NEWS & EVENTS: Breaking News
01.07.2009 11:03
July 1. The mechanism of additional capitalization for Russian banks via OFZ (federal bonds) could be extended to enterprises in the real sector of the economy, Director of Securities Operations of CBR Sergey Shvetsov said Tuesday. “The additional capitalization mechanism will now be implemented for the banking sector and in the long term, for the real sector. Bonds will be used as a payment instrument for preferred shares”, Shvetsov told journalists Tuesday. This kind of mechanism could have been applied when Rostekhnologii upsized AvtoVAZ’s charter capital, he added. “Theoretically this option is possible, and it is being discussed now, but will not likely happen until next year”. Meanwhile, a source in the federal government believes that the implementation of this mechanism will be inefficient for enterprises and adversely impact the domestic fixed income market. “It is still too soon to speak of it…. This mechanism is also limited for banks, but banks can pledge OFZ stakes at CBR as collateral for refinancing purposes, while no one will accept these stakes from enterprises”, the source said. “Enterprises have a different capital from banks, a bank needs available capital even if it is invested in securities, but this capital is insurance against losses from other operations. This is not as important for companies and they cannot pledge them at CBR, they can only go and sell them”. The source also noted that it would be difficult for companies to sell OFZs on the open market. “This could be the death of the domestic fixed income market”, he believes.
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