Russian central bank official says some banks need additional capital

A SENIOR Russian central bank official said on Wednesday (May 25) that some banks would need additional capital and that the country's top 20 lenders would be assessed for their financial strength by the end of the month.

Dmitry Tulin, first deputy governor, told a banking forum on Wednesday that Russian banks had a total capital buffer of around 7 trillion roubles (S$162 billion) but "some banks will require a capital injection."

"We do not know all the details of the capital injection yet but we have capacity... to solve all the issues banks are facing," he said, without naming any banks.

Some of Russia's top banks, from state-controlled Sberbank and VTB to private AlfaBank and others, were hit by a variety of western sanctions after Moscow sent thousands of troops into neighbouring Ukraine on Feb 24 in what it calls a "special military operation".

The Russian banking system faced a liquidity shortage following the military action as citizens rushed to take their savings out. People started to return their funds after the central bank hiked its key rate to 20 per cent to prevent volatility.

Russia has quickly moved to use its own banking messaging system known as SPFS, after a number of its top banks, VTB and Otkritie included, were cut off from the Swift global banking messaging system as part of the western sanctions.

Olga Skorobogatova, a deputy central bank governor, told the same conference on Wednesday that Russia was using its SPFS financial messaging system with twelve countries worldwide, without naming the countries. REUTERS