State life of private banks

Belarusian banking system emerges from crisis more easily than expected

By Leonid Veremeyev

In 2011, the National Bank of Belarus placed stricter controls on the banking system, aiming to push forward the national economy; ‘Main Directions of Monetary-Credit Policy for 2011’ outlines three major targets guiding the further development of the country. Importantly, the volume of loans is to be raised, with Belarusian banks focusing on granting credits to individuals as well as to the real sector of the economy, concentrating on small and medium-sized businesses. Investing money into smaller production enterprises makes good sense, since they are better able to adjust their strategy, proving more flexible and unpretentious.

The National Bank has another principally new direction for the banking system for 2011, with private banks receiving access to state programmes on equal terms with state banks. “The state has pledged to compensate banking losses in line with the refinancing rate,” explains the Head of the National Bank of Belarus, Piotr Prokopovich. “This will enable all banks to compete for participating in the state programmes.” The National Bank is confident that bankers will be pleased with the new rules, since they have long complained about inequality of terms when competing against state banks. Of course, not all state programmes are interesting to private banks. The move should promote competition between banks however.

Thirdly, our banking sector aims to attract direct investments into the country’s economy. Mr. Prokopovich notes that, if the investment policy of the West becomes more severe, foreign financiers may find themselves excluded. “In coming years, $100bn could be injected into Belarus. Foreigners see that investing money into a strong and developing economy brings sure-fire profit. However, if Belarus is deprived of attention from western investors, it will be searching in other directions, such as China. Already, the Chinese are almost leading regarding investment into the Belarusian economy,” he asserts.

The National Bank’s anticipation of direct injections is not without foundation. This year, the country’s major financial institution expects to see Belarus’ international reserve assets rise by $1.2bn, with our country planning to sharply reduce its external borrowings. Alongside $1bn received from Eurobonds (released in early January) and 8bn Russian Roubles (via bond placement in Russia), our country will gain loans from the Eurasia Foundation (within the limits of $2bn).

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