bank of russia annual report 2002 (english)

T H E C E N T R A L B A N K O F T H E R U S S I A N F E D E R A T I O N

R E P O R TA N N U A L 2 0 0 2

Approved by the Bank of Russia Board of Directors on April 29, 2003

© T H E C E N T R A L B A N K O F T H E R U S S I A N F E D E R A T I O N , 2 0 0 3

Introduction ......................................................................................... 8

I. The economic and financial situation in Russia .............................................. 11

I.1. The economic situation in Russia ..................................................................... 12

I.2. Government finance and domestic government debt ............................................. 21

I.3. The financial sector ....................................................................................... 241.3.1. Credit institutions ............................................................................... 291.3.2. Other financial institutions ................................................................... 371.3.3. Financial markets ............................................................................... 40

1.4. Balance of payments and foreign debt ............................................................... 50

I.5. The world economy and international financial markets ....................................... 54

II. Bank of Russia activities ........................................................................ 63

II.1. Monetary policy ........................................................................................... 64II.1.1. Objectives and results of monetary policy ................................................. 64II.1.2. Dynamics of monetary and credit indicators ............................................. 70II.1.3. Instruments of monetary policy .............................................................. 74II.1.4. Exchange rate policy and reserve management .......................................... 79

II.2. Banking regulation and supervision .................................................................. 85II.2.1. Upgrading the legal framework .............................................................. 85II.2.2. Off�site supervision and inspection of credit institutions .............................. 89II.2.3. Registration and licensing of banking activities .......................................... 92II.2.4. Liquidation, financial rehabilitation and re�organisation of credit institutions

and matching their authorised capital with their own funds ......................... 95

II.3. The Russian payment system .......................................................................... 97II.3.1. The state of the Russian payment system.

The development and upgrading of the Bank of Russia payment system .......... 97II.3.2. The development of the technical infrastructure of the Bank of Russia

payment system ................................................................................ 104

II.4. Foreign exchange regulation and foreign exchange control .................................. 106

II.5. Bank of Russia anti�laundering actions ........................................................... 109

II.6. Bank of Russia activities relating to government finance ..................................... 112

II.7. Cash issue management ............................................................................... 114

II.8. International co�operation............................................................................ 118II.8.1. Co�operation between the Bank of Russia and international financial

and economic organisations ................................................................. 118II.8.2. Co�operation between the Bank of Russia and foreign countries

and their central (national) banks and banking supervisory authorities ....... 121

II.9. Upgrading the Bank of Russia system and enhancing its efficiency ........................ 124II.9.1. The Bank of Russia organisational structure and measures

taken to improve it ............................................................................ 124II.9.2. Co�ordinating the activities of Bank of Russia regional branches ................. 126II.9.3. Staffing and personnel training ............................................................ 128II.9.4. Bank of Russia activities aimed at improving banking legislation.

Suits and claims in Bank of Russia institutions ........................................ 130

Contents

II.9.5. Bank of Russia internal audit .............................................................. 133II.9.6. Bank of Russia participation in capital of Russian and foreign

credit institutions and other organisations .............................................. 134

III. Bank of Russia financial statements as of January 1, 2003 ............................... 137

Introduction .............................................................................................. 138

Annual balance sheet as of January 1, 2003 ..................................................... 139

Profit and loss account................................................................................. 140

Capital, funds and profit allocation ................................................................. 141

Notes to the Annual Balance Sheet and Profit and Loss Account1. Accounting and financial reporting principles .......................................... 1422. The effect of the economic environment on Bank of Russia

financial statements ........................................................................... 1443. Foreign currency funds and securities placed with non�residents ................. 1454. Loans and deposits ............................................................................ 1465. Securities ........................................................................................ 1476. Other assets ..................................................................................... 1507. Funds in accounts with Bank of Russia .................................................. 1528. Float .............................................................................................. 1529. Other liabilities ................................................................................ 153

10. Relations between Bank of Russia and Ministry of Finance ........................ 15411. Interest income................................................................................. 15612. Income from operations with securities .................................................. 15613. Net income from the recovery of provisions ............................................ 15614. Other income ................................................................................... 15715. Interest expenses .............................................................................. 15716. Expenses on cash circulation management .............................................. 15817. Other operating expenses ................................................................... 15818. Personnel costs ................................................................................. 158

Statement of profit received and its allocation................................................... 159

Statement of Bank of Russia reserves and funds ................................................ 160

Statement on the management by Bank of Russia of securities and stakesthat form part of Bank of Russia property ........................................................ 162

Statement of Bank of Russia personnel costs .................................................... 167

Statement of capital investment budget performance.......................................... 168

Аudit reports ..................................................................................... 169

IV. Addenda .......................................................................................... 175

Major steps taken by the Bank of Russia in 2002 to implementthe single state monetary policy ..................................................................... 176

Major actions undertaken in 2002 to upgrade banking regulationand supervision .......................................................................................... 181

Statistical tables ......................................................................................... 187

1. Dynamics of consumer prices, core inflation and regulated service prices and tariffs ........... 14

2. Unemployment rate calculated according to ILO methodology and inflation ...................... 15

3. GDP and industrial production dynamics ................................................................... 16

4. Production growth rates in individual industries in 2002 .............................................. 17

5. Real disposable money income, wage and pension dynamics .......................................... 18

6. Dynamics of Russia’s major balance of payment components and international reserves ...... 19

7. Foreign trade ....................................................................................................... 20

8. Federal budget expenditure in 2002 ......................................................................... 22

9. Federal budget expenditures and balances of federal budget ruble accountsin Bank of Russia in 2002 ...................................................................................... 23

10. Effective interest rates on commercial banks’ ruble lendingand deposit operations by term ................................................................................ 25

11. Yield curves of financial instruments in 2002 ............................................................. 26

12. Interest margin on banks’ lending and deposit operations with non�financial clientsin 2001 and 2002 by term ...................................................................................... 27

13. Banking sector growth rates in real terms .................................................................. 30

14. Structure of banking sector liabilities ........................................................................ 31

15. Structure of banking sector assets ............................................................................ 32

16. Overdue debt on loans ........................................................................................... 33

17. Capital adequacy dynamics ..................................................................................... 33

18. Banking sector assets distributed among credit institutions grouped by financial stability .... 34

19. Sources of growth in banking sector’s own funds (capital) ............................................ 35

20. Dynamics of offered and actual interbank interest rates on overnight ruble loans in 2002 .... 41

21. GKO—OFZ secondary market turnovers and yields in 2002.......................................... 43

22. Volumes of resident operations with non�residents to buy and sell outstandingRussian government currency debt obligations on secondary market in 2002 .................... 45

23. MICEX share trade dynamics in 2002 ....................................................................... 48

24. Structure of trade in futures contracts for basic assets in 2002 ....................................... 49

25. Real GDP growth in leading industrialised nations in 2002 ........................................... 55

26. Rates of growth in exchange rates of foreign currencies against US dollar in 2002 ............. 60

27. Average annual growth in share price indices in 2002 .................................................. 61

28. M2 and consumer price growth rates ........................................................................ 65

29. M2 and core inflation dynamics in moving 12�month period .......................................... 65

30. Projected and actual M2 growth rates....................................................................... 66

31. M2 growth rates in 2001 and 2002 .......................................................................... 66

List of Charts

32. Ratio between balances in federal and regional government accountsin Bank of Russia and M2 aggregate ......................................................................... 67

33. Velocity of money calculated by M2 aggregate ............................................................ 67

34. Dynamics of average monthly balances in credit institutions’ correspondent accountsin 2001 and 2002 ................................................................................................. 68

35. Dynamics of ratio between funds in credit institutions’ correspondent accountsand non�financial sector deposits ............................................................................. 69

36. Rates of growth in banking sector domestic credit and its components ............................. 72

37. Major sources of growth in monetary base in 2001 and 2002 ......................................... 73

38. Dynamics of interbank market overnight interest rate in December 2001 and 2002 ........... 78

39. Dynamics of nominal US dollar exchange rate against ruble in 2001 and 2002 .................. 80

40. Average monthly real ruble exchange rate growth in 2002 ............................................ 81

41. Average annual real ruble exchange rate growth in 1996—2002 .................................... 81

42. Dynamics of banking sector currency position in 2002.................................................. 82

43. Number of operating credit institutions by region ........................................................ 93

44. Change in banking sector structure by type of credit institutions ..................................... 93

45. Number of operating credit institutions and banking licences granted to them ................... 94

46. Number of payments effected by Russian payment system ............................................. 98

47. Value of payments effected by Russian payment system ................................................ 98

48. Ratio between payments effected through Bank of Russia payment systemelectronically and on paper ................................................................................... 100

49. Ratio between chargeable and free operations conductedby Bank of Russia payment system ......................................................................... 100

50. Number of payments effected through private payment systems ................................... 102

51. Value of payments effected through private payment systems ....................................... 102

52. Change in amount of cash in circulation in 2002 ....................................................... 115

53. Cash growth in 2001 and 2002 .............................................................................. 115

54. Dynamics of detection of counterfeit Bank of Russia notes and coins ............................. 116

55. Detection of counterfeit Bank of Russia notes and coins in federal districts ..................... 117

56. Dynamics of detection of counterfeit foreign banknotes .............................................. 117

57. Number of executives and specialists with professional higher education ........................ 128

58. Dynamics of change in structure of banking sector personnel in terms of length of work .... 128

59. Advanced training of specialists in Bank of Russia banking schoolsand instruction centres in 2002 ............................................................................. 129

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF THE RUSSIAN FEDERATION

First Deputy Chairman

A.V. Voilukov


O.V. Vyugin


A.A. Kozlov


T.V. Paramonova

Deputy Chairman

K.N. Korishchenko

Deputy Chairman

G.I. Luntovsky

Deputy Chairman

V.N. Melnikov

Chief Accountant —

Director of the Accounting

and Reporting Department

L.I. Gudenko

Director, Consolidated

Economic Department

N.Y. Ivanova

Head of the Central Bank

St.Petersburg Branch

N.A. Savinskaya

Chairman of the Central Bank

of the Russian Federation

S.M. Ignatiev

Head of the Central Bank

Moscow Branch

K.B. Shor

8

B A N K O F R U S S I A 2 0 0 2 A N N U A L R E P O R T

INTRODUCTION

he Bank of Russia Annual Report for 2002,compiled in compliance with the FederalLaw on the Central Bank of the Russian

Federation (Bank of Russia), adopted in July2002, reflects the fulfilment of the functions as�signed to the Bank of Russia to protect the rubleand ensure its stability, develop and strengthenthe Russian banking system and ensure the ef�fective and uninterrupted functioning of theRussian payment system. This Annual Reportcontains information on the organisationalstructure of the Bank of Russia and its activi�ties aimed at enhancing the efficiency of theBank of Russia system. Bank of Russia finan�cial statements as of January 1, 2003, whosecredibility has been confirmed by the auditorZAO BDO UniconRuf, appointed by the Na�tional Banking Board, are an inalienable partof the Annual Report. Changes and amend�ments have been made in the structure of thefinancial statements to meet the requirementsof the Federal Law on the Central Bank of theRussian Federation (Bank of Russia). TheBank of Russia Annual Report is importantfrom the viewpoint of the openness of informa�tion and transparency of the Bank of Russia forall participants in economic activities.

The main result of Russia’s social and eco�nomic development in 2002 was the further slow�ing of inflation accompanied by continued quiterapid economic growth. Owing to the Russianeconomy’s heavy dependence on energy exports,the overall favourable situation on world energymarkets for Russia in 2002 played a decisive rolein the formation of Gross Domestic Product andbudget revenue and in international reserve dy�namics. At the same time, in the environment ofa strong balance of payments against the back�ground of structural reforms conducted in Rus�sia, the Bank of Russia was confronted with thedifficult task of achieving a sensible compromisebetween strengthening the national currency,slowing inflation and maintaining short�term andlong�term economic growth.

A major result of monetary policy in 2002 wasthe reduction of the inflation and devaluationexpectations of the public. Despite a slight over�shoot of the inflation target, Bank of Russia ac�tions in the field of monetary and exchange ratepolicies, backed by the Government and imple�mented in the context of the budget policy, madeit possible to keep core inflation within the pro�jected range and prevent more significant growthin the general level of consumer prices in 2002.

T

9

I N T R O D U C T I O N

The concerted efforts of the Government andBank of Russia helped tackle by and large thetasks set for 2002 in the Banking Sector Devel�opment Strategy. The amendments to applicablelegislation, which came into effect in 2002, ex�panded the legal framework of banking regula�tion and supervision and facilitated the rehabili�tation of the banking sector. The decisions takenin the field of banking regulation and supervisionwith the aim of maintaining stability of the bank�ing sector and safeguarding the legitimate inter�ests of bank creditors and depositors were adoptedafter a thorough evaluation of the situation andfuture developments, and with a view to enablingthe supervisory authority to make the most of itspossibilities and powers within the framework ofapplicable legislation.

The role of banks in the Russian economy in�creased during the year under review. The ex�pansion of the capital base of credit institutionsas a result of the increased profitability of thebanking business and the measures taken to makebanking more transparent helped increase publicconfidence in banks. The role of household de�posits as one of the principal sources of capitalformation for the banking sector, which was un�dermined by the 1998 crisis, has been practically

restored. The expansion of the resource base ofcredit institutions and longer borrowing termsfacilitated the creation of additional conditions forthe banking sector to convert savings into invest�ments.

Last year the Bank of Russia carried out mea�sures further to upgrade the payment system andenhance its efficiency by promoting the use of elec�tronic settlements and making the payment sys�tem more open and transparent. It worked outnew methodologies and techniques connectedwith the introduction of a real time gross settle�ments system.

Work continued to switch the Russian bank�ing sector to IAS and the Bank of Russia Com�mittee for IAS was set up to organise banks’ con�version to international standards.

The Bank of Russia will continue to implementa policy aimed at consistently slowing inflationand upgrading banking supervision in the beliefthat macroeconomic stability and banking sectorcredibility are major factors of long�term sustain�able economic growth. The experience it hasgained in tackling complex problems in a rapidlychanging environment allows one to feel confi�dent that the Bank of Russia will attain the ob�jectives it has set for the near future.

ITHE ECONOMIC AND

FINANCIAL SITUATION

IN RUSSIA


12

1 According to the IMF’s April 2003 economic report.

I.1. THE ECONOMIC SITUATION IN RUSSIA

The two most important results of the de�velopment of the Russian economy in 2002were relatively high rates of economic

growth and a rise in household incomes. GDPgrowth in Russia (4.3%) surpassed not only theexpansion of the world economy as a whole(3%)1, but also the increase in the production ofgoods and services in the industrialised nations(1.8%) and economies in transition (4.1%). Atthe same time, the role of the intensive factors ofeconomic growth slightly declined in 2002. Theslowing of growth in fixed capital investment lastyear showed that the pace of structural reform inRussia was too slow and the reform was not ef�fective enough.

Economic developments in Russia in 2002were seriously affected by changes in the worldeconomy. A quite favourable price situation onworld commodity markets for Russian exporterscontributed to growth in output by export�ori�ented sectors. In 2002, Russian exports reachedtheir highest level since 1992. A steady inflow offoreign exchange from foreign trade operationsfacilitated the maintenance of a strong balance ofpayments, growth in the country’s internationalreserves and a rise in federal budget revenues andallowed Russia to service its foreign debt on time.

Favourable macroeconomic developments in2002 were largely the result of the monetarypolicy pursued, which aimed at reducing inflation

to a level allowing conditions to emerge for themaintenance of sustained economic growth.Given the favourable foreign trade situation andsignificant inflow of foreign exchange to the coun�try, it was a difficult task for economic policy toachieve a compromise between strengthening thenational currency, slowing inflation and main�taining economic growth. Compared with 2001,inflation slowed down by more than 1.2 times,while core inflation declined by more than 1.5 ti�mes. The full�year rate of inflation, however, ex�ceeded the plan target by one percentage point.

The state of government finance was a majorfactor of macroeconomic stability: for the firsttime Russian lawmakers approved a budget sur�plus for 2002 at 1.6% of GDP. The 2002 federalbudget surplus in reality amounted to 1.5% ofGDP. Russia serviced in full all its foreign anddomestic debt obligations. To be able to effect itsforeign debt payments when such payments peakand to alleviate its debt burden, the Russian gov�ernment created a financial reserve, which hadexceeded the projected levels by the end of 2002.

Output growth in 2002 was accompanied bya rise in the efficiency of production. The expan�sion of output was ensured not only by the in�creased utilisation of existing production capaci�ties, but also by putting into operation new, moreefficient ones. According to estimates, theutilisation ratio of production capacities in 2002

I . 1 . T H E E C O N O M I C S I T U T A T I O N I N R U S S I A

13

increased about 1% year on year, while labourproductivity rose 1.8% in the economy as a whole.More efficient use of fixed assets is a major factorof growth in labour productivity.

Growth in the output of goods and services in2002 was ensured by broadening consumer andinvestment demand. The measures taken by theGovernment in 2002 to raise the minimum wageand increase social guarantees created conditionsfor accelerated growth in household income andthe corresponding increase in final consumptionexpenditure. Household spending on final con�sumption rose 8.5% in 2002, but unlike the situ�ation in the two preceding years when growth inthe gross fixed capital formation exceeded growthin spending on final consumption, the gross fixedcapital formation in 2002 was slower than incre�ment in household spending on final consumption.

The financial standing of Russian enterpriseswas characterised by a wide gap between the fi�nancial position of export�oriented companies andthat of the manufacturing sector. As prices in themining industries rose faster than in the manu�facturing sector, the latter’s production costs in�creased. There was a rise in unit production costsand a fall in profitability in the manufacturingsector. According to estimates, the expansion ofproduction in the fuel and non�ferrous metallurgysectors in 2002 accounted for more than half ofthe overall growth in industrial output. Volatileoutput dynamics in the branches orientated to thedomestic market despite a fairly high level of sol�vent demand indicated that most of the manufac�turing industries were not competitive enough tooutsell importers.

Judging by Russia’s balance of payments,there was a significant decline in the net outflowof corporate funds from the country in 2002, pri�marily owing to the increased inflow of portfolioinvestments and loans. This factor made the maincontribution towards the formation of the finan�cial position of the non�financial enterprise sec�tor. Unlike the situation in the previous periods,in 2001 and 2002 enterprises were net borrow�ers of funds from the banking sector. Hence, therole of the banking system as the transmissionmechanism of the monetary policy began to in�crease in the Russian economy.

