01 June 2010, 18:44 Business

Gref raises the bet

German Gref considers current lending rates unjustifiably low

Gleb Klimentyev The head of Sberbank, German Gref, entered into a public dispute with the authorities, who are calling on banks to make borrowed funds more accessible to businesses and citizens. In his opinion, current lending rates are already unjustifiably low, and the Central Bank is in vain reducing the refinancing rate.

“The current rates in the economy do not reflect the real assessment of risks. The risks in the economy are much higher than they were in 2006, 2007, 2008, and the rates are much lower,” said the head of Sberbank German Gref at the forum “Strategy 2010, implementation results and new challenges.” In this regard, in his opinion, banks will have either very low or negative margins, which “will affect the recovery of the banking sector, which is in a very difficult situation.”

“With low rates we will drive investors into investment projects. And when the trend “reverses”, we will have new bankruptcy of companies and banks,” Gref added.

In the coming years, a large number of unrealized projects may appear, which may also end up on the balance sheets of banks, says the head of Sberbank.

Gref's opinion runs counter to the opinion of Russian authorities, who regularly call on banks to make borrowed funds available to businesses and citizens. once again called not so long ago “We must consistently lower the lending rate for the entire economy,” Russian President Dmitry Medvedev .

To support the “gradual recovery of economic growth,” the Central Bank has reduced the refinancing rate for the 14th time since April last year. From June 1, 2010, it was reduced by 0.25%, to 7.75% per annum.

Slowing inflation allows him to do this. This level is a new historical low for Russia, although by world standards the rate is high. Thus, the US Federal Reserve finances the banking system at 0-0.25% per annum. The refinancing rate of the European Central Bank is 1%. And regulators are in no hurry to increase the cost of money, fearing to interfere with the timid economic recovery.

But, according to Gref, the Russian Central Bank’s reduction of the rate is “not a sign of an improvement in the situation, but a sign of volatility.”

According to him, “no one believes in the duration of the trend of decreasing inflation” and a turning point may occur before the end of the year. “We must be very careful about a further decline; now the most important problem is a change in trend,” Gref said.

Banks are gradually reducing lending rates, although this is more likely a reaction not to the credit policy of the Central Bank, but to some stabilization in the economy. According to the Central Bank, the average lending rate in March 2010 dropped to 11.8% per annum, while in February it was 12.7%, and in January - 13.9%. The average loan rate in 2009 was 15.3%.

It must be said that, as Minister of Economic Development, German Gref also advocated increasing the availability of loans. But the fact that his position has changed is not surprising, experts say. “Previously, he had the motivation of an official; naturally, he cared about the economy developing. And not here and now, but in the future. And today, when he became a banker, his motivation has changed,” explains Doctor of Economics, Professor Nikita Krichevsky . And Sberbank will also benefit from a reduction in the refinancing rate, the expert adds:

“Sberbank, naturally, will reduce rates on raising money, but loan rates will remain at the same level. As a result, part of the expected losses will be leveled out. It's a game".

But a further reduction in loan rates in the current conditions is truly unjustified, experts admit. “This will not lead to a revival of lending, since the main problem of the weak growth of the lending market today is not the desire or reluctance of banks to issue new loans, but the lack of quality borrowers and low demand from enterprises and the population,” says an analyst at FC Infina. Veronica Chekina . Besides,

During the acute period of the crisis, banks attracted deposits from the public at such high interest rates that if the trend towards lower rates continues, this will have a detrimental effect on bank profits.

“I would not expect a significant increase in lending this year, given the weak recovery of the economy and domestic demand,” agrees Olga Belenkaya, deputy head of the analytical department of Sovlink Investment Company . “But if borrowers feel that the “bottom” of lending rates is already close and it will not be possible to borrow funds cheaper, then the demand for loans may begin to grow.”