Corridor for currency resources could be extended

Banking system remains promising source of foreign currency inflow into the country

By Anton Alexeev

At present, 31 banks operate in the Republic, with 14 having over 50 percent of their statutory fund held in foreign capital; nine are 100 percent foreign. However, the state retains control of the banking sector, with three system-forming state-run banks owning about 67 percent of total assets. As a result, the state has prevailing ownership of banking capital, allowing it to guide supply and demand regarding monetary resources and financial services, conducting a constructive monetary-credit policy in the country.

Specialists from the Association of Belarusian Banks note that banks with foreign capital in their statutory fund possess greater possibilities for attracting foreign currency resources into the country — primarily, on the account of their mother companies’ investments. Non-residents’ investments and funds injected into banks’ statutory capital comprise almost 20 percent of credit resources (exceeding Br37tr after recalculating in the national currency). This somewhat satisfies the real sector’s need for foreign currency (formed as a result of the negative balance of current operations).

No doubt, state banks are developing their co-operation with foreign financial institutions. However, their major mission is to financially support state programmes and the development of social infrastructure. Credit for these projects is allocated primarily in Belarusian Roubles.

In the first half of 2011, the domestic banking system earned over Br1.1tr (up almost 50 percent on last year). According to the Association of Belarusian Banks, about Br400bn of this sum is estimated rather than real profit — accumulated as a result of the re-assessment of currency assets and liabilities after the Belarusian Rouble’s devaluation.

Foreign mother structures still prefer to assess the work of their financial ‘daughters’ in Belarus in foreign currency rather than local. Meanwhile, the Association of Belarusian Banks believes it to be necessary to legislatively fix additional guarantees for incoming capital — to strengthen the country’s financial system and its attractiveness to foreign investors. Some Central Asian countries (which have faced single or multi-stage devaluations at various times) saw profit received from the re-assessment of banks’ foreign currency assets and liabilities become exempt from taxation; rather, this profit was used to replenish a bank’s statutory capital.

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