Households are the sector that ensures theprovision of financial resources to the economy.

According to estimates, growth in the householdsector’s net financial assets relative to GDP in2002 reached the highest level since 1998. Thesavings strategies of the public underwent appre�ciable change over that period in favour of financ�ing the national economy rather than the rest ofthe world.

Price dynamics in the Russian economy wereformed as Russia continued to enjoy a strong bal�ance of payments. Thanks to the co�operative ef�forts of the Bank of Russia and the Russian Gov�ernment, consumer price growth slowed down sig�nificantly in 2002. In December 2002, consumerprices rose 15.1% year on year (in December 2001,consumer prices went up 18.6% year on year).

Even though core inflation has not exceededthe expected level, consumer price growth wasfaster than planned owing to rapid rates of growthin the prices of services provided to the public.

A major factor containing consumer pricegrowth as a whole was rates of growth in foodprices. Food prices were formed under the effectof slower year�on�year producer price growth inthe food industry, which turned out highly com�petitive products. Food prices, excluding those forvegetables and fruit, rose 8.5% in 2002 year onyear. Among the goods and services included inthe consumer goods basket for the consumer priceindex calculation, growth in the prices of thisgroup of products slowed down most significantlyyear on year (by 1.9 times). Estimates show thatgrowth in food prices, excluding those for veg�etables and fruit, in 2002 brought about a rise of3.9 percentage points, or 25.9% of the overallprice growth on the consumer goods marketagainst 8.4 percentage points, or 45.2%, in 2001.

Growth in vegetable and fruit prices in 2002accelerated by 1.2 times year on year. Vegetableand fruit prices rose 33.3% last year against27.6% in 2001. Over the year, growth in veg�etable and fruit prices brought about a rise of1.8 percentage points, or 11.7% of the overallprice growth on the consumer goods market. In2001, the respective figures were 1.4 percentagepoints and 7.4%. Thus, the influence of volatileprices on overall price dynamics on the consumergoods market increased in 2002.

Non�food prices in 2002 grew faster than foodprices, vegetable and fruit prices excluded. Non�food prices rose 10.9% in 2002 against 12.7% in


14

DYNAMICS OF CONSUMER PRICES, CORE INFLATION

AND REGULATED SERVICE PRICES AND TARIFFS

(% growth against corresponding month of previous year)

50

45

30

40

25

35

20

15

10

20022001

50

45

30

40

25

35

20

15

10

Core inflation Consumer prices Regulated prices

2 Calculated according to Goskomstat methodology.

2001. Non�food price dynamics were formed amidrelatively slow growth in producer prices in lightindustry, compared with the previous year, whileoutput volumes contracted in that industry. Im�port price dynamics had a noticeable effect onnon�food consumer price dynamics, owing to alarge extent to the stronger euro and the exchangerate policy pursued in 2002.

Core inflation2 in 2002 slowed down to10.2% from 15.6% in 2001. It accounted for8.4 percentage points, or 55.6% of the overallprice growth on the consumer goods marketagainst 13.2 percentage points, or 70.8% in 2001.In 2002, core inflation declined more than thegeneral level of consumer prices.

Service prices rose 36.2% in 2002 against36.9% in 2001. The most significant increase wasregistered last year in rent and communal servicecharges (48.8%), communications fees (37.6%)and children’s pre�school tuition fees (33.6%).Passenger transport fares continued to rise at arapid rate (26%). Growth accelerated year onyear in healthcare charges, passenger transportfares, communications, children’s pre�school in�struction and education fees. Over the year,growth in service prices accounted for a rise of5.9 percentage points, or 38.9% of overall pricegrowth on the consumer goods market. In 2001,

the respective figures were 5.1 percentage pointsand 27.6%.

Rapid rates of growth in the prices of some so�cially important products made it increasingly dif�ficult to meet the inflation target for 2002. Theprice of granulated sugar, for example, rose 30.8%whereas in 2001 it fell 4.5% and gasoline pricessoared 20.4% after a 8.6% fall in 2001. Medicineprices went up 15.1% against 2.1% in 2001.

Industrial producer prices in 2002 acceler�ated compared with 2001 and rose more thanconsumer prices. In the first half of the year con�sumer prices rose faster than industrial producerprices, whereas in the second half the oppositewas true. The accelerated industrial producerprice growth in the second half of 2002 wascaused, above all, by a sharp rise in producerprices in the fuel sector, ferrous metallurgy sec�tor and petrochemical, timber, woodworking andpulp�and�paper industries.

In 2002, industrial producer prices increased17.1% against 10.7% in 2001. At the same time,producer prices in the electric�power industry rose27.3% and the fuel sector 24.3%. In the oil�ex�tracting, oil�refining and gas industries producerprices went up 25.6%, 19.9% and 30.2% respec�tively. In 2001, producer prices in the electric�power industry rose 30.2% and the oil�extracting

Chart 1


15

UNEMPLOYMENT RATE BY ILO METHODOLOGY

(as % of economically active population) AND INFLATION

(December as % of December of previuos year)

40

28

16

36

24

32

20

10

12

1999 2000 2001 2002

12.5

11.0

12.0

10.5

11.5

10.0

9.0

9.5

8.5

Inflation Unemployment rate

Inflation Unemployment rate

and oil�refining industries registered a fall in prices.Producer prices in the fuel sector edged up just2.2% in 2001. Rapid rates of price growth in thesesectors in 2002 had an adverse effect on produc�tion cost dynamics. Producer prices in the light andfood industries rose 5.3% and 5.8% respectivelyin 2002 against 10.9% and 15% in 2001.

Thanks to economic growth, some favourabletrends, such as a rise in employed numbers anda fall in the unemployment level, continued.Russia’s economically active population increasedto 71.8 million in 2002, of whom 92.0% wereemployed in the economy and 8.0% were consid�ered unemployed in accordance with ILO meth�odology. In 2001, the respective figures were70.9 million and 91.0% and 9.0%.

According to the government employment ser�vice, there was a year�on�year rise in the numberof vacancies in 2002. At the same time, growthin the number of registered jobless also acceler�ated, escalating tension on the labour market. In2002, the unemployment�vacancy ratio rose15.4% year on year to 15 unemployed people per10 reported vacancies.

Growth in output in 2002 stimulated job cre�ation. The number of new jobs in 2002 rose 11.2%year on year.

The results of 2002 placed Russia in the groupof countries with rapid GDP growth rates.Russia’s GDP in 2002 expanded 4.3% year on

year (in 2001 it grew 5%). Value added increased3.2% in the manufacturing sector and 5.4% inthe services sector.

All key branches of the economy registered arise in output in 2002. Production expanded inindustry, construction, agriculture and transport,while and retail and wholesale trade volumes ex�panded significantly.

Industrial output in 2002 rose 3.7% year onyear. The major factors of growth in industrialproduction were the favourable foreign trade situ�ation, which facilitated the expansion of export�oriented production, and growth in domestic de�mand, which stimulated the development of otherindustries.

An analysis of rates of growth in industrial out�put, excluding seasonal and random factors, showsthat the starting conditions for industry in 2002were roughly the same as in 2001. The intensity ofindustrial production increased in the first half ofthe year, but slowed down in the second. A slow�ing of production activity in the second half of theyear has been registered since 1999, but in 2002 itwas more significant than ever.

According to estimates, the biggest contribu�tion to industrial production growth was made in2002 by the fuel sector, non�ferrous metallurgysector and food industry.

The fuel sector demonstrated sustainedgrowth in production, which rose 7% over the

Chart 2


16

GDP AND INDUSTRIAL PRODUCTION DYNAMICS

(as % of corresponding quarter of previous year)

116

114

110

106

112

108

104

102

116

114

110

106

112

108

104

102

200220012000

GDP Industry

I II III IV I II III IV I II III IV

year against 6.1% in 2001. Stable external de�mand contributed to growth in output in the oil�extracting, oil�refining and gas industries in 2002.There was also a rise in the deliveries of oil, pe�troleum products and natural gas to foreign anddomestic markets.

Output in the non�ferrous metallurgy sectorrose 6% in 2002 against 4.9% in 2001. Thechemical and petrochemical industries, ferrousmetallurgy sector and wood�paper industry reg�istered output growth (by 1.6%, 3% and 2.4%respectively), while the electric�power industryreduced production by 0.7%. Light industry wasthe only industry orientated to the domestic mar�ket that registered a fall in output (by 3.4% in2002 against growth of 5.0% in 2001). The factthat production declined in light industry amidgrowth in household incomes and the expansionof import volumes indicates that the competitive�ness of this industry was still low. A low level ofinvestment activity was accompanied by the slow�ing of production growth in machine�building(2.0% in 2002 against 7.2% in 2001). In the foodand building materials industries output increased6.5% and 3% respectively.

The expansion of production in the food in�dustry stimulated demand for farm produce. Ag�ricultural output rose 1.7% in 2002.

As a result of growth in industrial and agri�cultural production and a rise in activity in theconstruction sector, transport companies regis�

tered an increase in freight traffic. In 2002, theirfreight turnover expanded 5.6%.

The financial standing of Russian enterprisesdeteriorated a little in 2002. The value of profit(net financial result) made by large and medium�sized enterprises and organisations (excludingsmall businesses, banks, insurance companies andbudget�financed organisations) in 2002 amountedto 905.8 billion rubles, or 8.3% of GDP against12.4% of GDP in 2001. Last year’s profit was18.9% smaller than in 2001. The share of profit�making enterprises contracted by 5 percentagepoints to 56.6% as of January 1, 2003.

The main reason for the fall in profit in theeconomy was its 26.3% decrease in industry. In2001, industrial enterprises accounted for 52.7%of the economy’s net profit, whereas in 2002 theyaccounted for 47.9%. Practically all industriesregistered a deterioration in their financial per�formance and a fall in profitability.

The main factor of the deterioration in corpo�rate financial performance in 2002 amid growthin the output of goods and services was a rise incosts caused by the accelerated growth in prices ofproducts turned out by cost�intensive industries,such as the fuel and energy sector, ferrous metal�lurgy sector and petrochemical industry, comparedwith a general price rise in industry. The ratio ofprofitability of the goods, products, works and ser�vices sold to earnings in 2002 was 10.1% in theeconomy and 12.3% in industry. The respective

Chart 3


17

PRODUCTION GROWTH RATES

IN INDIVIDUAL INDUSTRIES

IN 2002 (as % of 2001)

Electric�power industry

Fuel sector

Ferrous metallurgy sector

Non�ferrous metallurgy sector

Chemical and petrochemical industry

Machine�building and metalworking industry

Wood�paper industry

Building materials industry

Light industry

Food industry

—4 —2 0 2 4 6 8

percentages in 2001 were 12.6% and 15.6%. Thehighest level of profitability in 2002, as in 2001,was registered in export�oriented industries.

Despite the deterioration in corporate finan�cial performance, the management of the finan�cial activities of enterprises continued to changefor the better in 2002 and that became manifest,among other things, in the improvement of thestructure of working assets and payment disci�pline. The volume of paid�for products continuedto expand in 2002 amid faster rates of growth insettlements effected with money, which ac�counted for 82% of the value of products (worksand services) of the major taxpayers and indus�trial monopolies, an increase of 4.6 percentagepoints on 2001.

The distraction of assets to receivables de�creased in the structure of working assets in 2002.Money increased 39.2% last year to 6.9% ofworking assets. Practically all sectors of theeconomy registered its growth. As of the end of2002, working assets of large and medium�sizedenterprises amounted to 7,914 billion rubles, anincrease of 23% over the year.

Changes took place in the small business sec�tor last year. As of January 1, 2003, there were882,300 small businesses in Russia, 39,300 mo�re than as of January 1, 2002. The number offull�time, part�time and contract workers and em�ployees in small businesses in 2002 rose 7.3% yearon year. In 2002, small businesses produced1,160 billion rubles worth of goods, of which25.2% were produced in industry, 28.1% in tradeand public catering and 24.7% in construction.The small business sector’s output accounted for10.7% of GDP against 9.4% in 2001.

Continued economic growth and a rise in em�ployment in 2002 brought about an increase inhousehold money income.

Nominal money income rose 27.7% in 2002year on year to 6,790.7 billion rubles, which ac�counted for 62.5% of GDP, an increase of3.7 percentage points on 2001.

Real money income in 2002 rose 10.3% yearon year and real disposable money income in�creased 9.9%. Real imputed average monthlywages rose 16.2% and real imputed monthly pen�sion increased 16.3%.

Despite a rise in real income, the Russian popu�lation remained highly differentiated in terms of

income. In 2002, as in 2001, 10% of the highest�income population accounted for 29.3% of the to�tal value of money income, while 10% of the low�est�income population accounted for 2.1%.

The number of people with average per capitamoney income below the subsistence minimum setfor Russia as a whole accounted for 25% of thecountry’s total population in 2002 against 27.3%in 2001.

The share of household income spent on goodsand services in the structure of money income usein 2002 contracted to 73.2% from 74.6% in2001. Growth in real money income contributedto a rise in consumer demand. In real terms, con�sumer spending rose 8.2%.

The share of household savings in deposits andsecurities in the structure of money income usein 2002 remained unchanged from 2001 at 3.7%.

Owing to relatively stable ruble exchange ratedynamics, the share of personal income spent onthe purchase of foreign exchange in 2002 con�tracted to 5.5% from 5.7% in 2001.

As real income grew, real household spend�ing on final consumption rose 8.5% and that,according to estimates, ensured growth in GDPby 4.1 percentage points.

A rise in non�interest federal budget expendi�tures in 2002 contributed to growth in generalgovernment expenditures on final consump�tion, which rose 2.4% year on year, while in 2001they fell 0.8%.

Chart 4


18

REAL DISPOSABLE MONEY INCOME, WAGE AND PENSION DYNAMICS

(trend, December 1999 = 100%)

180

170

160

150

140

130

110

120

100

200220012000

Income Wage Pension

180

170

160

150

140

130

110

120

100

Expenditures on final consumption in theeconomy as a whole rose 6.9% in 2002 and theirshare in GDP expanded from 65.2% in 2001 to68.3% in 2002.

The rate of growth in gross capital formationin 2002 slowed down to 1.6% from 19.3% in 2001as corporate investment activity was quite lowthroughout 2002. Fixed capital investment thatyear expanded 2.6% year on year, a significantdecrease from the previous year’s growth of 10%.

The biggest amount of investments in fixedcapital of large and medium�sized enterprises in2002, as in the previous years, went to industry,transport and the housing and communal servicessector. Data for 2002 indicate that these sectorsaccounted for 42.7%, 19.1% and 15.4% of thetotal value of fixed capital investment respec�tively. The share of other sectors of the economywas considerably smaller.

The sectoral structure of fixed capital invest�ment in Russian industry in 2002 was orientated,as before, to the raw materials sector. The elec�tric�power industry and fuel and metallurgy sec�tors in 2002 accounted for 71.7% of all invest�ments made by large and medium�sized enter�prises in industry.

As was the case in the previous years, en�terprises’ own funds remained the principalsource of financing investment. They accountedfor 48.0% of fixed capital investment of largeand medium�sized enterprises, a contraction of

1.4 percentage points compared with 2001. An�other major source of financing fixed capital in�vestment was budget funds, especially regionalbudget funds, which accounted for 19.6% of thesources of financing fixed capital investment.

The expansion of bank credit as a source offinancing fixed capital investment was impededby the deterioration of the financial standing ofenterprises and high credit risk connected withinstitutional flaws. The share of bank credit inthe financing of investment expanded by 0.4 per�centage points year on year to 4.8%. Foreign in�vestment accounted for 4.1% of fixed capital in�vestment against 4.6% in 2001.

The slowing of investment activity told onGDP growth rates. Growth in gross capital for�mation in 2002 ensured an increase of GDP by0.4 percentage points against 3.6 percentagepoints in 2001.

Net exports fell 4.4% in 2002 against 15% in2001 and the negative influence of net exports onGDP dynamics decreased significantly comparedwith 2001. The share of net exports in the struc�ture of GDP consumption contracted from 12.7%in 2001 to 10.6% in 2002.

Favourable trends predominated in the foreigntrade situation in 2002. A global economic recov�ery after a major slowdown in 2001, the resump�tion of growth in international trade, an overallfavourable price situation on world commoditymarkets for Russian exporters and the expansion

Chart 5


19

DYNAMICS OF RUSSIA’S MAJOR BALANCE OF PAYMENT COMPONENTS

AND INTERNATIONAL RESERVES (billion US dollars)

50

40

30

20

10

0

—301994 1995 1996 1997 1998 1999 2000 2001 2002

50

40

30

20

10

0

—30

—20 —20

—10 —10

Russia’s international reservesCurrent account Capital and financial account*

* Net of change in reserves.

of demand for Russian exports had a beneficial ef�fect on the country’s balance of payments. Russiaenjoyed a large current account surplus, net out�flow of capital decreased and international reservesexpanded. Although Russia’s current account con�tracted to 9.5% of GDP in 2002 from 11.3% in2001, it was large. The capital and financial ac�count deficit (including changes in reserves) de�clined to 7.3% of GDP in 2002 from 8% in 2001.By the end of last year, the country’s internationalreserves had reached a level high enough to coverimports of goods and services for 6.9 months.

The main source of foreign exchange for Rus�sia in 2002 was exports of goods and services. Theexpansion of export volumes of some commodi�ties delivered to foreign markets was the princi�pal factor of growth in exports, which expandedby about 10% in volume. The value of commod�ity exports in 2002 rose more than 5% year onyear to more than $107 billion. The change in thestructure of commodity exports was manifest inthe expansion of the share of oil and petroleumproducts from 33.3% in 2001 to 37.2% in 2002,the highest level registered since 1994. Exportsof services rose faster than exports of goods. In2002, exports of goods and services increased al�most 7% year on year, exceeding $120 billion.

