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Russian regional banks nervous

RUSSIAN regional lenders asked the government to moderate talks initiated by foreign financial firms concerned that banks and companies will struggle to repay some of the US$400 billion of debt due in the next four years.

"Several foreign banks asked about holding discussions," said Anatoly Aksakov, head of the Russian Association of Regional Banks, whose 450 members include Citigroup Inc's Russia unit, Alfa Bank and VTB Group. "It was their initiative to have talks on this topic to look at restructuring the debts of several companies, so that everyone can be calm."

The government "isn't planning to consider" restructuring foreign corporate debt and isn't in talks with foreign banks on restructuring, a Finance Ministry official said by telephone with Bloomberg News yesterday, declining to be named.

Speculation of European bank losses on Russian loans caused the euro to fall against the dollar and yen yesterday. The world's biggest energy supplier has pledged more than US$200 billion in emergency funding on falling oil prices.

"I think that so far it is nothing more than just an idea that this association of Russian banks came up with," said Mikhail Galkin, head of fixed-income and credit research at MDM Bank in Moscow. "I don't think that many borrowers themselves have intentions to restructure and are aware of this idea."


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