Central Bank fears problems with liquidity in the banking market
The Bank of Russia fears problems with liquidity in the banking market and this week will begin to distribute it to needing banks. The regulator believes that by the end of the year, a liquidity deficiency can reach 2.4 trillion rubles. Market participants note that this can negatively affect the rates on the lending market even with a decrease in the key rate of the Central Bank.
Since April 15, the Bank of Russia has been switching to the weekly auctions of the repo, while the regulator notes that these auctions at which banks will receive liquidity will be carried out instead of deposit auctions, on which banks are placed excessive liquidity. “This is due to the expected further decrease in the structural surplus and the transition of the banking sector to a liquidity deficit, as well as with the current structure of the demand of credit organizations in the monetary market,” the Central Bank noted.
Last week, the Bank of Russia predicted liquidity deficiency by the end of this year in the range from 1.6 trillion to 2.4 trillion rubles.
“The transition to a sustainable deficit will occur due to the growth of mandatory reserves, mirroring of the Bank of Russia Net Currency Sales from the FNB by the Ministry of Finance of Russia in 2024 and a slight increase in cash volumes in circulation,” the Central Bank explained. By March of this year, the liquidity surplus was 1.1 trillion rubles.
According to the Bank of Russia, this year the total volume of deposits of credit organizations in the Central Bank decreased from 4.2 trillion rubles. On average, in January up to 3.1 trillion rubles. On average in April. At the same time, at the last two auctions, banks placed less than 3 trillion rubles in the Central Bank. At the same time, at the end of March, the demand for liquidity was resumed as part of the auctions of the repo – since the beginning of the year they were spent for a period of 21 days, and, as a rule, banks received 100-300 billion rubles for them. However, on March 27, the auction of the replacement of thin settings for four days was held, where banks received 1.5 trillion rubles, and on April 7, another 810 billion rubles. For two days with a demand of 1.9 trillion rubles.
Elvira Nabiullina, Head of Bank of Russia, February 27, 2025:
At the cost of rapid credit growth of the last two years, it was that banks largely involved capital and liquidity reserves that they had in early 2022.
The change in the situation with liquidity was also reflected in the interbank market, where bets began to grow. As Konstantin Borodulin, managing director of the ratings of the financial institutions of the rating of the NRA rating, told Kommersant, at the current levels of high rates, the situation in the stock market and compression of the loan volumes of banks increased operations in the monetary market, including the classical transactions of interbank lending to Blancov or pledge limits that again became popular. “As for the rates, they are generally comparable to raising deposits of individuals and legal entities, while, unlike deposits, they have a tendency to increase recently – so, the value of MiaCR for the overpass for March 2025 amounted to 21.33%, while in January 2025 – 20.79%,” he says.
The analyst “The Figor of the Broker” Kirill Klimentiev, who notes that the rates on the interbank are growing and approaching the upper boundary of the percentage corridor of the Central Bank (key rate + 1 p.). In turn, the managing director of the expert RA rating agency Yuri Belikov draws attention to the fact that when the rates begin to decline, the placement of funds by credit organizations in deposit accounts at the Bank of Russia will be in less demand.
Market participants note that the structural surplus of liquidity is formed at the expense of banks that do not show activity in the lending market.
As the chief economist of Sberbank Mikhail Matovnikov explained “Kommersant”, today the deposits of the Central Bank are mainly needed by small banks and “daughters” of foreign banks, which, for various reasons, cannot conclude transactions with large Russian banks in the interbank. “As a result, their excess liquidity has to be absorbed by the Central Bank,” he says. In his opinion, the weekly auction of the repo at this stage seems to be an optimal period, since the monthly auctions conducted today are not bastard enough to control liquidity.
The new Central Bank tool can solve the impending problem of liquidity deficiency in the banking market, however, the fact that the Central Bank will have to resort to it means that reducing betting on the lending market at best will go more slowly than expected, Kommersant’s interlocutors in the banking market.