Another significant source of foreign exchangefor Russia in 2002 was foreign investment, whosenet inflow to the non�financial enterprise sectorrose by 3.6 times compared with 2001, reflecting

Russia’s increased attractiveness for foreign in�vestors. Russia had its credit ratings upgraded asanalysts of international rating agencies praisedthe fiscal and foreign trade policies and structuralreforms conducted by the Russian Governmentand Central Bank in 2002. Net foreign capitalinflow to the non�financial enterprise sector inthe form of loans and credits increased 10.8 timesand accounted for nearly two�thirds of all invest�ments in that sector. The structure of credit im�proved as the tenor of loans increased. As yieldsfell on volatile international financial markets, theRussian stock market became a little more attrac�tive and net inflow of portfolio investments inRussia increased 2.7 times. Net inflow of foreigndirect investments decreased 11%.

The biggest demand for foreign exchange on thedomestic foreign exchange market was made byimporters of goods and services, although the rateof growth in imports of goods and services in 2002slowed to 14%, whereas in 2001 imports grew19.5%. Growth in imports in 2002 was largelycaused by a rise in solvent demand for investmentgoods necessary to supply the needs of the expand�ing economy and an increase in the demand forconsumer goods brought about by the rise in house�hold income. Imports rose mainly as a result of theexpansion of import volumes. The share of invest�ment and consumer goods expanded in the struc�ture of imports, while the share of raw materialsand intermediate goods contracted.

Chart 6


20

FOREIGN TRADE

(based on balance of payments data)

120

100

80

60

40

20

01994 1995 1996 1997 1998 1999 2000 2001 2002

30

25

20

15

10

5

0

Price of Urals crude, $/barrel

Exports (billion US dollars)

Imports (billion US dollars)

Exports, imports Oil prices

Foreign exchange remained in high demandin 2002, as the country had to service and repayits foreign debts. At the same time, the amount offoreign debt payments effected by the federal gov�ernment declined by about 4%.

The expansion in the value of trade in goodsand services in 2002 was accompanied by growthin Russian capital outflow. The value of invest�ment in foreign economies by the non�financialenterprise and household sectors increased by 1.7times compared with 2001. Exporters resumedextending credits to foreign buyers. Private sec�tor direct and portfolio investment abroad ex�panded by 19% year on year in 2002. However,as big corporations significantly increased borrow�ing on foreign financial markets, net outflow ofcapital from the private sector continued to de�cline in 2002.

Considerable foreign currency earnings fromexports and foreign loans taken by the non�finan�cial enterprise sector, which far surpassed thedemand for foreign exchange, created conditionsconducive to the further expansion of foreign ex�change reserves in 2002 at more rapid rates thanin 2001. Russia’s international reservesamounted to $47.8 billion as of January 1, 2003.

Foreign trade remained a major source of bud�get revenues. Despite the lowering or lifting ofcustoms duties on some imports and exports, re�

ceipts from foreign trade amid the expansion ofexports and imports of goods accounted for a largepart of the country’s budget revenue in 2002.

Throughout 2002, the Russian Governmentactively used the tariff and non�tariff regulationof foreign trade in order to make Russian goodsmore competitive on foreign markets and protectdomestic commodity producers. The range of tax�able goods was constantly reduced last year andaverage weighted export and import duties werecut. Overall, export duties on more than 200 com�modities were reduced and export duties on about500 commodities were lifted. Import duties onmanufacturing equipment that was made outsideRussia were cut. The licensing of exports andimports was cancelled for some goods. The grant�ing to Russia of the market economy status by theUnited States and European Union was extremelyimportant for expanding the access of Russiangoods to world markets.

Preparations continued in 2002 for Russia’saccession to the World Trade Organisation(WTO). This country did not change its officialposition that Russia should be admitted to thisorganisation under standard terms and condi�tions, without any discrimination. As Russia pre�pared to join this international organisation, itimplemented a set of comprehensive measures toimprove its national legislation.

Chart 7

I . 2 . G O V E R N M E N T F I N A N C E A N D D O M E S T I C G O V E R N M E N T D E B T

21

B

I.2. GOVERNMENT FINANCE

AND DOMESTIC GOVERNMENT DEBT

udget policy was implemented in 2002to facilitate the achievement of the tasksset in the President’s Budget Message to

the Federal Assembly, “On the Budget Policy in2002,” the 2002 Federal Budget Law and Rus�sian Federation Government Resolution No. 137,dated February 28, 2002, “On Measures toImplement the 2002 Federal Budget Law,” whichprovided for maintaining macroeconomic equilib�rium and a deficit�free federal budget despite in�creases in foreign debt payments, increasing sta�bility of the budget system, reducing its depen�dence on fluctuating foreign trade conditions,continuing tax reform, enhancing the efficiencyof government spending and co�ordinating bud�get policy with monetary, foreign trade and struc�tural policies.

The favourable dynamics the Russian economycontinued to enjoy in 2002 and favourable for�eign trade developments allowed the Governmentto exceed the federal budget revenue levels set inthe 2002 Federal Budget Law and the revised taxcollection target for 2002, maintain a federal bud�get surplus, as in the previous year, and create asof January 1, 2003, a financial reserve that farsurpassed the level set by the Federal Law.

According to the Finance Ministry’s prelimi�nary data, Russia’s federal budget revenue in2002 amounted to 2,202.2 billion rubles, morethan 2.8% over the government’s revised budgetrevenue target. This represents 20.3% of GDP,

an increase of 2.7 percentage points on 2001(17.6%). Year�on�year growth in federal bud�get revenue largely resulted from the collectionof the flat social tax, which brought 339.5 billionrubles to the budget against the planned target of281.2 billion rubles.

Federal budget expenditure amounted to2,046.0 billion rubles, an increase of 5.1% overthe plan target. This represents 18.8% of GDPagainst 14.6% of GDP in 2001. The federal bud�get surplus amounted to 156.2 billion rubles.

The structure of federal budget expendituresimproved. Non�interest expenditures amountedto 1,822.3 billion rubles (89.1% of total expen�diture against 85.4% approved by the FederalLaw) and interest expenditures equalled223.7 billion rubles (10.9% and 14.6% respec�tively).

Foreign debt service expenditures accountedfor 83.3% of the total amount of interest expen�ditures against 79.7% set by the Federal Law, anddomestic government debt service expendituresaccounted for 16.7% against 20.3% approved bythe Federal Law.

The share of expenditures on social policy,industry, the electric�power industry, construc�tion and emergency and disaster prevention andcleanup expanded in 2002.

In 2002, following repeated requests by theBank of Russia, the Government instructed theMinistry of Finance and chief managers and man�

Б А Н К Р О С С И И 2 0 0 2 Г О Д О В О Й О Т Ч Е Т

22

89.1

9.1

FEDERAL BUDGET EXPENDITURES

IN 2002 (%)

Domestic government debt service expenditures

Foreign debt service expenditures

Non�interest expenditures

1.8

Chart 8

agers of federal budget funds to take measures toensure even financing of federal budget expendi�tures owing to which the dynamics of federal bud�get expenditures and balances of federal budgetaccounts in the Bank of Russia were smoother in2002.

As a result, federal budget expenditures byquarter amounted to 17.8%, 22.7%, 24.6% and34.9% of the full�year federal budget expendi�ture, and in December 2002 they accounted for36.1% of the fourth�quarter expenditures against47.4% in 2001.

Over the year, the balances of funds in ruble�denominated federal budget accounts in the Bankof Russia rose by 110.3 billion rubles, or 110%,to 208.7 billion rubles as of January 1, 2003.

According to the Finance Ministry, Russia’sconsolidated budget revenue in 2002 amountedto 3,515.6 billion rubles, or 32.4% of GDP, andexpenditure 3,403.7 billion rubles, or 31.3% ofGDP, of which regional consolidated budget rev�enue amounted to 1,632.6 billion rubles and ex�penditure — 1,676.8 billion rubles.

Preliminary data indicate that taking into con�sideration the changes in the methodology of com�piling the budget of the Pension Fund, its revenuesin 2002 amounted to 699.1 billion rubles and ex�penditures 791.6 billion rubles; revenues of the

Social Insurance Fund amounted to 139.5 billionrubles and expenditures — 124.6 billion rubles;revenues of the Compulsory Medical InsuranceFund amounted to 5.11 billion rubles and expen�ditures — 5.08 billion rubles.

The balances in regional and local budget ac�counts opened in Bank of Russia regionalbranches in 2002 rose by 7.8 billion rubles, or35.6%, to 29.8 billion rubles as of January 1,2003. At the same time, in January—November2002 the balances in these accounts rose by45.4 billion rubles (from 22.0 billion rubles to67.4 billion rubles), whereas in December theyfell sharply, by 37.6 billion rubles, or 55.7%(from 67.4 billion rubles to 29.8 billion rubles).The balances in the accounts of the stateextrabudgetary funds in the Bank of Russia fellduring the year under review by 96.6 billionrubles, or 71.9%, to 37.7 billion rubles.

According to Finance Ministry data, Russia’sdomestic government debt amounted to 680.3 bil�lion rubles as of January 1, 2003, which meansthat it was 71.8 billion rubles under the upperlimit set for the domestic government debt by Ar�ticle 107 of the 2002 Federal Budget Law (withchanges and amendments) and 146.8 billionrubles more than domestic government debt as ofJanuary 1, 2002.

Relative to GDP, Russia’s domestic govern�ment debt expanded to 6.26% from 5.9% as ofJanuary 1, 2001.

The increase in domestic government debtcompared with the previous year was the resultof the issue of debt depreciation federal loan bondswith the purpose of widening the range of debtinstruments on the organised securities market,fixed coupon�income federal loan bonds with thepurpose of investing the funded part of retirementpension and free funds from the Pension Fundreserve, and permanent coupon�income federalloan bonds in connection with their exchange forBank of Russia�owned Vneshtorgbank sharesunder the 2002 Federal Budget Law.

Of the total amount of domestic governmentdebt, only about 32% of government securitiesare traded on the organised securities market.

More than 68% of Russia’s domestic govern�ment debt is represented by non�marketable gov�ernment securities, the larger part of which(72.4%) are owned by the Bank of Russia. These

I . 2 . G O V E R N M E N T F I N A N C E A N D D O M E S T I C G O V E R N M E N T D E B T

23

FEDERAL BUDGET EXPENDITURES AND BALANCES OF FEDERAL BUDGET

RUBLE ACCOUNTS IN BANK OF RUSSIA IN 2002 (billion rubles)

1.07.2002

VII

1.08.2002

VIII

1.09.2002

IX

1.10.2002

X

1.11.2002

XI

1.12.2002

XII

1.01.2002

I

1.02.2002

II

1.03.2002

III

1.04.2002

IV

1.05.2002

V

1.06.2002

VI

1.01.2003

300

250

200

150

100

50

300

250

200

150

100

50

Federal budget expenditures Balances of federal budget funds

Chart 9

are mainly government securities with long termsto maturity (up to the year 2029) and a couponincome from nought to 6% p.a.

The Finance Ministry’s debt to the Bank ofRussia, which is part of Russia’s domestic gov�ernment debt, calculated according to the meth�odology established by the applicable federal leg�islation, continues to account for the largest partof this debt. As of January 1, 2003, it amountedto 388.9 billion rubles, or 57.2%, increasing overthe year by 38.1 billion rubles as a result of theexchange of Bank of Russia�owned Vneshtorg�bank shares for permanent coupon�income fed�

eral loan bonds under Article 108 of the 2002Federal Budget Law and use by the Bank of Rus�sia as a monetary policy tool direct repo opera�tions with Russian government debt instruments.

The Finance Ministry’s foreign currency debtto the Bank of Russia, which comprises the debton the funds provided by the Bank of Russia tothe Finance Ministry through Vneshekonombankfor the effectuation of Russian government for�eign debt payment and service, is included in theRussian government’s foreign debt, according tothe methodology established by the applicable fed�eral legislation.


24

I.3. THE FINANCIAL SECTOR

he state of the financial sector of the Rus�sian economy in 2002 was characterisedby a rise in the number of institutions, their

increased capitalisation and the expansion of therange of their activities. As of the end of 2002, therewere 1,329 credit institutions operating in the fi�nancial sector, including 1,282 banks and 47 non�bank credit institutions, 1,408 insurance compa�nies, 60 unit investment funds and 284 non�gov�ernmental pension funds. The capital base of thesefinancial institutions in 2002 expanded to 6.4%of GDP from 5.9% in 2001; the capital base ofcredit institutions accounted for 5.4% of GDP,non�governmental pension funds 0.5% and insur�ance companies 0.4%.

The legislative framework of the financial in�stitutions was formed as the corresponding lawsand bylaws were passed. Under the applicablelegislation, the activities of the financial institu�tions are regulated and supervised by the Bank ofRussia (credit institutions), Finance Ministry(insurance companies), Federal Securities Com�mission (unit investment funds and professionalsecurities market participants) and Labour Min�istry (non�governmental pension funds). The leg�islative framework of non�bank credit institu�tions, which was slow to develop in the early yearsof the economic reform, developed at a rapid ratein 2002.

Although credit institutions are outnumberedby non�bank financial institutions, they play aleading role in financial intermediation: private

individuals still prefer them to other institutions.Banks have the largest financial potential of allfinancial institutions. The growing requirementsfor the capitalisation of credit institutions and theundeviating position of the Bank of Russia thatbanks must comply with the key prudential stan�dards create additional conditions for growth inthe number of bank mergers and acquisitions,which aims to ensure the amalgamation of thebanking business. The current structure of thefinancial sector, in which banks play the princi�pal functional role in transforming accumulatedsavings into investments, is to a great extent theresult of the accelerated construction of the legis�lative framework of banking and the increaseddemand for basic banking services.

The trends in the development of the finan�cial sector of the Russian economy in 2002 weredetermined, above all, by the development ofcredit institutions, as their main performance in�dicators far surpassed similar indicators of otherfinancial institutions. Relative to GDP, the as�sets of credit institutions expanded by 3.2 per�centage points over the year to 38.2%. The con�tinued expansion of the capital base of credit in�stitutions, based on the positive dynamics of bankprofits, and the measures taken to make bankingmore transparent helped increase customer con�fidence in banks. Along with growth in produc�tion and a rise in real household income, this cre�ated conditions for the further expansion of thevolume of banking operations. Some banks in�

T

I . 3 . T H E F I N A N C I A L S E C T O R

25

EFFECTIVE INTEREST RATE ON COMMERCIAL BANKS’ RUBLE LENDING

AND DEPOSIT OPERATIONS BY TERM (% p.a.)

26

18

22

14

10

20022001

26

18

22

14

10

Household deposits for 6 to 12 months

Household deposits for 3 to 6 months

Loans extended to corporate borrowers for 6 to 12 months

Loans extended to corporate borrowers for 3 to 6 months

creasingly demonstrated their desire to providespecialised services, especially to retail clients,such as consumer and mortgage lending, lendingto small businesses and leasing operations.

Non�bank credit institutions mainly specialisein settlement operations, including settlement op�erations on the organised securities market, clear�ing and collection, but institutionally they are alsocapable of conducting a number of financial in�termediation operations. The Bank of Russiaimplements the prudential regulation of the ac�tivities of non�bank credit institutions, taking intoaccount the specifics of their functional role. Thescale of operations conducted by non�bank creditinstitutions has been quite stable and has a slighttendency towards growth.

While the role of banks in the economy con�stantly increased, the improvement of the legis�lative framework in 2002 opened up broader op�portunities for non�bank financial institutions toget to the financial market and in the future theseinstitutions will be able to compete with creditinstitutions in providing comparable financial ser�vices. During the year under review, the Bank ofRussia upgraded the procedure for regulating andsupervising non�bank financial institutions andadopted or drafted for adoption decisions designedto encourage non�bank financial institutions to

build up their capital. The launching of the pen�sion reform provided a major additional impetusfor the development of pension funds and theGovernment’s approval of the Insurance Devel�opment Concept stimulated the expansion of in�surance companies. Thus, the role of non�bankfinancial institutions as institutional investors onthe Russian financial market gradually increasedin 2002.

A rise in the activity of non�bank financial in�stitutions on the financial market was also facili�tated by the improvement of the investment cli�mate in the country, the increased transparencyof the financial market and the tendency towardsrisk reduction amid the stabilisation of the situa�tion in major segments of the market. The expan�sion and harmonisation of the conditions of ac�tivity of financial intermediation institutions cre�ated an environment conducive to the evening outof the terms and conditions on which different fi�nancial products were offered.

The consolidation of non�bank financial insti�tutions in 2002 led to the expansion of their co�operation with banks, a process that correspondedto the global practice of giving customers the wid�est possible choice of services by large and diver�sified financial structures. A number of Russianinsurance companies, non�governmental pension

Chart 10


26

YIELD CURVES OF FINANCIAL INSTRUMENTS IN 2002 (% p.a.)

20

16

18

12

10

2.50.5 3.01.0 3.51.5

Term to maturity, years

2.00.0

20

16

18

12

14 14

10

GKО—ОFZ yields in December

GKО—ОFZ yields in January

Loans extended to non�financial corporate borrowers in December

Loans extended to non�financial corporate borrowers in January

funds and investment funds implement jointprogrammes with banks, offering customers com�prehensive (universal) financial services, includ�ing basic banking and insurance services and newfinancial products.

In the future, organisations such as credit co�operatives, credit unions, mutual credit societiesand building societies, which have a good reputa�tion and successfully function in several foreigncountries, may occupy a special place in the Rus�sian financial sector. Some of them have alreadyopened in Russia, but owing to the absence of anadequate legislative framework and mechanismto regulate them, the role of these non�bank fi�nancial institutions in Russia remained negligiblein 2002. Using principally their members’ fundsand tackling in the main the problem of mutualfinancial assistance, such financial institutionscould help mobilise financial resources for thedevelopment of small businesses, farming andhousing construction.

The upgrading of the legislative and regula�tory framework with the purpose of more effec�tively protecting the rights of issuers and inves�tors, raising the standard of corporate gover�nance, further improving the regulation of theissuance of securities and disclosing informationon the financial markets, facilitated the develop�

ment of the infrastructure of the Russian finan�cial market as a major element of the financialsector in 2002. All these measures aim to enablethe Russian financial market to respond to thechallenges of growing competition at home andmeet the requirements of the globalisation of in�ternational financial markets.

Progress was registered in the development ofthe existing system of professional securities mar�ket participants, whose activities are regulatedby the resolutions and other regulations of theFederal Securities Commission (FSC). Accordingto available data, more than 1,500 licences forthe professional securities market participantsoperated in Russia at the end of the year. Theselicences regulated broker, dealer and depositoryactivities and such activities as keeping the regis�ter, trust management, clearing and organisingtrades on the securities market. Eight stock ex�changes and five currency exchanges had licencesto organise trade in securities.

