Russian Bank Chair: 'The Entire Economy Will Be Under Control Of The State'

The chairman of one of Russia’s biggest state-owned banks said that if the authorities don’t take control of the situation, the economy will continue to nationalize.

“We will have one big state; our entire economy will be under the control of the state,” Sberbank’s chairman and president German Gref said at the Gaidar Forum, according to Interfax.

He said lenders’ property would go to the banks, the state would capitalise the banks, and then the banks would purchase enterprises, turning into “finance industry” groups.

Additionally, Gref said it was “obvious that the banking crisis will be enormous,” citing the current average oil prices.

Sberbank’s chairman isn’t the first banker to seem worried about the industry. In mid-December, one banker declared it was “the end of the banking system” after the central bank raised rates to 17% in an effort to limit the ruble’s devaluation and inflation risks.

And in late December, Russia announced it would be bailing out its first bank of the crisis, Trust Bank.

The rubles 40% plunge against the dollar in 2014 has been primarily attributed to the declining oil prices. Currently, the ruble is trading around 66 to the dollar.

Since energy is Russia’s main export, low oil prices are bad news for the country. Russian’s finance minister Anton Siluanov noted on Wednesday that the country could lost $US45 billion in revenues if oil prices remain around $US50 per barrel in 2015.

“People seem to be coming to the conclusion that the current Russian issues will not be short,” Jean-David Haddad, an emerging market strategist at OTCex Group, told Bloomberg.

“I believe that the Central Bank survived a tough crisis in the end of last year, and they acted quite professionally and efficiently,” Gref said at the forum. “But to be honest,
we understand very little about what the government will do.”

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