Russia 091204 Basic Political Developments

Business, Energy or Environmental regulations or discussions

MOSCOW, Dec 4 (Reuters) - Here are events and news stories that could move Russian markets on Friday.

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STOCKS CALL (Contributions to moscow.newsroom@reuters.com):

Goldman Sachs recommends "a long unhedged Russian equity position, to benefit from rising oil prices, falling Russian rates and a strengthening rouble".

VTB Capital: "It looks like investors are quite happy with this uninspiring trade and are not ready for any meaningful changes in their market positions unless some extraneous shocks force them to."

EVENTS (All times GMT):

MOSCOW- The Vedomosti daily to hold a pharmaceutical forum 'Pharma Russia'. LINK: http://events.vedomosti.ru/description.shtml?pharma9

MOSCOW- Dalsvyaz 9-month results, conference call

IN THE PAPERS:

Troubled car maker AvtoVAZ is seeking a bridging loan from state-controlled Sberbank to tide it over until it receives the promised 12 billion roubles from the government budget, Kommersant reports citing unnamed sources.

State corporation Rosatom will be able to save 30 billion roubles and get out of having to buy out the minority shareholders of Inter RAO -- including 8.97 percent owner Gazprom -- thanks to a proposed change in legislation, Vedomosti reports.

TOP STORIES IN RUSSIA AND THE CIS:

TOP NEWS: Putin, Medvedev both hint at 2012 bids Putin skips modernisation as economy recovers

RUSAL agrees $16.8 bln debt deal ahead of IPO

COMPANIES/MARKETS: Gazprom Neft mulls secondary share placem

Sberbank Q3 profit seen at 5.1 bln roubles

Sitronics Q3 net loss narrows

MTS eyes local network operator Eurotel

ECONOMY/POLITICS: Russia Nov GDP -2.5 pct y/y-survey

Russia eyes reserve requirements rise

Econ Min more optimistic on GDP, inflation

ENERGY: Gazprom, Eni sign deal for EDF to join S.Stream

Gunvor to launch Ust Luga terminal in H1 2010

Russia ups Nov gasoline,gas oil,fuel oil export

COMMODITIES: Putin says WTO resists Russian farm subsidies Russia Murmansk Nov coal shipments 886,000 T

MARKETS CLOSE/LATEST:

RTS 1,410.98 +0.12 pct

Russia 30-year Eurobond yield: 5.358/5.303 pct

EMBI+ Russia 229 basis points over

Rouble/dollar 29.1550

Rouble/euro 44.0100

NYMEX crude $75.90 -$0.56

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Keywords: RUSSIA FACTORS/ (antonina.vorobyova@reuters.com; Tel: +7495 7751242, Reuters Messaging: antonina.vorobyova.reuters.com@reuters.net)

By Ilya Khrennikov

Dec. 4 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

The 30-stock Micex Index fell 1.1 percent to 1,311.08 in Moscow, erasing earlier gains of as much as 1.8 percent. The dollar-denominated RTS Index dropped 0.5 percent to 1,409.32.

To contact the reporter on this story: Ilya Khrennikov in Moscow ikhrennikov@bloomberg.net

Dec. 3 (Bloomberg) -- Russia’s banks ignored government efforts to raise lending in October and reduced corporate and retail loan books, threatening to choke the commodity-reliant economy’s recovery from its worst decline on record.

Lenders’ corporate loan books fell 0.5 percent, after declining 0.7 percent in September, according to data published on the central bank’s Web site today. Lending to consumers dropped 0.7 percent for a ninth consecutive monthly decline. The financial industry’s total assets fell 0.6 percent, while total equity capital advanced 3.1 percent.

Nine central bank rate cuts to a record low 9 percent last month have so far failed to ease credit flows. Businesses, including Moscow property developer Mirax Group, have accused banks of pocketing the difference between the lower central bank rates they pay to borrow and the higher rates they charge on loans. A shortage of credit may stall Russia’s recovery from a record 10.9 percent in the second quarter. Output shrank 8.9 percent last quarter.

