Russia's prime minister and finance minister have told the country's biggest state lenders to ensure liquidity continues to flow to banks in Belarus, where a political crisis has increased strains on the financial sector, banking sources said.
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MOSCOW: Russia's prime minister and finance minister have told the country's biggest state lenders to ensure liquidity continues to flow to banks in Belarus, where a political crisis has increased strains on the financial sector, banking sources said.
The top-level instructions are another sign of Moscow's support for embattled Belarusian leader Alexander Lukashenko, who has faced weeks of protests following a disputed Aug. 9 election.
The unrest has triggered deposit outflows from Belarusian banks and a spike in foreign currency demand, pushing the local rouble to record lows and eroding the central bank's already-sparse hard currency reserves.
Two banking sources told Reuters that Russian Prime Minister Mikhail Mishustin and Finance Minister Anton Siluanov had asked senior executives at Sberbank , VTB and VEB, all with units in Belarus, to ensure the continued flow of Russian roubles to the neighbouring state.
"Mishustin and Siluanov were calling the state banks asking (them) not to close (interbank) limits on Belarusian banks, so they could maintain access to rouble liquidity," the first source said. The second source confirmed the calls.
The move also coincides with fears that Belarusian banks could be forced to curb operations should interbank lending stall. The sources said Russia's government is keen to avert a Ukraine-type scenario where Russian lenders were forced to take major write-offs on their Ukrainian units after 2017.
That happened after Kyiv slapped sanctions on several Russian state banks, following the Kremlin's 2014 annexation of Crimea and its alleged role in fomenting conflict in eastern Ukraine.
"There have been a lot of losses with Ukraine but Belarus is a different story," said a third source, a senior banker at a Russian state lender.
In Belarus, fears are high for Belgazprombank, a unit of Russia's Gazprombank , which has been placed under temporary administration by the central bank. Its head Viktor Babariko was jailed after trying to challenge President Alexander Lukashenko in the election.
Lukashenko denies electoral fraud..
Russia's finance ministry and a spokesman for Mishustin did not reply to requests for comment. Sberbank declined to comment while VEB said it had not revised daily interbank funding lines for its unit in Belarus.
VTB said it had not revised its funding lines with Belarus and its unit there.
Graphic: IIF Belarus dollarisation and FX reserves – https://fingfx.thomsonreuters.com/gRead More – Source