For more than twenty years, Andreï Kostine, 68, has headed VTB, the Russia’s second largest bank, more than 61% controlled by the state and considered one of the Kremlin’s financial arms. Appointed two years after Vladimir Putin came to power, this graduate in economic policy and former career diplomat is considered close to the former spy who became president. The Westerners have placed VTB under sanctions and its boss, banned from staying in the West. Meeting in Ras Al-Khaima, in the United Arab Emirates, on the sidelines of the Eurasian Economic Forum in Verona, organized on Thursday December 5 and Friday December 6, the day after his interview with Vladimir Putin.
Speaking at a conference organized by your bank in Moscow on December 4, Vladimir Putin demanded “actions” from the government and the central bank to fight inflation, which, at nearly 9%, is double the official target. What should these “actions” be?
Despite enormous external pressures, the Russian economy and its banking sector are in good shape. The overall macroeconomic situation remains stable. The government and the central bank stick to flexible and prudent monetary and economic policies. I believe the inflationary risks we face today are manageable.
The Central Bank of Russia has already raised its interest rate, which at 21% is at a record low. It could, by the end of the year, increase again. As a result, VTB, our bank, increased borrowing rates to 26 or even 27%, but we pay deposit accounts at 23 or 24%. From 2025, the central bank will impose new capital requirements to authorize loans. For business loans, it also adds new measures, which will reduce borrowing possibilities. As a result, the growth in VTB loans to businesses is expected to decrease from 20% in 2024 to 10% in 2025. For consumer loans, we expect even minimal growth. And home loans are expected to fall by 20 to 30 percent.
You have 75.66% of this article left to read. The rest is reserved for subscribers.
