Central Bank places 307 bln rubles in floating rate loans at 5.75%
MOSCOW. July 29 (Interfax) - The Central Bank of Russia has placed one-year floating rate loans totaling 306.8 billion rubles at a cutoff rate of 5.75% in the first auction for loans secured with non-market assets, the Central Bank reported.
Thirty-one banks from eight Russian regions bid in the auction, offering rates ranging from 5.75% to 7.25% annually.
They bid for loans totaling 306.8 billion rubles.
A total of 500 billion rubles was on offer. The minimum rate was 5.75%.
The loans are for one year, from July 30, 2013 to July 30, 2014.
The auction was conducted as a Dutch auction, meaning the banks will receive the loans at the same interest rate, regardless of the bid rate.
The head of the Central Bank's financial stability department, Vladimir Chistyukhin, said last week he did not expect the first auction on nonmarket asset refinancing to draw great demand from the banks. "It would be wrong to assume there will be insane volumes," he said.
Deputy Central Bank Chairman Sergei Shvetsov said earlier the rate of the new instrument would consist of floating and fixed components. "The floating component is the rate of the weekly repo, which is 5.5% today. The fixed component is determined at auction and cannot be less than 25 basis points," he said. Changes to the weekly repo rate will automatically cause the rate of the new instrument to change accordingly.
Introduction of the new floating rate refinancing instrument has been under discussion at the Central Bank for some time. The decision to hold the first auction was made at a board of directors meeting on July 12.
Banks had not previously sought refinancing loans secured with non-market assets due to the punitive interest rates demanded, which were fixed at 6.75% for up to 90 days, 7.25% for 91-180 days and 7.50% for 181-365 days.
The new instrument is not intended to increase the amount of Central Bank financing available to the banks but to free up weekly repo lending, in order to free up loan security that can be used on the interbank market and to reduce the use of swaps to raise Central Bank financing.