Macro Developments and Banking System Trends in Russia

The most important domestic economic trend was the slowing economy, as Russia’s GDP in 2013 rose by only 1.3%. Investments in fixed capital decreased by 0.3%. Industrial production growth hovered around zero.

Capital outflows from emerging markets in 2013, including from Russia, was significant. The Russian rouble exchange rate decreased by 7.8% to the dollar and by 11.8% to the Euro.

Inflation was 6.5%, having exceeded the upper target limit of the Bank of Russia of 5-6%. Staying within the target limit was impossible owing to a number of factors, including rising food prices.

The liquidity situation in the banking sector in 2013 remained tense. The Bank of Russia continued to provide liquidity to the banking system, including using new tools. By the end of 2013, the banking system indebtedness to the Bank of Russia amounted to RUB 4.4 trillion, having increased during the year by RUB 1.7 trillion. Interbank market rates remained high. In 2013, Mosprime 3M was between 6.8% and 7.2%.

In the second half of the year, the Bank of Russia focused on strengthening the banking sector. In addition to the policy limiting the growth of risky unsecured consumer lending, the regulator actively identified the banks that related to money laundering and conversion-into-cash transactions. Banks-violators were deprived of licenses. In 2013, licenses were revoked from 33 Russian banks.

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Macro Developments and Banking System Trends in Russia
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