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The Russian Central Bank said on Monday it had launched a new mechanism for providing struggling banks with extra rouble liquidity.
Russia's Otkritie Bank was the first lender to benefit from the new scheme after the central bank stepped in last week to rescue it following a sustained run on its deposits amid worries about its loan portfolio.The central bank has said Otkritie could need up to 400 billion roubles ($6.9 billion) to plug the hole in its balance sheet, and its swift action helped ease market concerns about liquidity problems concerning other Russian private banks.
The regulator said on Monday it would provide liquidity in roubles for no more than 90 days, with an interest rate equal to its key rate plus 1.75 percentage points, effective from Sept. 1.
"Banks that have encountered temporary liquidity difficulties may recur to this mechanism after all other liquidity sources are exhausted, including the standard central bank instruments," the central bank said in a statement.
"The new facility is analogous to the internationally widespread emergency liquidity assistance mechanism (ELA)."
Banks applying under the scheme will have to provide an "exit strategy" detailing how they plan to address their liquidity problems, as well as information about the collateral they will provide, the central bank said.