The current system of regulation of the par�ticipants and the procedure for conducting opera�tions in the main segments of the financial mar�ket requires government regulators to co�oper�ate with self�regulating organisations of marketparticipants, whose activities reflect the desire ofthe financial institutions to set the standards of

Chart 11


27

INTEREST MARGIN ON BANKS’ LENDING AND DEPOSIT OPERATIONS

WITH NON�FINANCIAL CLIENTS IN 2001 AND 2002 BY TERM

(year’s average, percentage points)

14

10

4

6

12

8

2

0

14

10

4

6

12

8

2

0Up to 1 month 3 to 6 months1 month to 3 months 6 to 12 months 1 year to 3 years

2001 2002

fair play in business, reduce financial risk andensure the stability of the financial institutions.Such a combination of rigid framework regula�tion, reflecting the long�term strategic prioritiesof the Russian financial system and economy as awhole, and flexible regulation of the technical,organisational and information aspects of themarket participants’ activity helped encouragecompetition on the Russian financial market andmade it more transparent.

A major sign of the increased integration andfurther progress of the Russian financial marketwas the establishment of closer interest rates andyields on instruments with similar terms to ma�turity in all segments of the money and capitalmarket amid the general trend of interest ratesand yields to fall. Compared with 2001, the aver�age annual effective indicator for the GKO—OFZmarket portfolio in 2002 declined by 3 percent�age points, the average annual interest rate onruble bills discounted by banks slipped by 0.3 per�centage points, the yield on Moscow governmentbonds on the secondary market fell by 3.9 per�centage points. Interest rates on the interbankloan market remained lower than in most othersectors of the money market. The average annualrate on overnight interbank ruble loans fell to8.2% p.a. in 2002 from 10.1% in 2001.

A fall in interest rates on major financial in�struments along with the expansion of the range

of such instruments reduced the cost of servicingruble borrowings for non�financial borrowers.The average weighted rate on ruble loans for allterms fell from 17.8% p.a. in January to 15.0%p.a. in December 2002. The most significant de�cline in short�term interest rates was registeredin ruble loans extended to corporate borrowersfor a term from 3 to 6 months: compared with2001, the average interest rate on such loans fellby 3.4 percentage points over the year (from21.3% to 17.9% p.a.) and from January to De�cember 2002 it declined by 4.7 percentage points(from 21.5% to 16.8% p.a.). The interest rateon US dollar loans extended for all terms wasquite stable, fluctuating slightly within the rangeof 10.1% to 11.2% p.a. and the year’s averagerate fell to 10.5% p.a. from 11.7% p.a. in 2001.

The use of corporate bonds as an alternativeto bank loans, whose rates are close to the inter�est rates on loans with the same terms to matu�rity, gives non�financial sector enterprises addi�tional opportunities to raise funds. This segmentof the financial market demonstrated some of themost rapid rates in 2002. The value of primaryplacements on the Moscow Interbank CurrencyExchange (MICEX), the leading corporate bondbourse, in 2002 increased 93% year on year,while secondary turnover more than doubled. Inthe future, the corporate debt market may rivallong�term bank lending.

Chart 12


28

The interest rate policy pursued by commer�cial banks with regard to deposit operations in2002 encouraged depositors to commit their fundsfor longer terms. As interest rates fell in theeconomy as a whole, the average weighted rateon household deposits in rubles declined from12.5% p.a. in January to 11.8% p.a. in Decem�ber 2002, but interest rates fell less than infla�tion. The value of household deposits with termslonger than 1 year (a total in rubles and dollars)more than doubled, creating conditions for thefurther expansion of long�term bank lending.

A fall in average interest rates on loans and arise in the value of deposits that paid higher inter�est in 2002 caused the interest margin on lendingand deposit operations for a term up to 6 monthsto fall compared with 2001. The interest margin

on longer�term operations slightly rose, allowingcredit institutions to receive big net interest in�come throughout the reporting year.

As the financial sector expanded and the over�all financial situation stabilised, the differencesin economic agents’ expectations with regard toinflation, exchange rate and base interest ratedynamics and market risk assessments narrowed.This caused a downward shift and smootheningof yield curves on various financial instruments.An overall favourable economic situation and vig�orous actions taken by the monetary authoritiesto reduce market fluctuations in 2002 facilitatedthe establishment of a more balanced structureof market interest rates, a structure correspond�ing to the contemporary stage of financial inter�mediation.


29

I.3.1. CREDIT INSTITUTIONS1

In 2002, the banking sector in Russia contin�ued to expand more rapidly than the economyas a whole. The rate of growth in banking

sector capital in real terms was 2.6 times fasterthan GDP growth, the rate of growth in bankingsector assets was 4 times faster, loans to the non�financial sector increased 5 times faster andhousehold deposits 9 times faster. As a result, theratio of banking sector assets to GDP expandedto 38.2% as of January 1, 2003, against 34.9%as of January 1, 2002, loans to the domestic non�financial enterprise sector 14.6% against 13.0%and funds drawn from corporate entities and pri�vate individuals 19.5% against 17.5%.

The banking sector developed in a quitefavourable macroeconomic environment. Bank�ing sector assets rose 31.2% in 2002 and morethan 80% of credit institutions operating at theend of last year demonstrated steady growth inassets. In real terms2, banking sector assets ex�panded 17.8% in 2002, exceeding by 1.25 timesthe pre�crisis level (July 1, 1998). The share ofruble assets in total banking sector assets ex�panded a little in 2002, from 62% to 64% (as ofJuly 1, 1998, ruble assets accounted for almost73%).

The institutional structure of the banking sec�tor did not change much in 2002. The level ofasset concentration remained fairly high in thebanking sector as a whole: as of January 1, 2003,the top 20 banks in terms of assets accounted formore than 62% of banking sector assets and the200 biggest banks accounted for almost 89% ofall banking sector assets (compared with the be�ginning of 2002, asset concentration levels re�mained practically unchanged). At the same time,the top five banks slightly expanded their sharein total banking sector assets (from 42.8% to44.2%), mainly owing to the Savings Bank(Sberbank).

As the general level of banking sectorcapitalisation rose in 2002, the level of capitalconcentration in large banks remained un�changed. The number of credit institutions witha capital exceeding 5 million euros increased from401 to 423 (a growth of 5.5%), while the aggre�gate capital of this group of banks expanded al�most 25%. The share of banks with a capital inexcess of 5 million euros in the aggregate capitalof operating credit institutions with positive capi�tal remained practically unchanged over the yearat 93% as of January 1, 2003.

The number of branches of credit institutionscontinued to fall in 2002, declining from 3,433to 3,326. This trend is largely the result of theamalgamation of Sberbank branches’ internalstructures, which led to the reduction of theSberbank affiliate network by 71 branches. At thesame time, a major tendency of 2002 was growthin the number of new offices opened by banks(from 5,718 to 6,387). This tendency was mainlythe result of the relatively low cost of such ex�pansion.

The provision of Russian regions with bank�ing services did not change significantly in 2002.It continued to differ from region to region owingto uneven economic development of the Russianregions and differences in their production andresource potentials. The leaders in the provisionof banking services are the Northwestern andVolga Federal Districts3, while the Siberian Fed�eral District closes the list.

An important result of 2002 was the contin�ued tendency towards growth in creditor and de�positor confidence in banks and, as a consequence,the expansion of their resource base. This createsadditional opportunities for credit institutions totransform household savings into loans and in�vestments and continue to increase lending to theeconomy.

1 All indicators have been calculated for operating credit institutions.2 Consumer price index and official ruble/dollar exchange rate dynamics during corresponding period have been

used to calculate real growth rates.3 The average provision of the Russian regions with banking services has been calculated without taking into ac�

count the credit institutions of Moscow and the Moscow Region.


30

BANKING SECTOR GROWTH RATES IN REAL TERMS (% a year)

80

20

—40

60

0

40

—60

—801998 1999 2000 2001 2002

80

20

—40

—20 —20

60

0

40

—60

—80

Funds drawn from corporate entities

Real GDP

Deposits and other funds drawn from individuals

Credits and loans extended to non�financial enterprise sector

Assets

Capital

THE STRUCTURE OF CREDIT INSTITUTIONS’ LI�ABILITIES. It is the developments in the house�hold sector, especially increased confidence anda rise in real money income, that played the deci�sive role in the flow of funds to the banking sec�tor in 2002. At the same time, the role of the non�financial enterprise sector slightly decreased in theformation of the resource base of banks.

Household deposits were the most dynamic partof banking sector liabilities. In 2002, the balancesof household accounts1 rose 51.9%; the balancesof household accounts in rubles increased 45.6%and in foreign currency 63.0%. Seventy�four per�cent of operating credit institutions registered a risein household deposits. Household deposits withSberbank expanded 41.7% in 2002, butSberbank’s share in the total value of householddeposits at banks contracted from 72.1% to 67.3%.

The role of household deposits as a majorsource of banking sector resources, underminedby the 1998 crisis, has almost been restored: asof January 1, 2003, the value of household de�posits with the banking sector, foreign currencydeposits included, amounted to 1,029.6 billionrubles, while their share in banking sector liabili�

ties reached 24.8% against 21.5% as of January1, 2002, and 25.2% as of July 1, 1998.

The value of funds drawn by banks from cor�porate entities amounted to 1,091.4 billion rublesas of January 1, 2003, an increase of 20.9% overthe year (2001 growth was 25.0%). As of Janu�ary 1, 2003, this source of banking sector resourcesaccounted for a little over 26% of banking sectorliabilities. Thus, the share of corporate and house�hold funds drawn from these sources became al�most the same, while in 2000 they accounted for30.6% and 18.9% of liabilities respectively.

Credit institutions stepped up their borrow�ing activity on the interbank market, especiallythe international interbank market. The value ofinterbank loans taken in 2002 rose 55% and theirshare in banking sector liabilities expanded from6.4% to 7.6%. As of January 1, 2003, non�resi�dent banks accounted for almost 62% of the totalvalue of funds borrowed by Russian credit insti�tutions on the interbank loan and deposit mar�ket. Of this, 46% of the total value of loans, de�posits and other funds received by Russian creditinstitutions from non�resident banks had termslonger than one year.

1 Net of funds in self�employed entrepreneurs’ accounts.

Chart 13


31

0.12.9

24.4

1.01.2002 1.01.2003

STRUCTURE OF BANKING SECTOR LIABILITIES (%)

10.9

2.0

15.7

10.2

24.8

4.7

4.3

Funds drawn from non�resident corporate entities

Funds drawn from resident corporate entities

Deposits and other funds drawn from individuals

Other liabilities

Debt obligations issued

Interbank loans received from non�residents

Interbank loans received from residents

Banks’ correspondent accounts

Loans received by banks from Bank of Russia

Bank funds and profit

1.5

2.4

26.68.6

2.0

16.2

12.121.5

4.0

5.2

As before, a major source of resources for creditinstitutions was the issue of their own promissorynotes. In 2002, the value of promissory notes is�sued by credit institutions rose almost 56% andtheir share in banking sector liabilities expandedfrom 7.6% to 9.0%. Funds raised by issuing othersecurities (bonds, certificates of deposit and sav�ings certificates) still play a minor role in the re�source base formation: as of January 1, 2003, theaggregate share of these securities in banking sec�tor liabilities was 2% at the outside (it was lessthan 1% at the beginning of the year).

The overall tenor of the resource base of creditinstitutions is gradually getting longer: as of Janu�ary 1, 2003, bank obligations with terms longerthan 1 year accounted for 14.5% of the total valueof bank obligations against less than 9% as ofJanuary 1, 2002. The main factor of growth is

the expansion of household deposits with termslonger than 1 year: as of the beginning of last year,household deposits with such terms accounted for24.4% of the total value of household deposits andby January 1, 2003, their share had expanded to35.5%. Nevertheless, although the situation hasnow improved a little, the predominance of short�term liabilities and a shortage of medium� andlong�term resources continue seriously to restrictbanks’ capability to extend medium�term creditsto the non�financial sector of the economy.

THE STRUCTURE OF CREDIT INSTITUTIONS’ AS�SETS. Bank credit continued to expand in 2002,especially in the non�financial sector of theeconomy.

The value of loans extended by banks to thenon�financial enterprise sector in 2002 rose 35%

Chart 14


32

38.9

2.2

7.3

1.01.2002 1.01.2003

2.2

STRUCTURE OF BANKING SECTOR ASSETS (%)

39.9

3.0

10.0

3.5

6.4

1.43.7

1.2

7.3

3.4

6.2

18.8

10.1

17.8

9.6

Loans extended to financial organistions and agencies

Loans, deposits and other funds lent

to non�financial enterprise sector

Loans extended to private individuals

Loans, deposits and other funds lent to banks

Other assets

Fixed and intangible assets

Securities bought by banks

Correspondent accounts in credit institutions

Accounts in Bank of Russia

Cash, precious metals and gemstones

7.0

to 1,654.0 billion rubles as of January 1, 2003.Loans extended to Russian enterprises andorganisations in rubles accounted for almost two�thirds of that amount. The share of loans ex�tended to the non�financial enterprise sectorexpanded to nearly 40% of the value of assets ofoperating credit institutions. Seventy percent ofoperating credit institutions registered growthin lending operations with the non�financial en�terprise sector.

Lending to the household sector expanded ata rapid rate. The value of consumer loans ex�tended in 2002 rose by more than 1.5 times, from93.3 billion rubles to 141.2 billion rubles. At thesame time, the share of these loans in assets re�mains small: 3.4% as of January 1, 2003, against3.0% as of January 1, 2002.

The domestic interbank market developed rap�idly in 2002. The rates of increment in loans, de�posits and other funds of credit institutions ex�tended to resident banks amounted to 61% andexceeded by more than 1.5 times the same indi�cator for such funds extended to non�residentcredit institutions. Nonetheless, the balances offunds invested by credit institutions in the inter�national interbank market continued to exceedby far the balance of funds invested in the domes�tic interbank market. As of January 1, 2003, thesebalances amounted to 171.5 billion rubles and119.9 billion rubles respectively. Overall, as thevalue of interbank loans and deposits grew, theirshare in the assets of operating credit institutionsexpanded from 6.2% as of January 1, 2002, to7.0% as of January 1, 2003.

Chart 15


33

OVERDUE DEBT ON LOANS

12

8

4

10

6

2

01.07.1998 1.01.20011.07.19991.01.1999 1.01.2000 1.07.2000 1.07.2001 1.01.2002 1.01.20031.07.2002

2,400

1,600

800

2,000

1,200

400

0

Overdua debt on loans as % of total value of loans

Total debt on loans, billion rubles

% Billion rubles

CAPITA; ADEQUACY DYNAMICS

30

26

22

28

24

20

181.07.1998 1.01.20011.07.19991.01.1999 1.01.2000 1.07.2000 1.07.2001 1.01.2002 1.01.20031.07.2002

700

500

300

600

400

200

100

Capital adequacy indicator for banks with positive capital, %

Aggregate capital of banks with positive capital, billion rubles

% Billion rubles

Judging by banks’ reports, the quality of theloan portfolio remained satisfactory in 2002. Theshare of standard loans in the banks’ loan portfo�lio was 90.1% as of January 1, 2003, while theshare of overdue debt on loans was 1.9%. Thereserve for possible loan losses (RPLL) createdby banks completely covered doubtful and badloans, which accounted for 5.6% of the total valueof debt on loans (6.3% as of the beginning of2002). Shortly before the August 1998 crisis, theRPLL covered fewer than half of the bad loans,which, according to banks’ reports, accounted foralmost 10% of the loan portfolio.

Banks’ investments in ruble�denominatedRussian government securities rose 41% in 2002and in foreign currency�denominated securities6.6%. As a result, the share of bank investmentsin ruble�denominated Russian government debtinstruments expanded from 34% to 39%. Over�all, the share of investments in Russian govern�ment debt instruments remained unchanged from2001 at 10% of total banking sector assets.

The purchase of Russian companies’ promis�sory notes remains a major area of banks’ activeoperations. Although the value of bank invest�ments in promissory notes increased 42% in 2002,

Chart 16

Chart 17


34

BANKING SECTOR ASSETS DISTRIBUTED AMONG CREDIT INSTITUTIONS

GROUPED BY FINANCIAL STABILITY (billion rubles)

4,500

4,000

1,500

2,500

3,000

1,000

2,000

500

01.07.1998 1.01.20011.07.19991.01.1999 1.01.2000 1.07.2000 1.07.2001 1.01.2002 1.01.20031.07.2002

3,500

Problem banksFinancially stable banks

4,500

4,000

1,500

2,500

3,000

1,000

2,000

500

0

3,500

their share in banking sector assets remained vir�tually unchanged at about 5%. The share of bankinvestments in Russian corporate stocks andbonds remained small at less than 2% of bankingsector assets.

Rapid growth in credit investments makescredit institutions increasingly dependent on thefinancial standing of the borrower enterprises.

Preliminary assessments of the Russian bank�ing sector’s financial stability, which includedassessments made with the help of the stress test�ing methods, show that credit risk is the princi�pal source of potential loss of capital. At the sametime, there is still a shortage of medium� and long�term resources in bank liabilities, which is a fac�tor of liquidity risk in the banking sector, espe�cially structural risk that arises when credit in�stitutions transform their short�term liabilitiesinto long�term investments. And although com�pared with the pre�crisis level, the banking sec�tor has become far better protected (according tobanks’ reports, the value of their RPLL amountedto almost 150 billion rubles as of January 1, 2003,or 1.4% of GDP against 0.7% of GDP as of July1, 1998), bank managers and owners and regu�lating authorities should take a conservative ap�

proach to the evaluation of credit institutions’possibilities to assume additional risks with re�gard to the real economy, cover such risks by cur�rent income and capital and create full reservesfor possible loan losses on time.

THE FINANCIAL STANDING OF CREDIT INSTITU�TIONS. In 2002, operating credit institutionsmade a profit1 of 93.0 billion rubles against67.6 billion rubles in 2001. Profits for the finan�cial year were reported by 1,279 credit institu�tions, or 96% of the total number of operatingcredit institutions (95% as of January 1, 2002).Profit�making credit institutions last year ac�counted for 99.4% of total banking sector assetsagainst 97.2% in 2001. A rise in losses incurredby loss�making credit institutions (from 3.1 bil�lion rubles as of January 1, 2002, to 12.0 billionrubles as of January 1, 2003) largely resultedfrom the increased losses (from 2.2 billion rublesas of January 1, 2002, to 11.7 billion rubles as ofJanuary 1, 2003) of credit institutions controlledby the Agency for the Restructuring of CreditOrganisations (ARCO).

