Russia's central bank offers loans to help firms service their debts

PanARMENIAN.Net - Russia's central bank on Wednesday, Dec 24, launched another initiative to shore up the ruble, offering hard currency loans to help companies and banks service their debts, the Associated Press reports.

Stabilizing the ruble, which is one of the world's worst-performing currencies this year following the slide in oil prices and the sanctions imposed on Russia for its involvement in Ukraine, is a priority for Russia's monetary authorities.

Russia's largest lender, Sberbank, admitted again that it faced a run last week when the ruble was in freefall and individuals fretted over the value of their deposits. Its chairman, Alexander Torbakhov, conceded to Russian news agencies that the bank was "ready for a new wave of panic." In an attempt to manage the financial impact, the bank raised the rates being offered on deposits and mortgages.

Containing the ruble crisis is behind the Central Bank's latest measure to accept foreign currency debt obligations as collateral against the loans. The hope is that it will provide relief to those who can't tap foreign capital markets to refinance loans because of Western sanctions, the AP says.

Other measures taken include last week's increase in the Central Bank's main interest rate to a whopping 17 percent in the hope that it makes holding rubles more attractive for traders.

On Tuesday, credit rating agency Standard & Poor's put the country on notice that it may face a downgrade following "a rapid deterioration of Russia's monetary flexibility and the impact of the weakening economy on its financial system."

S&P said it plans to make an announcement by mid-January. Any cut from the current BBB- would push Russia's debt rating into so-called "junk" status.