Siluanov calls out state banks' reluctance to bid in recent OFZ bond auctions

ST. PETERSBURG. June 16 (Interfax) - Major Russian state banks, systemically important players on the domestic sovereign debt market, have been reluctant to bid in recent auctions for OFZ federal government bonds, Finance Minister Anton Siluanov said.

"Neither Sberbank nor VTB were at the latest auctions," Siluanov said at the Sberbank business breakfast at the St. Petersburg International Economic Forum, one of the topics of which was sources for financing the deficit amid growing spending, including potential growth of the state debt. He later corrected himself and said Sberbank did participate, but only on a modest scale.

"They say give us higher rates. We're already borrowing at 10.5% on fixed and 8.6% on variable [rate bonds]. How much higher can they go? Loans for you will be even more expensive. This is the downside of increasing the budget deficit," Siluanov said.

The share of major banks at OFZ auctions plunged to 9% in April from 60.5% in March, Central Bank data show. The figure doubled to 18.5% in May with the first offerings this year of OFZ-PK variable rate bonds, but this was still relatively low.

On the most recent auction day, June 14, the Finance Ministry raised 106.63 billion rubles at face value in two primary auctions, the highest figure since mid-February, amid demand that totalled 172.7 billion rubles. But compared to last year, even the highest current borrowing figure is low.

The ministry has raised 701.6 billion rubles at face value with OFZ bond sales since the start of the second quarter, which amounts to 82.5% of the quarterly target of 850 billion rubles. There are two auction days left until the end of the quarter, June 21 and 28.