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16 Apr, 2009 17:01

Banks and companies haggle over financial support

Banks want to toughen control over bad debtors, but companies are complaining the banks don't even renew loans to disciplined borrowers.

They say one good turn deserves another, but that's not the experience of some Russian corporate borrowers.

Vladimir Korzun the head of Moscow food producer, Karat, says it repaid its bank, but some lenders refused to help out again.

"We paid back Uralsib $5 million but didn't get a kopek from it again, MIB Bank also hasn't given us another loan."

And its a similar story at Russian cable maker, Sevcabel. Its struggling to pay its debts on time, and company head, Gennady Makarov, says the banks should be prepared to help firms through the hard times.

"Our bankruptcies are not profitable for banks. It takes time and money – even our equipment on collateral is not that easy to go and sell. We hope that even the most uncompromising banks will understand that their behaviour is absurd, and switch to normal partner relationships."

One of Russia's main state lenders, VTB, told president Medvedev that it has increased financing of the real sector by 8% since the beginning of the year, and on behalf of the banking sector, CEO Andrey Kostin called for stricter financial discipline by borrowers.

"It's important that debtors don't think that the crisis writes off everything. There is need to take improve legislation in this sphere."

President Medvedev agrees. The state plans to inject several billion dollars more into banking sector. Medvedev once again emphasised that the banks should pass the money on to industry. But that’s unlikely to satisfy industrialists, who say the current interest rates on loans, of around 25%, are unaffordable anyway.