Russia may have to give another RUB60bn (USD1.9bn) in subordinated loans to six banks seeking state support due to a shortage of current funds, the chief of Russia's state-agent VEB bank said yesterday. Hence concerns about the lack of capital in the Russian banking sector keep popping up and are likely to do so for the rest of the year, as amounts of non-performing loans rise and external refinancing needs are large. Russian premier, Vladimir Putin, is to discuss lending and banking sector stability with top-bankers at Sberbank headquarters today. The PM has recently stepped up the rhetoric regarding lending policies, as he urges banks to increase lending amid being squeezed on the funding.
On Monday the European Commission released a Supplemental Memorandum of Understanding. See our comment.
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Lithuanian industrial production is due to be released today. We expect industrial production to deteriorate marginally to minus 19.8% y/y in June from the decline of 19.3% y/y in May. Industrial confidence indicators continued to improve in June putting some more optimism on industrial production outlook. However, due to poor employment expectations we remain rather pessimistic on IP data going forward.
Today there will also be a 10-year government bond auction in the Czech Republic.
Trading update
Yet again, there were limited movements and low volumes in EMEA FX and fixed income markets. The sentiment was dampened somewhat by concerns about whether business lender, CIT will have to file for bankruptcy if the August tender fails.
