubles (R4.9 trillion), central bank data show.
Customer trust in banks is being eroded as President Vladimir Putin annexed Crimea and amassed troops on the border with Ukraine, triggering sanctions by the US and the EU that they say will be expanded unless Russia works to de-escalate the crisis.
The withdrawals are starving lenders of roubles, according to UralSib Capital, helping push the Micex financials index down 19 percent this year, piling pressure on an economy that is on the brink of recession.
“While in 2008, Russians ran for safety to foreign currencies including the dollar, they now prefer to keep cash in safe deposit boxes or under a mattress for fear international sanctions can cut access to their foreign exchange deposits,” Vladimir Kolychev, the chief economist for Russia at VTB Capital, said.
US Secretary of State John Kerry had warned Russian Foreign Minister Sergei Lavrov on Monday that “there will be consequences” if Russia did not act “over the next pivotal days” to restrain separatists in Ukraine, spokeswoman Jen Psaki said.
The US has threatened further penalties including measures targeting banks and the energy industry. A decision would be made in a matter of days, said an administration official who briefed reporters on condition of anonymity.
The rouble slumped to a record 37.0005 to the dollar on March 3 as the Russian parliament approved the use of its military in Ukraine before completing the annexation of the former Soviet territory on March 21. The currency ended the month stronger amid diplomatic efforts to defuse tensions over Ukraine. It has weakened 1.5 percent this month.
Retail deposits at Sberbank, Russia’s biggest lender, fell 0.8 percent to 7.6 trillion roubles in March, as clients converted roubles into foreign currency and withdrew cash in anticipation of sanctions, a press officer said.
VTB Group, the nation’s second-biggest bank, also saw an outflow of deposits in March, trimming its quarterly gain to 1.9 percent, spokesman Vitaly Druchinin said. Promsvyazbank said retail deposits fell by 2 percent last month.
is practically a one-way flow of capital” out of Russia, said Natalia Smirnova, an independent financial consultant in Moscow. “Clients who get new money transfer it abroad, as they do not know how the Ukrainian situation will be resolved, whether there will be further sanctions and how the banking system will react.”
Russian savers face a slowing economy and accelerating inflation. Consumer prices increased an annual 6 percent in March, the fastest pace since January 2012. – Bloomberg