Russia Plans To Inject $27 Bln Into Banks -Sources

Sberbank, Russia`s biggest lender, was likely to receive a 500 billion-rouble subordinated government loan.

Russia plans a 900 billion-rouble ($27.4 billion) capital injection for commercial banks hit by the economic crisis, with state-controlled lenders set to receive the largest share, government sources said on Tuesday.

Sberbank, Russia's biggest lender, was likely to receive a 500 billion-rouble subordinated government loan, one source told Reuters, citing a decision taken at a meeting of the government's anti-crisis committee.

"Sberbank has no urgent need for new capital, but this could change depending on the increasing share of non-performing loans and the state of the banking sector," Troika Dialog analyst Olga Veselova said.

Russia's government has already allocated over $200 billion, spending some of the oil wealth accumulated over the last decade, to cushion an economy widely forecast to be heading into recession this year.

Major players among the country's 1,000-plus banks have been charged with ensuring the cash reaches the real economy, keeping money markets ticking over and filling holes left by the dearth of foreign funding during the global credit crunch.

The government source, speaking on condition of anonymity, said another state-controlled bank, No. 2 Russian lender VTB, would get 200 billion roubles as part of the latest rescue package.

Other commercial banks would share a total of 100 billion to 200 billion roubles. Privately owned banks are waiting to find out the criteria for loan applications before deciding whether to apply for the state funds.

"It's still not clear what's inside the package, but the new measures are timely," said Andrey Shalimov, head of the treasury department at top 30 Russian bank Vozrozhdeniye.

DETERIORATING ASSETS

A second source within the government, also speaking anonymously, said the form in which VTB and others would receive the capital injection had not yet been agreed.

"VTB's management said earlier the bank would prefer Tier 1 capital injection, so the subordinated loan is not the best option for VTB -- but no doubt it's good news," UBS analyst Natalya Pushkina said.

Sberbank and VTB both declined to comment. Their shares were down around 4 percent in Moscow by 1220 GMT, with dealers citing profit-taking after sharp gains in the previous session. The MICEX index lost 2.6 percnet.

The state, whose gold and foreign exchange reserves of $396.2 billion on Jan. 16 were still the world's third-largest despite losing a third of their value since August, has said it is ready to help Russia's banks.

Finance Minister Alexei Kudrin has said the government would allocate $40 billion in 2009 to help the banking sector get through the crisis, as the deteriorating quality of assets puts pressure on banks' profitability and capital adequacy ratios.

VTB reported a third-quarter loss of $363 million. Sberbank, while reporting third-quarter net profit of 23.2 billion roubles, is likely to come under pressure from new writedowns and higher provisions.

The government said the anti-crisis committee, chaired by First Deputy Prime Minister Igor Shuvalov, had met to specify the amount of finance needed to increase banking capital. It did not give any more detail.

Russia's central bank expects the share of non-performing loans in commercial banks' loan portfolios to rise to 4.0-4.5 percent in the first quarter of 2009.

Russian banks have been lobbying for Tier 1 capital injections, such as direct equity-stake purchases by the state.

"I cannot imagine how this can happen. Then all our banks will become state-owned," the second government source said.

In the previous round of capital injections, the state pledged to give banks 950 billion roubles in subordinated loans. Subordinated loans qualify as second-tier capital under international commercial banking rules.