The profitability of banking sector assets2 rose2.6% in 2002 from 2.4% in 2001. The rate of

1 These data refer to net financial result.2 Profitability of assets is calculated as the ratio of profit to assets. The year’s financial result before tax (the balance

of profit and loss) and the average annual (average chronological) value of assets of credit institutions are used for

the calculation.

Chart 18


35

3.3

2001 2002

3.4

SOURCES OF GROWTH IN BANKING SECTOR’S OWN FUNDS (CAPITAL) (%)

19.4

22.434.5

36.211.8

3.1

3.2

15.4

Other items of growth in own funds

Growth value of property due to revaluation

Part of reserves for possible loan losses (general reserves)

Seniorage

Profit amd funds created from profit

Authorised capital

42.7

4.7

return on capital1 remained high in 2002 at18.0%, although it was a little lower than in 2001(19.4%). Such profitability dynamics is the re�sult of banking capital2 growing faster than as�sets.

The banking sector leads all other sectors ofthe economy in terms of profitability, althoughaccording to Goskomstat data, the average levelof profitability in industry was under 11%. Therate of return on capital in the Russian bankingsector is now a little higher than in Europe andthe United States where this rate has varied latelybetween 12% and 15%.

A rise in lending activity and the expansion ofbanks’ operations with securities amid decliningopportunities for making profit on the foreignexchange market predetermined changes in thestructure of income of credit institutions. At the

same time, while the share of net interest incomein the 2002 financial result remained unchangedat 60%, the share of net income from operationswith securities expanded from 12% to 16%. Inthe meantime, the share of net income from op�erations with foreign exchange and foreign cur�rency valuables (adjusted for exchange rate dif�ferentials) contracted from 11% to 9%. There wasalso a contraction in the share of net commissionincome (from 20% to 17%).

The dynamics of the main parameterscharacterising the financial standing of credit in�stitutions in 2002 show that the Russian bank�ing sector is quite stable by and large. The shareof financially stable credit institutions exceeded95% of the total number of credit institutions asof January 1, 2003, whereas as of January 1,2002, it was 93%. As of January 1, 2003, finan�

1 The rate of return on capital is calculated as the ratio of profit to capital. The year’s financial result before tax (the

balance of profit and loss) and the average annual (average chronological) value of capital of credit institutions are

used for the calculation.2 In 2002, banks’ assets (annual averages) expanded 30%, capital rose 48% and financial result (profit) increased

38%.

Chart 19


36

cially stable credit institutions accounted for morethan 97% of banking sector assets against 95%as of January 1, 2002.

As of January 1, 2003, the operating creditinstitutions’ own funds amounted to 581.3 bil�lion rubles, a growth of 28.1% since the begin�ning of the year or 11% in real terms. The ratioof banking sector capital to GDP in 2002 in�creased from 5.0% to 5.4%, while the capitalto assets ratio remained unchanged at 14%. Asof January 1, 2003, the capital of operatingcredit institutions exceeded by 25.8% the capi�

tal of operating credit institutions as of July 1,1998.

Growth in the banking sector’s own funds(capital) in 2002 mainly resulted from the profitreceived and the funds created from it (43% ofthe total sum of growth in own funds), incrementin the paid�up authorised capital of operatingcredit institutions included in the own funds cal�culation (35%) and income from share place�ments (12%). Other sources accounted for 10%of the total sum of capital growth. However, thequality of capital remains a serious problem.


37

I.3.2. OTHER FINANCIAL INSTITUTIONS

INSURANCE COMPANIES. As of January 1,2003, there were 1,408 insurance companieson the State Register of Insurers compared

with 1,350 insurance companies registered as ofJanuary 1, 2002. According to the Finance Min�istry, the aggregate authorised capital of insur�ance companies amounted to 47.6 billion rublesas of January 1, 2003, an increase of 74.4% onthe beginning of 2002.

The total sum of insurance premiums for allkinds of insurance in 2002 amounted to 300.4 bil�lion rubles, an increase of 8.1% year on year, andthe total sum of indemnities amounted to 231.6 bil�lion rubles, a rise of 27%. It should be noted thatthe Central Federal District accounted for 83.1%of all insurance premiums and 90.3% of all in�demnities. From premiums insurers created in�surance reserves that are necessary to ensure thefinancial stability and solvency of the insurancecompanies and are a source of investment in theeconomy. According to data as of January 1,2002, 88.5 billion rubles of insurance reserveswere invested, an increase of 174.2% on the samedate in 2001.

The relatively favourable macroeconomic de�velopments that continued in 2002, the gradualimprovement of the social situation and changesin the tax legislation affected the system of pri�orities of insurance companies and brought aboutchanges in the structure of the insurance servicesthey offered. Property and liability insurance de�veloped at the most dynamic pace last year interms of both insurance premiums (154.9% and132.1%) and indemnities (170.8% and 188.8%).At the same time, unlike the situation in 2001,there was a sharp fall (by 25.7%) in the value oflife insurance premiums. The value of life insur�ance premiums (104 billion rubles) almostequalled the value of property insurance premi�ums (90.1 billion rubles) and their aggregateshare of the total amount of insurance premiumscontracted over the year from 50.4% to 34.6%.At the same time, life insurance indemnities ex�ceeded life insurance premiums, mainly as a re�sult of the fulfilment by insurers of their obliga�tions under earlier contracts. The main reason for

the decreased role of life insurance is that fromJanuary 1, 2003, a 13% tax has been imposed onincome payments on life insurance policies if suchpayments are effected during the first five yearssince the conclusion of the contract. Thus, five�year life insurance contracts that were used bysome companies as a means of avoiding taxationin paying compensation to employees began to losetheir appeal. As a result, already in 2002 insur�ers began gradually to abandon short�term lifeinsurance schemes in favour of long�term con�tracts. In the future, this may facilitate the accu�mulation of the long�term financial potential ofinsurance companies and the enhancement oftheir role in the investment process.

The changes in the structure of insurance in2002 changed the ratio between insurance indem�nities and insurance premiums (from 65.6% in2001 to 77.1% in 2002) and this showed thatthe insurance companies’ financial base for de�riving profit from the insurance business had nar�rowed. Insurance companies’ long�term invest�ments remained negligible as insurance compa�nies continued to experience a shortage of long�term resources.

As competition on the insurance market in�creased, insurance companies ventured into newareas of business. In 2002, in addition to work�ing with banks to offer clients insurance and bank�ing services, insurance companies participated inbank holding companies and co�operated withbanks in carrying out mortgage programmes.

A major step forward in 2002 was the ap�proval by the Russian Government in late Sep�tember 2002 of the Insurance Development Con�cept, whose implementation may give an addi�tional impetus to the expansion of this segment ofthe financial market. The long�term objectives ofthe insurance business are formulated in the Con�cept as follows:● building a legislative basis for the insurance

services market;● promoting the development of compulsory and

voluntary insurance;● creating an effective mechanism of state regu�

lation and supervision of insurance;


38

● encouraging the transformation of householdsavings into long�term investment, using long�term life insurance schemes;

● promoting stage�by�stage integration of thenational insurance system into the interna�tional insurance market.

UNIT INVESTMENT FUNDS (PIFs). According tothe Federal Securities Commission, which regu�lates and controls the activities of the unit invest�ment funds and the institutions that service them(managing companies, depositories and apprais�ers), the total number of PIFs rose by nine in2002 to 60 as of the end of the year, of which 32were open�end funds (their owners have the rightto demand redemption of their shares on anyworking day), 25 interval funds (this right is ef�fective within a set time period) and three closed�end funds (such funds do not have this right un�less the law stipulates otherwise)1. The total valueof PIFs’ net assets amounted to 12.7 billionrubles, an increase of 40.3% year on year, butthe rate of their growth slowed from the previousyear (77.8% in 2001 against 2002). Under theapplicable legislation PIFs are not legal entitiesand function under the aegis of managing compa�nies that have the FSC licence to manage unitfunds, unit investment funds and non�governmen�tal pension funds.

According to the National Managers’ League(NML), the number of managing companies rosesignificantly in 2002 (from 36 to 82). In addi�tion to PIFs, clients of these companies are in�surance companies, non�governmental pensionfunds, private individuals, enterprises and otherlegal entities. The Russian managing companiesare characterised by a high level of concentration:the top 10 managing companies control more than90% of their total assets.

In 2002, the FSC took a series of landmarkdecisions designed to expand the sphere of activ�ity of unit investment funds, improve control overthem and increase their financial stability andcredibility, which helped reduce risks and made

this segment of the market more transparent.These regulating measures made these financialinstitutions more attractive to potential investors.Specifically, the FSC approved the minimum valueof property a unit investment fund should haveto be considered legal2 and raised requirementsfor the minimum value of a managing company’sown funds3. In addition, it appreciably broadenedthe range of unit fund categories: the existingshare, bond and mixed investment funds werecomplemented with money market funds, fundfunds, real estate funds, index funds and high�risk (venture) investment funds. The FSC ruledthat the name of a fund should indicate its cat�egory, depending on the makeup and structure ofits assets4. Lastly, a law was adopted in 2002legalising the secondary circulation of investmentfunds on the exchange5. As a result, the stockmarket received an additional stock tradingmechanism and potential investors the opportu�nity to know the real market value of PIFs’ shares.

A major step forward in the development ofPIFs was the establishment in 2002 of thecountry’s first three close�end funds which en�tirely differed from open�end and interval fundsin their purposes and activities. The most impor�tant distinction of the close�end PIFs is that theyare designed to finance long�term and mostlylarge�scale investment projects, including projectsin the real sector of the economy.

Last year was quite successful for the collec�tive investment market in terms of return on capi�tal. Unit stock funds proved the best performers,accounting for 76% of PIFs’ total net assets. Theirsuccess was the result of a favourable situationand stability in the corresponding segment of thestock market during the year. As of the end of2002, there were 24 stock funds on the market,of which 11 were open�end funds, 10 intervalfunds and three close�end funds. Next in terms ofprofit came the mixed investment funds, whichaccounted for 20% of PIFs’ total net assets. Therewere 27 mixed investment funds (14 open�endand 13 interval funds). Stability was the tradi�

1 These data have been provided by the National Managers’ League (NML), which has the FSC’s permission to

operate as a self�regulating managing company.2 FSC Resolution No. 15/ps, dated April 27, 2002.3 FSC Resolution No. 26/ps, dated July 3, 2002.4 FSC Resolution No. 31/ps, dated August 14, 2002.5 FSC Resolution No. 18/ps, dated June 7, 2002.


39

tional feature of bond funds, which accounted for4% of PIFs total net assets, as most of them reg�istered profits that exceeded the inflation rate.There were nine bond funds, of which seven wereopen�end funds and two interval funds.

There was a rise in PIFs’ investment activityin 2002. According to the FSC, PIFs’ investmentsin shares and bonds rose by 1.75 times over theyear and their share in total assets expanded from57.2% as of January 1, 2002, to 71.4% as ofJanuary 1, 2003.

NON�GOVERNMENTAL PENSION FUNDS (NPF).As of January 1, 2003, 284 non�governmentalpension funds had been granted licences by theLabour Ministry’s Inspectorate for Non�Govern�mental Pension Funds. This represents an in�crease of 22 on the same date of 2001. By Octo�ber 2002, 4.3 million people participated in thesefunds, a rise of 11.2% on October 1, 2001. How�ever, NPF participants account for just 5.9% ofthe economically active population and last yeartheir number did not expand much from the pre�vious year.

The value of NPFs’ own property amountedto 54.8 billion rubles as of October 1, 2002, anincrease of 88.3% on October 1, 2001. The NPFs

pension reserves amounted to 43.4 billion rublesas of October 1, 2002, more than twice theamount registered as of October 1, 2001. Pen�sion payments rose by 1.5 times over that period.

Most of the NPFs’ financial resources (almost70%) are concentrated in 10 funds set up by thelargest industrial and financial structures. As aresult, the latter have additional investment re�sources, which they chiefly use for the expansionof their own businesses. This practice has a sig�nificant effect on the structure of NPFs’ invest�ment portfolio. As of the beginning of October2002, shares accounted for 52.9% of the NPFs’42.9 billion rubles of investments. These are fol�lowed by promissory notes (16.1%), bank depos�its (14.8%) and government securities (10.7%).

To encourage the development of non�govern�mental pension schemes and enlist NPFs to theimplementation of the government pension re�form, the Russian Government in 2002 revisedthe procedure for licensing NPFs and announcedthat the licences granted to NPFs before Janu�ary 1, 2003, would be replaced by July 1, 20091.The issue of new licences will keep on the marketthe NPFs that meet more precise criteria and thushelp increase the credibility of these financial in�stitutions.

1 Russian Federation Government Resolution No. 546, dated July 22, 2002.


40

I.3.3. FINANCIAL MARKETS

INTERBANK LOAN MARKET

he main result of the development of the in�terbank loan market in 2002 was a signifi�cant stabilisation of interbank interest

rates. For most of the year, the average monthlyinterest rate on overnight ruble loans ranged from4% to 13%. The continued improvement of thesituation in the adjacent segments of the finan�cial market in 2002 had a favourable effect onmarket interest rate dynamics. At the end of thatyear, Bank of Russia operations on the moneymarket helped reduce interest rate volatility.

The interbank loan market gradually stabilisedin 2002 as banking sector liquidity remained at afairly high level and that caused interest rates onruble loans to fall for most of the year. Sporadicinterest rate rises were connected with short�termliquidity fluctuations, caused above all by seasonalfactors and brief spells of high demand for for�eign exchange.

The consolidation of the Russian banking sys�tem and the reduced risk of lending to Russianbanks affected the structure of the interbank loanportfolio. For most of the year, comparative dy�namics of overall debt and overdue debt on inter�bank loans extended to resident banks were posi�

tive. The average annual ratio of overdue debt tooverall debt on interbank loans, deposits and otherfunds lent to resident banks contracted to 5.3% in2002 from 6.8% in 2001. As the value of debt oninterbank loans rose, its structure changed in theyear under review owing to loans and deposits ex�tended to resident banks, expanding to 35.6% onaverage in 2002 from 29.2% in 2001.

As before, most of the operations on the inter�bank lending market were concentrated in theMoscow Region. Significant amounts of interbanklending operations were also conducted by banksin the Northwestern, Volga and Ural Federal Dis�tricts.

Interbank lending was conducted by Russianbanks in the form of direct interbank operationsand a considerable amount of transactions on theinterbank market was conducted between banksunder long�term agreements on co�operation ininterbank lending. Such agreements allow banksto have a number of constant and reliable part�ners with a good credit history. The continuedefforts to improve the provision of the market withinformation was a major condition of greatertransparency of market operations.

T

THE FOREIGN EXCHANGE MARKET

n 2002, as in the previous years, the foreignexchange market was the principal sector ofthe Russian financial market in terms of the

volume of operations. The turnover of conversionoperations far surpassed the turnover of the in�terbank lending market and stock market.

In 2002, Russia continued to liberalise itsforeign exchange market. Specifically, the newprocedure for compulsory sale of export cur�rency earnings, which came into force fromDecember 1, 2002, allowed exporters to sellforeign exchange not only at the Single Trad�ing Session of interbank currency exchanges(STS) and to the Bank of Russia, but also onthe over�the�counter interbank market and tothe exporter’s bank.

The structure of the interbank foreign ex�change market remained quite stable during theyear under review. The share of direct transac�tions between banks on the over�the�countermarket continued to expand in the overall turn�over of the interbank market as a whole in 2002and reached 95% against 93% in 2001. The ex�change and over�the�counter segments of the for�eign exchange market retained their specialisationin 2002: the exchange floor was mainly used forsmall operations on clients’ behalf, while the over�the�counter interbank market provided a venuefor large�sum client operations and arbitrage dealsbetween credit institutions.

The Bank of Russia in 2002 conducted opera�tions on the domestic foreign exchange market in

I


41

DYNAMICS OF OFFERED AND ACTUAL INTERBANK INTEREST RATES

ON OVERNIGHT RUBLE LOANS IN 2002 (% p.a)

45

40

30

35

20

10

5

0I II III IV V VI VII VIII IX X XI XII

25

15

Actual rate (MIACR)Offered rate (MIBOR)

45

40

30

35

20

10

5

0

25

15

Chart 20

the conditions of the completion by the membercountries of the European Economic and Mon�etary Union of the transition to a single currencyand its significant exchange rate appreciation oninternational markets. At the same time, the USdollar remained the main foreign currency on theRussian foreign exchange market and the volumeof ruble/euro lending operations accounted forless than 1% of the ruble/dollar operations.Therefore, conducting operations in the rub�le/dollar segment, the Bank of Russia set the of�ficial rate of the euro against the Russian rubleon the basis of the US dollar’s rate against theruble on the domestic foreign exchange marketand the US dollar’s rate against the euro on theinternational market.

In 2002, the Bank of Russia bought and soldUS dollars for rubles on the over�the�counter in�terbank market with value dates no later than thesecond working day. Until December 2002, it hadbought foreign exchange within the frameworkof the system of compulsory sale of export cur�rency earnings directly from exporters’ authorisedbanks. The value of these operations in 2002amounted to nearly $26 billion.

In the period under review, the Bank of Rus�sia drafted a number of internal documents thatregulated in detail the procedure for conductingtransactions with the Bank of Russia’s contrac�tor credit institutions on the domestic foreign ex�

change market, setting individual limits on thevalue of such transactions. The new procedureallowed the Bank of Russia to make more effec�tive use of such operations as a means of promptlyinfluencing the current situation on the domesticforeign exchange market. The aggregate value ofoperations with the banks that are the main mar�ket operators amounted to nearly $2.6 billion1 in2002.

In addition, the Bank of Russia continued toconduct operations with credit institutions onthe interbank market, making settlementsthrough the Electronic Lot Trading System(SELT) of the Moscow Interbank Currency Ex�change (MICEX). It also set an upper limit onthe volume of such operations, which aggregated$7.1 billion in 2002.

