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7 Oct, 2008 16:44

Russian banks get $36 BLN shot in the arm

The Russian government will inject an additional $US 36 BLN into the country's financial sector to prevent a major crisis.

Earlier, more than 150 billion dollars has already been allocated, however, the situation is still extremely volatile.

The Russian government continues to support the economy by creating additional measures and injecting liquidity.

“The government is allocating loans to banks, worth a total of 950 Billion rubles ($US 36 BLN) for a period of at least five years. This is the first measure to prop up the country's banking system,” President Medvedev said Tuesday.

Finance Minister Aleksey Kudrin echoed President Medvedev:

“This is a preventative measure. It is designed to support the banking system and to guarantee the robustness of the Russian financial system.”

Noting the fears pervading global financial markets the Minister added;

“We can see what's going on in the banking sectors in other countries. We need to preempt events related to the robustness of some of our own banks and we've taken these measures,”

“This decision is not just intended to inject liquidity into the banking system – we're injecting enough of that – but it is designed to strengthen the capital of Russian banks,”

“It will improve the performance of those banks, give them enough capital, enable them to issue loans. It will broaden even further their opportunities to lend to the real sector, for securities trading,”

Sberbank and VTB will be allocated 500 billion rubles and 200 billion rubles, respectively.  Russia’s agriculture bank, Rosselkhozbank, will receive a further 25 Billion Rubles. The funding will come from Vnesheconombank in the form of 5 year loans.