Bank of Russia Says $87 Billion in Deposits Safe From Sanctions

(Bloomberg) -- Russian depositors who save in foreign currency can breathe a sigh of relief after central bank Governor Elvira Nabiullina said their money was safe, whatever new sanctions the U.S. throws at state-owned banks.

“We don’t see any kind of threat to foreign-currency deposits and we haven’t considered any kind of forced conversion,” Nabiullina said following the Bank of Russia’s surprise decision to raise its key interest rate Friday. “We’ve never even thought about this.”

The comments put a lid on speculation that savers might be forced to accept payment in rubles if the U.S. Congress slaps Russian state-owned banks with new sanctions. The Senate is considering various laws to punish the Kremlin for alleged election meddling, including one draft dubbed the “bill from hell.” This could bar Americans from buying new issues of Russian sovereign debt and ban Russia’s largest state banks from using dollars.

Andrey Kostin, chief executive of VTB Group, had spooked investors earlier this week by suggesting that it may not be able to honor the claims of dollar depositors in such extreme circumstances.

Kremlin Alignment

Nabiullina’s comments were in line with those of Kremlin spokesman Dmitry Peskov, who said Friday that the government has no plans to force depositors to convert their holdings.

Russians often prefer to save in foreign currency, given the ruble’s traditional volatility. Some 20 percent of Russians’ savings -- which Nabiullina estimated at $87 billion -- are held in foreign currencies, according to central bank data. In addition, around a third of corporate deposits are in currencies other than rubles, due to the preponderance of natural resource exporters who are paid in dollars.

“Our resources and the resources of the banking system as a whole are sufficient to ensure that in any situation, all obligations to people will be fulfilled in the same currency in which they are denominated,” Nabiullina said.

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