The conditions of trade in the exchange seg�ment of the domestic foreign exchange market alsochanged significantly in 2002. Seeking toliberalise the market and change the procedurefor compulsory sale of currency earnings by ex�porters, the Bank of Russia took part in elabo�rating a new procedure for conducting trades atthe STS, which made operations in the exchangesegment of the market more attractive to banks(owing to the reduction of the commission chargefor operations at the STS to a market level andthe lifting of the requirement for traders to makea 100% preliminary deposit for ruble/dollar op�

1 Net of transactions relating to compulsory sale of exporters’ currency earnings.


42

erations at the STS). The new rules at the STS,which came into force from December 1, 2002,helped keep the volume of STS ruble/dollar op�erations at the level of the previous months andallowed the currency exchange to preserve its roleas a major segment of the market, whose exchangerate is used by the Bank of Russia for setting theofficial exchange rate.

As mutual confidence between banks in�creased, foreign exchange liabilities of credit in�stitutions expanded and the infrastructure of thedomestic foreign exchange market improved, theaggregate turnover of conversion transactionscontinued to rise. In 2002, the average daily turn�over of ruble/dollar spot transactions on the in�terbank exchange and over�the�counter marketrose by almost a quarter year on year to $4.4 bil�lion. The major contributor to growth in the ag�gregate turnover of conversion operations was theover�the�counter interbank segment of the mar�ket, especially the expansion of conversion opera�tions conducted by credit institutions with clients(the volume of such ruble/dollar operations roseby about one�third year on year).

The aggregate volume of ruble/dollar opera�tions in the exchange segment of the foreign ex�change market amounted to about $63 billion, afall of 11% from the previous year1. The main rea�son for decline in exchange trade turnover was acontraction in the volume of exporters’ compul�sory sales of currency earnings on the exchange.

Most of the exchange spot transactions wereconducted at the SELT afternoon session onMICEX: these transactions accounted for about65% of the aggregate volume of ruble/dollar spottransactions on MICEX. Compared with 2001,the share of trades for “today” and “tomorrow”settlements at the SELT afternoon session on

MICEX contracted a little, while the share ofswap transactions expanded significantly.

The aggregate volume of ruble/dollar opera�tions at the STS amounted to nearly $22 billionin 2002, a contraction of 17% year on year. Atthe same time, the Single Trading Session of in�terbank currency exchanges in 2002 retained itsrole as a segment of the domestic foreign exchangemarket where the exchange rate formation is mosttransparent and provides economic agents withexchange rate benchmarks, on the basis of whichthe Bank of Russia sets the official ruble/dollarexchange rate. In addition, the STS continued toprovide access for regional credit institutions tothe highly liquid foreign exchange market of theMoscow Region.

The currency structure of the over�the�counter domestic foreign exchange market wasdominated in 2002, as in the previous year, byruble/dollar trades, which reflected the USdollar’s leading role in international settlements.At the same time, the turnover of operations withthe single European currency expanded at a morerapid rate, reflecting the increased interest in theeuro on the part of credit institutions and clients,including private individuals. The average dailyinterbank ruble/euro trade turnover rose about16% compared with December 2001 to an equiva�lent of $52 million in December 2002.

Ruble/dollar trades also dominated in the cur�rency structure of exchange trade, while the vol�umes of operations with other foreign currencieswere small.

Turnovers in the forward exchange segmentof the currency market remained small. The av�erage daily ruble/dollar trade turnover of the for�ward over�the�counter foreign exchange marketamounted to about $25 million in 2002.

2 Overall volume of operations at the STS and afternoon trade in SELT on MICEX is used here and below as a

measure of the aggregate volume of ruble/dollar operations in the exchange segment of the currency market as

regional interbank currency exchange turnovers remain extremely small.

GOVERNMENT SECURITIES

KO—OFZ MARKET. The yield on govern�ment bonds in 2002 was formed under theeffect of two major factors: the Ministryof Finance had stepped up its activity in

managing domestic government debt and theamount of free funds held by market participantshad increased as a result of the inflow of vastamounts of export earnings to the economy,

G


43

caused by high world prices of Russian exportcommodities.

The nominal value of the GKO—OFZ marketexpanded from 160.1 billion rubles as of January1, 2002, to 217.0 billion rubles as of January 1,2003. By the end of last year, GKO—OFZ yieldshad fallen by almost 3 percentage points to 13.6%p.a. The average daily trade turnover expanded10% year on year to 592 million rubles.

The Finance Ministry exerted decisive influ�ence on the situation on the domestic governmentdebt market in 2002, as it acted as one of themajor market operators: the issuer’s share in themarket turnover stood at nearly 40%, not count�ing primary placements.

The main objective of government policy onthe GKO—OFZ market was to improve the bor�rowing conditions in anticipation of large foreigndebt payments in 2003. To stimulate investmentactivity on the government bonds market, theFinance Ministry announced in early 2002 thatit was going to correct GKO—OFZ yields gradu�ally, taking into account the real and projectedrates of inflation.

One of the reasons for a rise in yields in Feb�ruary and March was uncertainty about theshort�term dynamics of the exchange rate andgrowth in the supply of financial instruments

24

20

16

8

4


12

16.5

16.0

15.5

15.0

14.5

14.0

13.5

GKО—ОFZ SECONDARY MARKET TURNOVERS AND YIELDS

IN 2002Turnover, billion rubles Yield, % p.a.

Turnover of GKО—ОFZ bonds with terms longer than 365 days

Turnover of GKО—ОFZ bonds with terms from 0 to 90 days

Turnover of GKО—ОFZ bonds with terms from 91 to 365 days

GKО—ОFZ yield, % p.a.

Chart 21

as a result of the issue of bonds by corporateentities.

The subsequent period saw a gradual declinein yields on government bonds under the effect ofthe Finance Ministry’s increased activity in man�aging domestic debt. GKO—OFZ prices rose inthe fourth quarter as the Bank of Russia began toconduct operations to refinance credit institu�tions, using government securities. Credit insti�tutions, GKO—OFZ market dealers, stepped uptheir activity in buying bonds, since these marketparticipants sought to bring their government se�curities portfolios into conformity with Bank ofRussia requirements in order to be included in thelist of contractors for direct repo operations. Aprice increase of government securities was alsofacilitated by a fall in interest rates on the moneymarket amid the expansion of ruble liquidity ow�ing to an inflow of vast amounts of foreign ex�change to the balance of payments current ac�count and a contraction in the capital and finan�cial account deficits. A rise in GKO and OFZ bondprices led to growth in the yields to resale in theshort term and that provided an additional impe�tus to demand for government bonds by all mar�ket participants, including non�resident investors.

During the year, yields on government bondswere corrected by the issuer in the course of pri�


44

mary GKO and OFZ bond placements, depend�ing on the current market situation. When, forexample, demand was high for a certain govern�ment bond issue, its average weighted yield wasestablished at the auction practically without apremium to market prices and that caused pricesof government bonds with similar parameters torise in secondary trading.

Funds that were not committed at auctionsformed positive GKO—OFZ price dynamics onthe secondary market, encouraging the FinanceMinistry to intensify direct government bond saleson the open market. In 2002, the share of GKO—OFZ bonds placed for secondary trade doubled inthe total volume of borrowings year on year. Apartfrom additional placements, the Finance Minis�try practised the holding of auctions of additionalgovernment bond issues that were particularlypopular with investors.

Growth in the nominal value of the GKO—OFZ market mainly resulted from the issue of fed�eral loan bonds due in 2004—2008, while theshare of short�term borrowings contracted. Seek�ing to increase the liquidity of government secu�rities and extend the market duration, the FinanceMinistry offered market participants a new finan�cial instrument, the so�called debt depreciationfederal loan bonds, or OFZ�AD. One of the ob�jectives of this bond issue was to create large is�sues of government securities capable of playingthe role of a benchmark cost of borrowings on thestock market, especially its corporate segment.

The difference between this financial instru�ment and the OFZ bond issues placed earlier liesin the redemption procedure: the principalamount of the debt is paid by instalments ratherthan a lump sum. Thus, the Finance Ministry sig�nificantly alleviates the burden on the budget,spreading the payments over a period of time,while market participants have the opportunityto manage their funds more effectively and reduceinvestment risk.

High investor demand caused OFZ�AD pricesto soar in 2002. Investments in Series 46001OFZ�AD bonds, for instance, brought investorsa real income of 27% p.a.

The extension of the domestic governmentdebt duration and the approximation of govern�ment bond yields to the inflation rate have cre�ated conditions for the emergence of large insti�

tutional investors on the GKO—OFZ market,especially pension funds and insurance companies.However, despite some favourable changes, thelevel of liquidity of the GKO—OFZ market is stilltoo low. A major obstacle to the expansion of thedomestic debt market is the high concentrationof government bond issues in the portfolios ofsome big market players who invest funds for along term with the aim of receiving a stable in�come. It is not surprising that the turnover of thebond issues in their portfolios is close to nil.

Dealers held the largest government securi�ties portfolio in 2002. At the same time, the non�resident share in the government bond marketcontracted during the year, from 11.7% to 7.0%,mainly as a result of the redemption of govern�ment bond issues held by non�residents. At theend of the year, foreign market participantsstepped up their purchases: in November andDecember their investments in GKO and OFZbonds exceeded 2 billion rubles a month.

Continuing to liberalise the C�account regime,the Bank of Russia held six auctions of foreignexchange for authorised banks servicing non�resi�dents. The total value of foreign exchange sold bythe Bank of Russia was close to $160 million.Owing to extremely low demand at last year’sautumn auctions, the Bank of Russia decided notto hold any in 2003.

In January, non�residents received permissionto make direct investments in the Russianeconomy to the amount of 10 billion rubles. Earlyin June, the Bank of Russia reduced to fourmonths the period during which non�residentswere required to keep their funds in transit ac�counts. In addition, non�residents were grantedthe right to transfer government bonds to thetransit section of the depo account and subse�quently enter receipts from their sale to the so�called C (conversion)�accounts. The transfer ofgovernment securities takes a year (1/12 of thetotal value of the bonds subject to the transfer istransferred each month). The Bank of Russia es�tablished a similar procedure for transferring cor�porate and sub�federal securities to the depo sec�tion of non�residents’ accounts.

REGIONAL GOVERNMENT BOND MARKET. Thedynamic development of the sub�federal bondmarket in 2002 was characterised by the expan�


45

sion of bond issue volumes, longer borrowingterms, growth in the liquidity of regional bondmarket instruments and their increased attrac�tiveness for investors. In addition to the princi�pal issuers (Moscow and St. Petersburg), otherRussian regions became increasingly active inplacing bond issues, such as the Republic ofBashkortostan, Republic of Komi, Republic ofSakha (Yakutia), Khanty�Mansi AutonomousArea and Moscow and Tver Regions.

In the period under review, 25 Russian regionsand municipalities registered the terms and condi�tions of their bond issues with the Ministry of Fi�nance. Bonds were placed mainly on the largestfloors trading in sub�federal bonds, the MoscowInterbank Currency Exchange (MICEX) andSt. Petersburg Currency Exchange (SPCE). In2002, the SPCE gradually ceded to MICEX its po�sition as the largest trading floor of the Russianregional bond market in terms of operation volumesand the number of issuers it represented. Thechange resulted from the expansion and develop�ment of the Moscow bond market infrastructureand a sharp rise in the volume of market borrow�ings made by the Moscow government on that floor.

In 2002, the Moscow government placed atMICEX auctions 8.9 billion rubles of bonds at paragainst 1.75 billion rubles in 2001. The auctionyield of the bonds varied from 16% to 18% p.a.The overall volume of secondary trade in Mos�cow bonds on MICEX amounted to 18.6 billionrubles in 2002, almost three times the volumeregistered in 2001.

The St. Petersburg government placed 3.0billion rubles of government registered bonds(GRB) at par in 2002 against 2.2 billion rublesin 2001. The St. Petersburg government bondmarket was characterised by a variety of instru�ments and the extension of borrowing terms.

RUSSIAN GOVERNMENT CURRENCY BOND MAR�KET. The Russian government bonded foreigndebt was represented by the following foreigncurrency�denominated instruments in 2002:● Russian government eurobonds (10 issues),

issued in 1997—2000 and due in 2003—2030;

● Series IV—VII domestic government currencyloan bonds (OVGVZ), issued in 1993 and1996 and due in 2003—2011 and government

currency loan bonds (OGVZ), issued in 1999and due in 2007.According to the Finance Ministry, as of the

beginning of 2002 these bonds had a total nomi�nal value of $45.2 billion and as of October 1,2002, $47.1 billion.

In 2002, the commercial debt of the formerUSSR was exchanged for $1.37 billion worth ofRussian government eurobonds maturing in 2010and 2030.

Coupon income payments on all foreign cur�rency�denominated instruments were made in fulland on schedule. The total amount of coupon in�come payments equalled $2.9 billion.

The major volume of Russian government cur�rency loan bonds were tradable as before on theinternational over�the�counter market of debtobligations of the emerging�market countries.

In the period under review, investors receivedthe opportunity to conduct operations with USdollar�denominated Russian governmenteurobonds on the organised domestic market,which caters to small and medium�scale investors.

Chart 22

VOLUMES OF RESIDENT OPERATIONS

WITH NON�RESIDENTS TO BUY AND SELL

OUTSTANDING RUSSIAN GOVERNMENT

CURRENCY DEBT OBLIGATIONS

ON SECONDARY MARKET IN 2002

(at market price, billion US dollars)

20

12

16

8

4

0

Eurobonds placed by open subscription

Bonds issued in restructuring of GKO bonds

Eurobonds issued in restructuring debt

to London Club of commercial bank creditors

OVGVZ and OGVZ bonds of 1999 issue

Q1 Q3Q2 Q4


46

The price level of these instruments on the do�mestic market corresponded to the level of priceson the international market. In 2002, the valueof trades in Russian government eurobonds in theRussian Trading System (RTS) amounted to$288 million at actual prices and $11 million onMICEX.

The situation on the Russian currency bondmarket was affected by the favourable macroeco�nomic situation in the country, the expansion ofRussia’s international reserves, the government’sforeign debt management policy and the situation

on the world capital market. Against this back�ground, international rating agencies upgradedRussia’s sovereign rating on currency borrowingsand the ratings of Russian bonded foreign debtinstruments.

The long�term downtrend of yields on Russiancurrency debt instruments continued in 2002.The occasional periods of stabilisation and short�term decline in market prices and correspondinggrowth in yields, registered during that period,were caused by the fluctuating conditions onworld stock markets.

CREDIT INSTITUTIONS’ SECURITIES

he market of bank promissory notes con�tinued to develop dynamically in 2002: thevalue of promissory notes issued by banks

rose more than 1.5 times and there was an in�crease in the number of large bank issuers. Formost of the year, this market demonstrated agradual narrowing of the spreads between yieldson papers with different maturities, while theaverage weighted maturity of ruble promissorynotes increased from 76 days in 2001 to 136 daysin 2002. Hence the year 2002 was characterisedby more active use of bank promissory notes byRussian investors as a medium�term investmentinstrument.

Forty�seven terms and conditions of certifi�cates of deposit and four terms and conditions ofsavings certificates were registered in 2002. Asin 2001, credit institutions of the Moscow Regionaccounted for the bulk of the securities issued(196 billion rubles) and the volume of certificatesales in the Moscow Region expanded 66% yearon year.

The year under review saw a clear tendencytowards decline in aggregate volumes of securitiesissued by credit institutions. In 2002, 331 creditinstitutions registered 356 security issues wortha total of 61.6 billion rubles, whereas in 2001,424 credit institutions registered 482 security is�sues with a total value of 109.76 billion rubles.

The decline may be attributable to the cominginto force from January 1, 2002, of some provi�sions of the Federal Law on Joint�Stock Compa�nies, which seriously influenced the security is�sue process. As the requirements for the proce�

dure to increase authorised capital by including acompany’s property in it were tightened and astandard was introduced allowing a company toincrease its authorised capital by raising the nomi�nal value of shares at the expense of the company’sproperty only, companies increased theirauthorised capital mainly by making additionalshare placements.

To increase their authorised capital by mak�ing additional share placements, 241 credit com�panies launched 263 share issues with a totalvalue of 34.1 billion rubles in the year under re�view. In 2001, 329 banks registered additionalshare issues with a total value of 39.5 billionrubles. One credit institution increased itsauthorised capital by 276.3 million rubles by rais�ing the nominal value of its shares.

As usual, credit institutions of the MoscowRegion significantly increased their authorisedcapital by issuing additional shares; at the sametime, major regional banks (in the Republic ofTatarstan and Republic of Bashkortostan, forexample) also stepped up their share issuing ac�tivity in 2002.

The coming into force of the share splittingprovision of the Federal Law on Joint�Stock Com�panies led to a fall in the number of share issuesmade by credit institutions for the consolidationof their stocks. Three share issues were registeredin the year under review against seven in 2001.

Two share splitting issues were registered in2002. They were launched mainly as part ofpreparations to convert securities for futurereorganisation in the form of acquisition.

T


47

Additional share issues were launched in thecourse of reorganisation in the form of acquisitionin 2002 by the following credit institutions: the joint�stock commercial banks AKB Business Service Trust(Kemerovo), AKB EXPRESS TULA and AKBMENATEP St. Petersburg, which launched addi�tional share issues with a total value of 200 millionrubles. It should be noted that AKB MENATEPSt. Petersburg acquired two credit institutions.

In the year under review, 42 credit institu�tions worth a total of 9.2 billion rubles were trans�formed into limited liability joint�stock companiesagainst 67 credit institutions worth a total of 63.9billion rubles in 2001.

Although 838 credit institutions, or 63% ofthe total number, operate as open�end joint�stockcompanies, just a small part of their shares aretraded on the organised securities market and maybe of interest to potential investors. The over�whelming majority of banks are too small to at�tract big investors and their shares are usuallyplaced among former shareholders of credit insti�tutions or investors selected in advance.

Unlike the stock market, the corporate bondmarket experienced a rise in banks’ issuing activ�ity: 19 credit institutions registered 20 share is�sues with a total value of 9.56 billion rubles,whereas in the previous year 11 credit institutionsregistered 15 share issues with a total value of4.60 billion rubles.

