Banks on Tuesday during a one-week Deposit auction of the Bank of Russia placed to 220.8 billion rubles of excess liquidity under of 10.41% per annum with the prescribed limit of 280 billion rubles, according to materials of the Bank of Russia.
In the auction was attended by 76 credit organizations from 35 regions of the country. Banks offered funds under the 10-10. 5% at the maximum possible rate of 10.5%. The cut-off rate was 10.5% per annum.
This is the second auction since the resumption of this tool after 1.5-year break. On 9 August the Bank of Russia held a weekly Deposit auction, through which attracted the banks 100 billion rubles under of 10.22% per annum. Then it was attended by 62 the Bank, and suggestions from credit institutions exceeded the limit of the Central Bank almost doubled.
The increase in the number of participants of the Deposit auction, compared with the beginning of the month indicates the presence of excess liquidity from a greater number of banks. “The last auction is sufficiently large. We can say that the surplus liquidity is gradually spreading through the system outside the top-30 of banks”, — says the analyst of Raiffeisenbank Stanislav Murashov. Agree with him and in ROSBANK. Credit institutions prefer to place short-term liquidity in the most reliable tools, not coping with lending”, — says the analyst of ROSBANK Eugene Koshelev.
However, experts believe that the two auctions not yet indicates the transition of the system to surplus. In their view, the regulator withdraws the point the banks have excess funds due to the inflow of liquidity via budget channel. This week ended the period of tax payments, the receipt of budgetary funds should replenish Bank reserves. In addition, the Federal Treasury announced the placing of additional funds in Bank deposits.
“Data Deposit auctions — a manifestation of the rather harsh reaction of the Central Bank on the emergence of excess liquidity. Those steps, however, the regulator suggests that the Bank of Russia stops to provide liquidity and begins to adopt it on a permanent basis”, — says the analyst of Raiffeisenbank. The expert notes the lack of visible signs of excess liquidity in money market rates, and the availability of debt on REPO to the Bank. This, according to him, is a sign of a specific situation, namely the need to attract funds from a limited number of banks.
The Bank of Russia has repeatedly said that the banking sector until the end of 2016 will be a sustained need to attract money from the Central Bank. The regulator at the same time promised to hold Deposit auctions during certain periods when the supply of funds from banks will exceed their needs to attract resources. “In the current environment it is more likely that the Deposit auctions held in the early months, when there is a budget inflow. But in General, other things being equal, the thrust is in the direction of the repo,” said last week the Deputy Director of monetary policy Department, Bank of Russia Alexander Polonsky.
Structural excess liquidity, experts do not expect for at least another few months. TSB will be to conduct more auctions in the next 2-3 months, although in September probably makes sense to alternate the Deposit auctions and repo auctions in the second week of September to repeat Deposit auction, and at the end of the month is to offer repo”, — said in ROSBANK. When the Deposit auctions will be permanent, then it will make sense to replace them mid-term instruments to absorb liquidity, for example, the release of Bank of Russia bonds (OBR), add in a credit institution. Structural excess liquidity in the banking system will be closer to the end of the year, when the plan budget expenditures will be done at 70-80%, says Koshelev.
When excess liquidity, the effectiveness of interest rate policy of the Bank of Russia is reduced, causing inflationary risks, experts remind. “If the market liquidity shortage, the Central Bank is the main source affecting the interbank rate. In a situation of structural surplus of large amounts of liquidity from the CB banks are needed, so the rates become more difficult to manage,” notes Murashov.