Corporates Begin Pulling Cash From Bailed-Out Russian Banks

Five major banks in Russia saw capital outflows from corporate accounts last month, according to data compiled by Reuters from the nation’s central bank. That news comes despite Russian consumers largely holding faith in the banking system after the central bank moved to prop up several top lenders, the newsource reported Thursday (Dec. 28).

The central bank took over three private banks earlier this year, and analysts have raised concerns about the banking industry as financial institutions (FIs) that do not receive central bank bailouts will lose their licenses. Russian officials have revoked 62 banking licenses so far this year, and the number of banks in operation in the country has nearly halved from 1,000 a few years ago to 519 today.

Corporates seem to be spooked by these developments. Otkritie, once the largest bank in the nation, lost $1.75 billion worth of corporate cash in current and deposit accounts in November, according to central bank data obtained by web-based aggregator and financial analytical tool kuap.ru. That figure accounts for 25 percent of total corporate funds held by the bank.

In a statement, Otkritie said the outflow is linked to a write-off of subordinated bonds, a condition to the central bank’s bailout of the financial institution.

Another bank, B&N, saw a 16 percent decline in corporate funds in November, though the FI attributed that loss to the expiration of some corporate time deposits. Further, Credit Bank of Moscow saw a 4.9 percent drop in corporate accounts last month, while FIs PSB and UniCredit also saw significant losses of corporate cash.

Consumers don’t seem as concerned, however, with data showing retail funds increased by 2 percent in November among major banks’ current and deposit accounts. The latest data shows a reversal of analysts’ previous concerns, statements that suggested corporate deposits at the nation’s top banks held steady in September despite the bank bailouts.