To make bonds more attractive and secure,banks issued securitised bonds and enlisted un�derwriters, mainly on organised floors, such asMICEX, using direct trade by auction. The mostcommon type of security is third�party guaran�tees in the form of irrevocable offer.

Bank share quotations on the secondary mar�ket in 2002 were characterised by a pronouncedupward trend amid the expansion of operationvolumes. Credit institutions’ shares accounted forabout 5% of the total volume of secondary trad�ing in shares on MICEX and in the RTS. Sberbankshares were the most traded bank shares andthere was stable demand on the secondary mar�ket for bank bonds, including highly liquidVneshtorgbank shares.

NON�FINANCIAL SECTOR CORPORATE SECURITIES MARKET

he Russian corporate stock and bond mar�ket developed in 2002 against the back�ground of the improved financial standing

of leading issuing companies. Operations with cor�porate securities were conducted on the exchangeand over�the�counter segments of the stock mar�ket. The two main Moscow floors, MICEX and theRTS, dominated in the exchange segment. In ad�dition, operations were conducted on several re�gional stock exchanges and stock�exchange seg�ments of seven regional currency bourses. Trad�ing via distant terminals and Internet trading weremost widely used by the stock exchange depart�ments of the St. Petersburg, Siberian, Samara andNizhni Novgorod interbank currency exchanges.

Primary share placements were effected, as arule, on the over�the�counter market by open orclosed subscription.

The MICEX index rose 34% in 2002 and theRTS index gained 38%. The capitalisation of theRTS stock market at the end of the period underreview amounted to $93 billion, an increase of34% on the previous year.

Aggregate turnovers of secondary trade inshares on Russian exchanges expanded signifi�cantly in the period under review. Energy com�panies’ shares continued to dominate the struc�ture of exchange trade in stocks. The manufac�turing sector’s share of the MICEX and RTS stocktrading volumes was still less than 1%.

The role of corporate bonds in the financ�ing of the real economy rose significantly in2002. Sixty�seven corporate bond issues witha total value of 47.6 billion rubles were placedon MICEX in the period under review. This rep�resents an almost 100% increase on the previ�ous year. Growth in the volume of new corpo�rate bond issues resulted from the increased at�tractiveness of these instruments for issuers andinvestors as major macroeconomic indicatorscontinued to demonstrate positive dynamics.Bonds were placed through auctions held on ex�changes, mainly MICEX, as well as on the over�the�counter market through financial interme�diaries, and professional stock market partici�pants. Banks usually acted as organisers, un�

T


48

120

110

100

90

80


360

340

320

300

280

260

MICEX SHARE TRADE DYNAMICS IN 2002Volume Index

MICEX trading volume, billion rubles Average MICEX index

derwriters and paying agents for corporatebond issues.

The dynamic expansion of the primary mar�ket stimulated activity on the secondary corpo�rate bond market. Secondary corporate bondtrade turnover on MICEX rose by 2.2 times yearon year to 72.3 billion rubles, while the effectiveyield on corporate bonds on the secondary mar�ket fell as GKO and OFZ yields declined. Marketparticipants began to show more interest in long�term bonds.

Bonds issued by fuel sector enterprises ac�counted for the largest share in MICEX second�ary trade in corporate bonds in 2002.

The factors behind the expansion of the over�the�counter corporate securities market were thepresence of a large number of unlisted bond issuesand the conduct of a number of large�scale opera�tions with shares designed to ensure control overenterprises, including operations relating to theimplementation of the state property privatisationprogramme. In addition, players on the over�the�counter market conducted operations with listed

securities that had representative price character�istics in order to build large blocks of securities thatmet the requirements of exchange trade. Finan�cial intermediaries and small shareholders wereusually contractors in such operations. The devel�opment of information analysis systems andInternet trading systems were the principal objec�tives of the upgrading of the technological infra�structure of the over�the�counter segment of thecorporate securities market.

The situation on the market of non�bankpromissory notes in 2002 was seriously affectedby the gradual replacement of notes by corporatebonds owing to the phasing out of promissory noteprogrammes by a number of big non�financial is�suers. The decline in the offer of promissory notesfacilitated a fall in yields on these notes of themost reliable issuers and the corresponding re�duction in the activity of non�bank promissorynote market operators. At the same time, thesenotes were used as a medium�term borrowinginstrument by borrowers who had no access tothe bond market.

FINANCIAL DERIVATIVES MARKET

tability of the real sector and foreign ex�change and stock markets stimulated thefurther expansion of the financial deriva�

tives market. The aggregate futures and optionstrade turnover on the main floors amounted to

119 billion rubles in 2002, which represents amore than six�fold increase on 2001.

Closer ties between the financial market andreal economy in 2002 facilitated growth in thedemand for futures contracts on the exchange as

S

Chart 23


49

STRUCTURE OF TRADE

IN FUTURES CONTRACTS

FOR BASIC ASSETS IN 2002

(billion rubles)

16

10

14

6


8

12

4

2

Shares

Stock indices

Foreign exchange

an instrument of hedging risk and led to the ex�tension of contract terms and open positions. Theintensification of hedging operations on the de�rivatives market increased the importance of theinformation function of futures quotations andattracted new players to the market. However,compared with other sectors of the Russian finan�cial market, derivatives operations remained smallin volume.

The creation of the FORTS trading system inlate 2001 and further expansion of the MICEXstandard contracts sector facilitated the concen�tration of operations by big regional market par�ticipants on the Moscow trading floors.

Owing to relative stability and predictabilityof the ruble/dollar exchange rate, the biggestprogress was made in the share and stock indexfutures segment of the market: the range of con�tracts broadened significantly and trade turnoversexpanded at the most rapid rates.

The stock options segment of the market alsodemonstrated dynamic growth in 2002. Stockoptions trade turnover amounted to 1.4 billionrubles in 2002 against 100 million rubles in2001, but growth in the trade turnover of thissegment of the market was not accompanied bythe expansion of its instrumental structure. Thelevel of diversification of the market remainedlow.

MICEX and the SPCE remained the principalcurrency futures trading floors in 2002. The vol�ume of currency futures operations continued toexpand that year: the average daily US dollar open

positions on MICEX and the SPCE rose from $2.2million in 2001 to $6.5 million in 20021.

Despite its dynamic growth, imbalances re�mained on the derivatives market caused by theuneven development of its various segments. Me�dium� and long�term contracts were still not onthe market and there were no interest, commod�ity and credit derivatives. The inadequate legalframework remained a major problem for the de�rivatives market.

1 Average annual values are used in the calculation.

Chart 24


50

I.4. BALANCE OF PAYMENTS

AND FOREIGN DEBT

I. BALANCE OF PAYMENTS

Russia continued to enjoy a stable balance of pay�ments in 2002 as foreign trade conditions weregood and large quantities of borrowed capitalflowed into the private sector.

The Russian Government serviced its foreigndebt obligations fully and on time and the count�ry’s international reserves continued to grow.

CURRENT ACCOUNT

The current account surplus amounted to$32.8 billion, a fall of 6% from the previous year’s$35 billion. The surplus in Russia’s trade withnon�CIS countries amounted to $29.6 billion andCIS countries $3.2 billion.

Foreign trade turnover expanded 8% to morethan $168 billion. Exports rose 5% and imports13%. As a result, the balance of trade surplusslightly contracted (by 4%) but at $46.3 billionit was one of the largest in recent years.

Foreign trade conditions improved for Russiacompared with the previous year: the export con�tract price index stood at 96.1% and import con�tract price index was 93.4%.

Exports of goods were valued at more than$107 billion, of which the value of exports to non�CIS countries amounted to $91 billion (a rise of5%) and exports to CIS countries $16 billion (anincrease of 7%).

As export prices fell, the factor that ensuredthe favourable dynamics of exports was the ex�pansion of export volumes (by 10%), which re�flected a rise in the demand for Russian productson foreign markets.

Exports of oil and petroleum products ex�panded at rapid rates in volume terms (16% and18% respectively).

Crude oil, petroleum products and natural gasaccounted for 52% of the total value of exportsand the value of exports of these raw materialsincreased by $4.1 billion.

Exports of other goods rose by $1.3 billion,also as a result of growth in export volumes, whichoffset a fall in the prices of most commodities: foodprices fell 7%, ferrous and non�ferrous metalprices were down 2%, prices for engineeringproducts declined 5% and chemical prices de�creased 7%.

The leading importers of Russian productswere Germany (7.5%), Italy and the Netherlands(7% each), China (6.4%) and Ukraine andBelarus (5.5% each).

Imports of goods amounted to $61 billion, ofwhich imports from non�CIS countries were val�ued at $48.8 billion (a rise of 20%) and importsfrom CIS countries $12.2 billion (a fall of 7%).

A rise in the demand for imports, caused byincreased incomes in the economy, was manifestin the further expansion of import volumes (by21%). At the same time, in 2002 imports grew

I . 4 . B A L A N C E O F P A Y M E N T S A N D F O R E I G N D E B T

51

more slowly than in 2001 in terms of both valueand volume.

As for the commodity structure of imports, theshare of machinery, equipment and vehicles ex�panded from 34% to 36%, the share of chemicalproducts contracted from 18% to 17% and theshare of foodstuffs remained unchanged from thebase period at 22%.

The largest exporters to Russia were Germany(14% of Russian imports), Belarus (9%), Ukraine(7%), the United States (6%) and China (5%).

The deficit in the balance of services in�creased 7% to $9.1 billion.

The turnover of international services ex�panded by $5.1 billion to $35.2 billion, exceed�ing the highest level registered in 1997; exportsof services rose 21% and imports 15%.

Operations relating to travel and tourism ac�counted for the largest share of the internationalservice turnover, expanding from 45% to 46%;the share of transport services contracted from25% to 24% and that of other services stood atabout 30%.

Russia exported services to the total amountof $13 billion against $10.8 billion in 2001, ofwhich transport services were valued at $5.5 bil�lion against $4.7 billion, travel�related services$4.2 billion against $3.6 billion and other ser�vices $3.4 billion against $2.6 billion.

Exports of international transport servicesrose 18%, mainly owing to operations with non�CIS countries. The most rapid rates of growthwere registered in pipeline and air transport.

Travel�related services, which were valued at$12 billion against $10 billion a year earlier, ac�counted for 54% of service imports, which to�talled $22.1 billion over the year. The main fac�tor of growth in service imports was a rise in realdisposable income.

Imports of transport services fell 4%, which,given appreciable growth in commodity imports,testifies to the increased competitiveness of Rus�sian carriers. The value of transport service im�ports amounted to $2.9 billion.

There was a surplus of $200 million in thebalance of wages against $100 million in 2001.

Wages and salaries paid to foreign workersremained unchanged from the previous year at$500 million, while the number of non�residentworkers and employees in Russia fell 19%.

The incomes of Russians working abroad to�talled $700 million, an increase of 13%, causedby growth in the number of Russian residentsworking abroad and a rise in their averagewage.

The deficit in the balance of investment in�comes rose from $4.1 billion to $4.3 billion.Owing to interest rate dynamics on internationalfinancial markets, the anticipated incomes fellalmost 20% year on year to $4.9 billion. The to�tal amount of interest due stood at $9.2 billionand the government sector accounted for 68% ofthat amount.

Actual interest payments on the federalgovernment’s foreign debt totalled $5.1 billionagainst $5.9 billion in the previous year.

CAPITAL AND FINANCIAL ACCOUNTS

CAPITAL ACCOUNT. The balance of capital trans�fers was negative. Valued at $12.4 billion, itlargely resulted from operations connected withthe settlement of debt on liabilities and assets ofthe former USSR.

At the same time, the balance of migrants’ trans�fers, which includes the value of migrants’ propertyand funds, was also negative (—$500 million).

FINANCIAL ACCOUNT. The financial account defi�cit (here and below figures apply to the year un�der review and base year net of operations relat�ing to debt remission) amounted to $13.4 billion,reflecting the excess of foreign capital outflowover foreign capital inflow. However, the finan�cial account deficit contracted year on year (in2001 it was valued at —$16.0 billion).

The value of foreign liabilities increased by$7.5 billion (during the base period, it fell by$1.4 billion).

Different sectors of the economy made differ�ent contributions to this value. The governmentsector’s liabilities declined by $6.8 billion (in thesame period of the previous year they decreasedby $6.6 billion).

The overall sum of payments made on the prin�cipal debt by the federal government amountedto $6.6 billion, of which $4.2 billion, or 63% ofthe total amount, was paid on the new Russiandebt, including $2.1 billion (31%) paid on loansfrom international financial organisations.


52

Debt payments to the Paris Club of creditornations amounted to $1.4 billion (21%).

The actual debt burden on the economy de�creased: the foreign debt service ratio (the ratiobetween the amount of debt payments and exportsof goods and services) contracted from 11.6% to9.9%, while the ratio between actual paymentsand consolidated budget revenues fell from 14%to 10.6%.

The Russian Government’s foreign borrowingamounted to $700 million. These funds came frominternational financial organisations and wereprovided under bilateral intergovernmentalagreements.

The banking sector’s foreign liabilities slightlyrose (by $1.9 billion against $4.6 billion in 2001).Foreign capital flowed in mostly in the form ofloans and deposits.

As of January 1, 2003, foreign liabilities of thebanking system were valued at $16.5 billion, ofwhich $10.8 billion, or 66%, were short�term li�abilities.

One of the notable developments in 2002 wasthe massive inflow of foreign capital to the non�financial enterprise sector. For the first time since1998, a year of low non�resident investment ac�tivity, capital inflow to the real sector exceeded$12 billion. The export�orientated sectors of theeconomy, particularly raw material sector enter�prises, were especially attractive to investors.Long�term loans accounted for about 67% of netforeign capital attracted to this country ($8.3 bil�lion).

Net inflow of foreign direct investment declinedfrom $2.4 billion to $2.1 billion, whereas invest�ment in Russian corporate securities expanded:growth in non�financial sector liabilities on port�folio investments ($2 billion) was 2.7 times big�ger than a year earlier ($700 million).

Residents’ foreign assets (net of the officialforeign exchange reserves) expanded by$20.9 billion (base year growth was $14.7 bil�lion).

Growth in the government sector’s foreignassets stood at $2 billion, mainly as a result of theaccumulation of overdue interest debt on loansextended to foreign countries by the formerUSSR.

Growth in the banking sector’s foreign assetsslowed to $500 million, or 31%, in 2002 from

$1.6 billion in 2001. Low and volatile interestrates on international financial markets compelledinvestors to look for alternative means of puttingtheir money into the domestic economy.

As of January 1, 2003, banks’ foreign assetsamounted to $22.5 billion, of which 76% wereshort�term financial instruments.

The net international investment position ofthe banking system (the ratio between foreignassets net of reserves and foreign liabilities) in�creased from $5.9 billion to $6.0 billion.

Resident capital outflow from the non�finan�cial enterprise sector, estimated at $18.4 billion,was more intense than a year earlier ($11 billion).At the same time, net outflow of financial re�sources decreased from $16.3 billion to $11.1 bil�lion, owing to the massive foreign capital inflow.

The value of direct and portfolio investmentin the capital outflow structure increased from$2.7 billion to $3.3 billion, but its share con�tracted from 25% to 18%.

The accumulation process of foreign exchangein the non�banking sector stabilised at just$800 million, as foreign exchange lost much of itsattraction as an investment. The contraction ofthe share of household income spent on the pur�chase of foreign exchange from 5.7% to 5.5% mayserve as indirect evidence of that.

FOREIGN EXCHANGE RESERVES. The favourablesituation on international markets and the largecurrent account surplus led to the massive inflowof foreign exchange to the country. A large part ofit was accumulated as international reserves,which rose by $11.4 billion over the year to$44.1 billion as of the end of last year and togetherwith monetary gold reserves stood at $47.8 bil�lion.

Indicators characterising international reservesufficiency improved. Russia has enough gold andforeign exchange reserves to finance imports for6.9 months against 6 months as of January 1,2002.

II. FOREIGN DEBT

Throughout 2002, residents’ foreign debt rose indollar terms from $150.8 billion to $153.5 bil�lion, mainly as a result of the US dollar’s signifi�cant decline against other major world curren�

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53

cies and the ensuing considerable exchange raterevaluations (up to $6.5 billion regarding the of�ficial debt alone).

Most of Russia’s foreign debt is the governmentsector’s liabilities, which amount to $104.7 billion,or 68% of the entire debt). Of this, $103.6 billionis the debt of the federal government and $1 bil�lion the debt of regional governments.

The largest part of the federal government’sforeign liabilities is the debt assumed by Russia assuccessor to the former USSR. As of January 1,2003, this debt amounted to $55.3 billion, or 53%.It includes the debt to the Paris Club of creditornations ($39.2 billion, or 71% of the formerUSSR’s debt), debt to ex�socialist bloc countries($4.1 billion, or 8%), liabilities on the 3rd, 4th and5th tranches of OVGVZ bonds ($1.7 billion, or 3%)and other foreign liabilities ($10.2 billion, or18%), which comprise, among other debts, thedebt owed to countries that are not members ofthe Paris Club, the International Investment Bank(IIB), International Bank for Economic Co�opera�tion (IBEC) and commercial debt.

Russia’s new debt was estimated at $48.4 bil�lion. As before, securities denominated in foreigncurrency (valued at $26.2 billion, or 54% ofRussia’s new debt) and loans from internationalfinancial organisations ($13.3 billion, or 27%)accounted for the largest part of this debt. Thedebt on intergovernmental loans amounted to$5.7 billion (12%) and the debt on ruble�denomi�nated liabilities to non�residents in the form ofGKO and OFZ bonds stood at $500 million (1%).

Russian regional governments’ foreign debtremained unchanged at $1 billion.

Foreign debt owed by the banking system rose12% to $15.2 billion.

The biggest growth in debt obligations to non�residents was registered in the non�financial en�terprise sector, whose debt increased by $9.6 bil�lion.

As a result, as of January 1, 2003, the ratio offoreign debt of all sectors of the economy to GDPfell to 44% from 49% at the beginning of 2002,in which the share of the government sector’s debtcontracted from 37% to 30%.


54

I.5. THE WORLD ECONOMY AND

INTERNATIONAL FINANCIAL MARKETS

orld economic growth accelerated andinternational trade volumes ex�panded in 2002. The main factor of

growth in business activity in the world was theexpansion of the production of goods and servicesin the United States, caused by a rise in domesticdemand in that country. US imports of goods andservices in 2002 increased, while exports fell. Arise in net demand for imported goods in theUnited States was a major factor of growth inoutput in European and Asian countries, whichsell a large part of their products on the US mar�ket and are major importers of US goods.

