Russia’s top banker Gref backs independence of new central bank governor

By:
Dominic O’Neill, Sid Verma
Published on:

Sberbank chief German Gref, who – as the former economics minister – was the boss of Central Bank of Russia governor-designate Elvira Nabiullina, says the bank’s dominance in the country’s economic affairs won’t exert undue influence over monetary policymaking.

German Gref, CEO of Sberbank
German Gref, the CEO of Sberbank, Russia’s largest bank, says he will respect the autonomy of the country’s central bank governor-designate Elvira Nabiullina, in comments that might boost investor confidence over the transparency of monetary policymaking in the world’s ninth largest economy.

Nabiullina, whose tenure from June 24 at the Central Bank of Russia (CBR) received legislative approval on Wednesday, was Gref’s deputy at the economy ministry, before serving as economic adviser to president Vladimir Putin until her appointment as CBR chief.

Asked whether Sberbank’s deep penetration in the Russian economy – from vanilla banking to capital market products – meant the bank would command an overwhelming influence in regulatory and monetary policy affairs, Gref cast doubt on the assumption.

In an interview with Euromoney, he said: “Ms Nabiullina worked for four years as minister for economic development. Not once did I allow myself to meddle with her professional responsibilities in terms of giving any sort of advice, apart from times when she herself asked for it.”

As Euromoney reported, heads of state-owned banks, including Gref, eager for cheap funding, have been vocal in their opposition to central bank rate increases in Russia.

However, Gref said he would not exert undue influence in monetary affairs: “There is a certain code of ethics in relationships. Ms Nabiullina and I are bound by such a code, which would not allow us to interfere in each other’s duties and responsibilities with any unsolicited advice, let alone any sort of demand.

“Ms Nabiullina is a very principled person.”

Bankers in Russia privately express frustration that state-owned banks perceive private-sector entrepreneurial lenders as a competitive threat and use their political influence to lobby for regulatory redress, citing the risk of large-scale and unsecured credit expansion.

Nevertheless, analysts and the CBR reckon retail loan growth at 53% year-on-year in 2012 – which served as a pro-growth fillip ahead of the March election – poses a macro-economic risk.

The central bank has recently tightened the screw through new prudential guidelines, including increases in provisioning requirements for uncollateralized loans issued after January 1, 2013.

According to VTB: “The new requirements are mainly addressed to the consumer finance banks, such as HCFB, OTP Bank, Russian Standard and others where unsecured lending accounts for a 95% to 97% of their loan portfolios, largely to the benefit of the state-owned banks.”

Asked about the risk of a retail credit bubble, Gref said the pace of lending expansion should moderate this year after growing at an unsustainable rate last year, and backed the CBR’s recent prudential efforts.

“Theoretically, there could be [a retail credit bubble],” said Gref. “Last autumn, when we looked at how fast the market was growing at that time, I discussed with my colleagues how the same pace of development continuing in 2013 could mean that towards the end of 2013 this kind of a danger [of a credit bubble] might start manifesting itself.”

He concluded: “However, we don’t see it just yet, not at this point of time. Also, the central bank has been taking measures to reduce growth rates in consumer finance, so I certainly don’t think the growth in consumer credit this year will be bigger than last year.”