Russia's banking system can survive the current financial crisis and the sharp devaluation of the ruble if the government takes measures to prevent panic, a top Russian banking official said Wednesday.
"The main goal is to calm people and restore confidence in the banking community," said Sergei Yegorov, head of the Association of Russian Banks.Banking analysts have predicted that a third to half of Russian banks may fail, largely because they are overdependent on ruble assets worth a third less after Monday's effective devaluation.
But only a few Russian banks meet the Western definition of a bank. Many are essentially fronts for highly risky speculation in the stock and money markets. And only about 30 percent of Russians' savings are deposited in banks, one reason that the lines at most banks did not soar during the crisis.
At a news conference, Yegorov tried to sound upbeat, predicting that the majority of Russia's 1,600 commercial banks would be able to overcome the crisis. He said only between 200 and 250 banks are in immediate danger.
Many customers visiting Moscow banks Wednesday didn't share Yegorov's optimism.
"The banks are in danger, and withdrawal is the only reasonable thing now," said Semyon Shengelai, 51, a construction manager, who tried to close his dollar account in SBS-Agro, one of Russia's largest banks.
Like clients at other banks, he was told to return in several days if he wanted to get dollars. Banks were paying out rubles, however, at the official rate, which stood at 6.9 after brief trading Wednesday.
At exchange booths on the street, however, the dollar was trading between 8 and 9.5 rubles - the low end of the trading band set by the government Monday.
"It's vexing. I don't want any rubles at this rate," said Nikolai Ivanov, another exasperated bank client. The ruble will keep falling."
Yegorov called on the government to approve legislation that would reassure ordinary Russians, who keep an estimated $80 billion in savings under their mattresses.
The Central Bank, meanwhile, predicted that the national currency will stabilize at around seven rubles to the dollar in the next few days as the market regulates itself.