“We continue to believe that hidden non-performing loans may stymie a recovery in lending and could constrain growth next year,” Natalia Orlova, chief economist at Alfa Bank, said yesterday in a report.

Banks are withholding funds as the ratio of non-performing loans rises, threatening to create a spiral in which households and businesses can’t borrow enough to generate the growth needed to make profits that would service the debt.

Overdue Loans Rising

The share of overdue corporate loans rose to 5.9 percent in October from 5.6 percent the previous month, central bank data show. The percentage for consumer lending increased to 6.6 percent from 6.4 percent.

Banks are lending less even after one-week interbank rates dropped from 10 percent at the end of March to 5 percent today, the lowest level this year. Three-month interbank ruble rates dropped to 7.75 percent today from 17.5 percent at the end of the first quarter. The average rate on banks’ corporate loans, by comparison, was 13.9 percent in October, from 16 percent in March, according to central bank data.

Retail lending has declined for nine consecutive months through October, and shrank in 12 of the last 13 months, the central bank data show. Corporate lending dropped for a second month in a row and hasn’t risen for six months.

“Both corporate and retail loan portfolios contracted at a slow pace, which is signal that it is still a problem for banks to find good borrowers,” VTB Capital analysts led by Dmitry Dmitriev said in a research note today.

Provisions

Banks set aside 1.88 trillion rubles ($64.3 billion) as of Nov. 1 to cover overdue debt, an increase of 3.1 percent, compared with a month earlier. Bad-loan provisions have more than tripled from 586.3 billion rubles as of Jan. 1, 2008. The number of lenders that posted losses through October rose to 171 from 142 in September, according to Bank Rossii.

While the government has urged banks to ease the flow of credit, the Finance Ministry has proposed tightening regulation in a move that is likely to reduce the number of lenders.

Russia will require its banks to have bigger capital buffers in future, Finance Minister Alexei Kudrin said on Nov. 25. Capital requirements for banks should be raised to 1 billion rubles ($34.7 million), a move the government expects will lead to consolidation in the industry, he said. The measure will probably reduce the number of banks to about 500 from 1,100, his ministry estimates.

Unwinding Support

At the same time, Bank Rossii has started unwinding emergency support measures. The regulator will require lenders receiving unsecured loans to have higher credit ratings starting on Feb. 1. The new rules require a so-called category 3 bank to have a minimum credit rating of B- in Moody’s Investors Service rankings to be eligible for unsecured loans.

The central bank will continue to lower borrowing costs, First Deputy Chairman Alexei Ulyukayev said at a conference in London on Dec. 1. Even so, the regulator is betraying a “dilatory” stance in its policy, Martin Gilman, head of the International Monetary Fund’s Moscow office during Russia’s 1998 default, said in an interview yesterday.

Bank Rossii is “strangling the private sector because monetary policy is far too tight,” he said.

Mirax founder and Chairman Sergei Polonsky said on Nov. 24 central bank easing hadn’t helped lower his borrowing costs because he, like many of his peers, took loans before the regulator started easing.

“Since a company can’t renounce debt obligations it previously agreed to, and at the same time can’t just halt work, a businessman has only one choice: hang himself or take on a loan,” Polonsky, whose development company is building the 506- meter Federation Tower in Moscow which will be Europe’s tallest building once completed, said in a comment on his Web site last month.

To contact the reporters on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net; Paul Abelsky in Moscow at pabelsky@bloomberg.net.

The report is an outcome of extensive research and detailed study of the banking sector in Russia. The report has discussed each of the performance indicators of banking sector, like deposits: household deposits and corporate deposits; loans: individual loans and organizational deposits in detail. In addition to these core performance indicators, the report contains an elaborate information and reliable statistics of other important banking products like payment cards and ATM terminals.

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