Russian investors withdraw dollars from banks

In August, private individuals and companies withdrew from the Russian banks 6.4 billion dollars. The largest outflow of individuals' funds fell on Sberbank: the German Gref bank left 1.2 billion dollars.
Origin source
Sberbank is stronger than other banks suffered from the outflow of currency from individuals' accounts in August. Clients were frightened by US sanctions and the risk of converting dollar deposits into rubles. The strengthening of foreign exchange outflow creates risks for the ruble.

Private investors in August took out the equivalent of $ 1.5 billion from foreign currency deposits of all Russian banks. Sberbank had the largest outflow - $ 1.2 billion, according to Bloomberg, citing data from the Bank of Russia and the research company Frank RG.

As a result, the volume of currency on deposits of the country's largest bank fell to a three-year low. Since the beginning of the year, the volume of household funds on foreign currency deposits in Sberbank has decreased by 10% - more than the average for the sector.

On the eve of Raiffeisenbank released a survey, which says that in August, individuals withdrew from banks $ 1.1 billion, the company - $ 1.8 billion. Another $ 3.1 billion banks and companies paid on foreign debts, the refinancing of which actually stopped because of the exacerbated relations with the West, while $ 0.4 billion went to other items. Thus, a total of $ 6.4 billion was withdrawn from the accounts of Russian banks.

Among the reasons for accelerating the outflow of funds are fears of freezing foreign currency deposits in case Washington imposes sanctions on banks with state participation and a statement by VTB CEO Andrei Kostin on the possible conversion of foreign currency deposits into rubles.

According to analysts of Raiffeisenbank, free currency reserves in the Russian banking system declined to $ 300 million - for this amount, own reserves in the form of liquid assets and foreign accounts exceeded liabilities to customers.

Currency outflow threatens the ruble weakening

A large-scale withdrawal of money from foreign currency deposits threatens the devaluation of the ruble against the dollar, experts warn. The outflow of currency has so far been compensated for by the record injections of the Bank of Russia into the banking system: $ 2.6 billion through swap operations in early September. At the same time, banks withdraw foreign currency reserves from foreign accounts ($ 2.8 billion in August) and buy foreign currency on the domestic market ($ 2.3 billion in August). Rubles were converted into currency in the market, increasing pressure on the rate.

By 15:15 Moscow time the ruble weakened against the dollar by 0.5%, to 66.8 rubles. for the dollar.

After the speech by Kostin, the head of the Central Bank Elvira Nabiullina and presidential spokesman Dmitry Peskov assured that the regulator does not consider the possibility of forced conversion of foreign currency deposits into rubles. But Costin said not only that the conversion will be mandatory, but that if sanctions are imposed, the bank can, on its own initiative, pay in rubles with customers who want to close dollar accounts.

What will happen next

According to analysts of Raiffeisenbank, the situation with currency liquidity will improve in October-November. First, the Bank of Russia promised before the end of the year not to buy the currency market. Secondly, the US is unlikely to impose restrictions on dollar settlements with respect to the largest banks. Third, expensive oil will bring in the country $ 20-24 billion of net inflows in the current account. This currency, from their point of view, will cover a possible outflow of non-residents from federal loan bonds (OFZ) in case of sanctions.

In the short term, support for the ruble is provided by the weakness of the dollar in the global market, the increase in the key rate in Russia, as well as the mitigation of sanctions risks for Russian companies, the budget forecast for the Ministry of Finance in 2019 and the department's plans to borrow up to 1.5 trillion rubles in the domestic market, investment company "Opening a Broker" Andrey Kochetkov. "In our opinion, an increase in borrowings with a surplus budget is a strange decision, unless it is related to the refinancing of less profitable OFZ issues," Kochetkov said.