At the same time, in 2002 the United Statesand other industrialised nations continued to seeinvestment in production fall. Their federal bud�get performance deteriorated and imbalances intrade between individual countries increased. Asinvestors were not quite certain about the irrevers�ibility of the post�recession economic recovery, aspessimism about corporate profit forecasts pre�vailed and as the credibility of corporate reportingand audit practices declined, share prices fell onthe stock markets in the United States, WesternEurope and some Asian countries. The crisis inArgentina destabilised the economic, monetary andfinancial situation in Latin America.

ECONOMIC GROWTH. According to an IMF esti�mate, the world’s real output growth rates quick�ened to 3% in 2002 from 2.3% in 2001. The ac�

celeration of economic growth in theindustrialised nations was more significant thanin the countries that had not reached a compa�rable level of development. Real GDP growth inthe industrialised nations in 2002 is estimated at1.8% against 0.9% in 2001. Production growthin developing countries was not so impressive —4.6% in 2002 against 3.9% in 2001. Growth inoutput in transitional economies in 2002 was notso dynamic as in the previous year — 4.1%against 5.1% in 2001.

US real GDP expanded 2.4% in 2002 against0.3% in 2001. The main factor of the accelera�tion of US economic growth rates was a moredynamic rise in domestic demand than in the pre�vious year. A cut in personal income tax, whichalong with low mortgage interest rates and slowerinflation led to a significant acceleration of growthin real disposable income (in 2002, US real dis�posable income rose 4.3% against 1.8% in 2001),facilitated a rise in domestic demand.

At the same time, the investment recessioncontinued in the United States in 2002. The ra�tio of the utilisation of production capacity fellyear on year and the number of jobs in the manu�facturing sector declined significantly. As a resultof a fall in US corporate stock prices, the net valueof the household sector’s aggregate assets de�creased relative to the sector’s disposable income.In that situation, consumer spending increasedunevenly during 2002 and that led to significant

W

I . 5 . T H E W O R L D E C O N O M Y A N D I N T E R N A T I O N A L F I N A N C I A L M A R K E T S

55

REAL GDP GROWTH IN LEADING INDUSTRIALISED NATIONS IN 2002

(as % of 2001)

Japan

USA

UK

EU

Canada

EMU

Germany

France

Italy

2.5 3.0 3.50.5 2.00.0 1.51.0

IMF forecast (October 2001)2002

Chart 25

fluctuations in GDP growth rates from quarterto quarter.

The supply of US goods, mainly investmentgoods, to foreign markets declined in 2002, whileUS demand for foreign goods, especially consumergoods such as cars, rose. The factors behindgrowth in US net demand for foreign goods werethe dollar’s significant rally in 1995—2001, a risein US domestic demand in 2002 and a slowdownin domestic demand in countries which are theUnited States’ leading trading partners.

A fall in imports had a decisive effect on GDPgrowth rates in the Economic and MonetaryUnion (EMU), while a rise in exports became adecisive factor of positive production dynamics inJapan and played a part in accelerating economicgrowth rates in other Asian countries and USpartners under the North American Free TradeAgreement (NAFTA).

Canada’s real GDP rose 3.4% in 2002 against1.5% in 2001. Positive production dynamics inthat country resulted not only from growth inspending on individual consumption, but also arise in investment activity (private sector fixedcapital investment in Canada rose 1.6% in 2002).A major factor of recovery in the Canadianeconomy in 2002 was a rise in US demand forhousing construction materials imported fromCanada.

The EMU’s real GDP growth rate sloweddown to 0.8% in 2002 from 1.4% in 2001. A

major factor of GDP expansion was a fall in im�ports to the EMU. At the same time, this fall re�flected the slowing of growth in consumer spend�ing and investment decline. Production growthrates slowed in 2002 in Germany, France andItaly. Economic growth slowed year on year to0.2% from 0.6% in Germany, to 1.2% from1.8% in France and to 0.4% from 1.8% in Italy.Growth in business activity in European coun�tries was contained to a great extent by the debtproblems of telecommunications companies andthe difficulties experienced by financial institu�tions as a result of a rise in the number of insol�vent debtors, especially bankrupt companies inthe United States and Argentina.

The non�EMU member countries of the Euro�pean Union (Britain, Sweden and Denmark) reg�istered a fall in business activity in 2002 comparedwith 2001, although it was higher than in theEMU. This fact is attributable to more dynamicgrowth in private sector consumer spending, en�couraged by a relatively favourable situation onthe labour market. In Britain, a rise in householdsector borrowings, stimulated by low interestrates, also played a positive role. Britain’s realGDP expanded 1.8% in 2002 against 2.1% in2001. Economic growth in the European Unionas a whole slowed to 1% from 1.5% in 2001.

Japan’s real GDP expanded 0.3% in 2002against 0.4% in 2001. A decisive factor of pro�duction growth in Japan was a rise in exports.


56

The favourable situation on export markets al�lowed the Japanese economy to avoid a recessionthat could have been caused by a fall in domesticdemand connected with the structural problemsof the country’s banking system and non�finan�cial corporate sector. A large share of doubtfuland bad loans in credit institutions’ assets seri�ously impaired the system of financial interme�diation in Japan and that, in turn, reduced theeffectiveness of the monetary policy pursued.

Economic growth rates in the new industrialcountries of Asia rose 4.6% in 2002 against 0.8%in 2001, according to an IMF estimate. Produc�tion growth was facilitated by the improved situ�ation on the export markets for industrial goods,but all these countries, except South Korea, ex�perienced a fall in fixed capital investment. SouthKorea’s real GDP growth rates accelerated to6.3% in 2002 from 3.2% in 2001 and Hong Kongregistered a 2.3% rise in its real GDP against0.6% in 2001. In 2002, real GDP expanded 2.2%in Singapore (in 2001 it contracted by 2.4%) and3.5% in Taiwan (in 2001 it fell by 2.2%).

According to an IMF estimate, real GDP ofthe developing countries of Asia rose 6.5% in2002 against 5.7% in 2001. China’s economicgrowth rates accelerated to 8% from 7.3% in2001. One of the contributing factors was China’sentry into the World Trade Organisation(WTO), which led to a rise in Chinese exports,growth in the money income of the urban popu�lation, an increase in the government enterprisesector’s expenditures on investment and the ex�pansion of mortgage lending (encouraging banksto grant mortgage and consumer loans is one ofthe objectives of China’s economic policy; since1998, the value of such loans has amounted toabout 500 billion yuan).

Favourable industrial exports dynamics, a risein prices of some raw materials, the expansion ofhousehold sector consumer spending and govern�ment expenditures and the implementation ofstimulating monetary and fiscal policies in 2002facilitated the acceleration of economic growth inSouth East Asian countries. Real GDP rose 4.2%against 0.4% in 2001 in Malaysia, 3.7% against3.4% in Indonesia, 5.2% against 1.9% in Thai�land and 4.6% against 3.2% in the Philippines.India’s real GDP growth accelerated to 5.1%from 4.1% in 2001.

The slackening of demand for imported goodsand services in EMU and natural disasters in 2002slowed production growth in Central Europeancountries. At the same time, production growthrates remained high in the countries which hadstrengthened their positions on export marketsthanks to an inflow of foreign direct investments.In Hungary real GDP expanded 3.3% against3.8% in 2001 and in the Czech Republic it rose2% against 3.1% in 2001. Economic growth ratesin Poland accelerated to 1.3% from 1% in 2001.

Production growth in countries of Central Asiaslowed down year on year owing to the slowingof economic growth in Russia, their leading trad�ing partner within the framework of the Common�wealth of Independent States (CIS), and a fall inprices of some major exports, such as cotton andnon�ferrous metals. Production growth alsoslowed down in the European members of the CIS.Ukraine’s real GDP grew 4.6% in 2002 against9.2% in 2001.

According to an IMF estimate, the output ofgoods and services in Latin America fell 0.1% in2002 after a rise of 0.6% in 2001. The Argentinecrisis was accompanied by a sharp fall in produc�tion in that country and it destabilised the finan�cial system of neighbouring Uruguay. The region’sproblems were also linked with inadequate exter�nal financing and, in some countries, with politi�cal tension. Argentina’s real GDP contracted10.9% in 2002 compared with a 4.4% fall in 2001.Real GDP growth rates in Chile slowed to 2.1%from 3.1% in 2001, while Brazil’s economicgrowth accelerated to 1.5% from 1.4% in 2001.As Brazil lost much of its credibility on the inter�national capital market owing to its huge govern�ment debt, the country had to conclude a standbyloan agreement with the IMF and adopt a rigid fis�cal policy. Mexico’s real GDP expanded 0.9% in2002 after a 0.3% contraction in 2001, owing to arise in Mexican net exports to the United States.

DOMESTIC DEMAND. US domestic demand ex�panded 3% in 2002 against 0.4% in 2001. Un�like the situation in 2001 when finished productinventories sharply contracted, in 2002 they ex�panded, making a positive contribution to domes�tic demand dynamics and causing gross capitalformation to increase despite a fall in fixed capi�tal investments. Final domestic demand rose 2.4%


57

in 2002 against 1.6% in 2001. The main contri�bution to its growth was made by the householdsector with its increased spending on individualconsumption. The positive contribution of spend�ing on consumption and government sector invest�ment increased. US private sector investment infixed capital fell 3.1% and its contribution to do�mestic demand dynamics remained negative.There was a significant fall in expenditures on theconstruction of production premises and facilities.Investments in machinery, equipment and trans�port vehicles declined, while enterprise expendi�tures on the purchase of computer hardware andsoftware increased. There was a rise in invest�ment in housing construction.

Growth in EMU domestic demand slowed to0.2% in 2002 from 0.9% in 2001, as gross do�mestic investment declined 2.5% and growth inconsumer spending of the household sectorslowed, while growth in government sector ex�penditures accelerated. In Japan, domestic de�mand fell 0.3% in 2002 after it rose 1.1% in 2001.The reason for the decline was the acceleratedreduction of inventories. Final domestic demandrose 0.1%. A 3.8% fall in private sector invest�ment and a 4.7% decline in government sectorinvestment were offset by a rise in spending onconsumption in both sectors.

South Korea registered an expansion of allcomponents of domestic demand in 2002. A risein consumer spending in Taiwan allowed thiscountry to avoid a fall in domestic demand amid areduction in investment. A major factor that off�set investment decline in Singapore was growthin government sector consumption. Hong Kongexperienced a decline in consumption and privatesector investment, which led to a fall in domesticdemand. A rise in domestic demand was a majorfactor of economic growth in developing countriesof South East Asia and Central European states.

INFLATION. US consumer price growth slowedto 1.6% in 2002 from 2.8% in 2001. The baseconsumer price index, which does not comprisefood and energy prices, rose 2.3% against 2.7%in the previous year. Lower inflation in the UnitedStates in 2002 was attributable to a 5.9% fall infuel and energy prices and a 1.5% decline in pro�ducer prices of consumer goods. A major factor ofslowing inflation in the United States was the re�

duction of unit labour costs as a result of a rise inlabour productivity.

EMU consumer prices rose 2.2% in 2002against 2.4% in 2001. Energy prices declined0.6% on the consumer goods market. Producerprices of industrial goods in EMU were down0.1% in 2002. A major factor of a price slowdownin the EMU in 2002 was the euro’s rally. In someperiods of the year the rate of inflation fluctuatedsignificantly owing to volatile oil and food pricedynamics, the rounding�up of prices after the eurowas put into circulation for the public and someother factors.

Japan’s consumer prices fell 0.9% in 2002against 0.7% in 2001. The decline resulted froma fall in nominal household income and expendi�tures amid low business activity and rising un�employment. Most other Asian countries regis�tered slowing inflation and consumer prices fellin China, Hong Kong, Taiwan and Singapore.Inflation rates slowed in the Central Europeancountries. In Hungary consumer price growthslowed to 5.3% in 2002 from 9.2% in 2001, inPoland to 1.9% from 5.5% and in the Czech Re�public to 1.8% from 4.7%. A major factor of theslowing inflation rates in these countries was thestrengthening of their national currencies againstthe US dollar (the Hungarian and Czech curren�cies also rose against the euro). Devaluationcaused a sharp rise in consumer goods prices inArgentina, but price growth slowed in many otherLatin American countries. The inflation rate inMexico fell to 5% from 6.4% in 2001 and in Chileto 2.5% from 3.6%. Consumer price growth inBrazil accelerated to 8.5% from 6.8% in 2001.

EMPLOYMENT. The number of jobs fell in most ofthe industrialised nations. The United States reg�istered a fall in job numbers in the manufactur�ing and mining industries, construction, whole�sale and retail trade and transport and communi�cations. The US jobless rate rose to 5.8% of thelabour force against 4.8% in 2001, reaching thehighest level since 1994. The average duration ofunemployment increased to 9.3 weeks from6.7 weeks in 2001.

The EMU unemployment rate in 2002 rose to8.3% of the labour force against 8% in 2001. InGermany as a whole, i.e. including eastern andwestern parts of the country, the jobless rate in�


58

creased to 9.8% from 9.4% in 2001. Japan’s un�employment rate rose to 5.4% of the labour forcefrom 5% in 2001. Job numbers fell in the manu�facturing industry, wholesale and retail trade,construction, agriculture and the forestry indus�try; there was a major fall in job numbers at largeenterprises (with more than 500 workers andemployees). Unemployment rates rose signifi�cantly in 2002 in Poland, Brazil and the new in�dustrial countries of Asia, except South Korea.

GOVERNMENT FINANCE. Budget performancedeteriorated in many countries in 2002. Growthin government expenditures, necessitated by thegovernment’s new financial policy priorities, andtax cuts created a US federal budget deficit of$231.2 billion (2.2% of GDP) after a surplus of$92.3 billion (0.9% of GDP) in 2001. The USconsolidated budget deficit in 2002 rose to 3.6%of GDP against 0.7% of GDP in 2001.

The economic slowdown led to a fall in EUbudget revenues. According to an IMF estimate,the EU consolidated budget deficit rose to 1.9%of GDP from 1% of GDP in 2001. The EMU con�solidated budget deficit expanded to 2.2% of GDPin 2002 from 1.5% in 2001. Germany’s budgetdeficit of 3.6% of GDP exceeded the 3% limit setby the Maastricht Treaty and the European Pactof Stability and Growth.

Japan’s consolidated budget deficit rose to7.7% of GDP from 7.2% of GDP in 2001. Therewas a rise in the average weighted budget deficitsof the countries in transition.

INTERNATIONAL TRADE AND BALANCES OF PAY�MENTS. International trade turnover expanded2.9% in 2002 against 0.1% in 2001, accordingto an IMF estimate. Aggregate trade volumes ofthe industrialised nations rose after a fall in 2001.

US trade turnover in 2002 remained un�changed from the previous year at $2.4 trillion.Owing to a fall in exports and a rise in imports,the US trade deficit rose to $435.7 billion against$358.3 billion in 2001. The US current accountdeficit increased to 4.8% of GDP in 2002 against3.9% of GDP in 2001 as a result of the expansionof the trade deficit and the reduction in the in�flow of incomes from foreign investment. Thecapital and financial account surplus rose to 4.5%of GDP against 3.8% of GDP in 2001.

EMU trade turnover in 2002 remained un�changed from 2001 at 2.6 trillion euros. A rise inexports and a fall in imports caused the EMUtrade surplus to expand to 146.1 billion euros from76.6 billion euros in 2001. The EMU current ac�count surplus in 2002 amounted to 0.9% againstthe deficit of 0.2% of GDP in 2001. The capitaland financial account deficit grew to 2.2% of GDPfrom 0.5% of GDP in 2001 as a result of a sharpcontraction of the inflow of financial credits, de�posits and cash to the EMU (there was a simulta�neous fall in net outflow of direct investment fromthe EMU). The EMU’s official foreign exchangereserves increased to $246.5 billion at the end of2002 from $234.5 billion at the end of 2001.

Japan’s trade turnover in 2002 expanded to108.8 trillion yen against 105.6 trillion yen in2001. Owing to a rise in exports, the country’strade surplus rose to 6.6 trillion yen against3.2 trillion yen in 2001. Japan’s current accountsurplus increased to 2.8% of GDP from 2.1% ofGDP in 2001. The capital and financial accountdeficit rose to 1.6% of GDP against 1.2% of GDPin 2001. The main reason for the increase wasthe repatriation of capital brought to Japan ear�lier in the form of portfolio investments. Japan’sofficial foreign exchange reserves amounted to$461.2 billion as of the end of 2002 against$395.2 billion as of the end of 2001.

Britain’s trade turnover in 2002 amounted to557.3 billion pounds against 557.7 billion poundsin 2001. As a result of a fall in imports of goodsand a rise in exports of services, the country’strade deficit contracted to 18.9 billion poundsfrom 22.2 billion pounds in 2001. The UK cur�rent account deficit in 2002 fell to 0.8% of GDPfrom 1.3% of GDP in 2001, while the capital andfinancial account surplus rose to 2.3% of GDPfrom 1.7% of GDP. The main reasons for thelatter’s expansion were an increase in the inflowof portfolio investments to Britain and a decreasein their outflow from the country. Britain’s offi�cial foreign exchange reserves rose to $39.4 bil�lion as of the end of 2002 from $37.3 billion as ofthe end of 2001.

Growth in exports accelerated in developingcountries, but import growth rate quickened evenmore as a result of a rise in domestic demand inAsian countries and an increase in the demandfor imported goods in the Middle East. By con�


59

trast, the countries in transition experienced asharp fall in import growth rates amid a moder�ate acceleration of export growth. Import growthslowed down significantly in the Czech Republicand Slovakia, owing to a fall in the demand forimported investment goods and materials used inthe production of export commodities. Growth inimports of goods and services in the countries withtransition economies ceased to exceed the expan�sion of export volumes.

According to an IMF estimate, the volume ofnet external financing of developing countries in2002 contracted just as in 2001 by $14 billion,while the volume of net external financing of thecountries in transition expanded by $12.4 billionagainst $6 billion in 2001. The inflow of directinvestment into developing countries decreasedin 2002 owing to a fall in direct investment in�flow into Latin America. The inflow of direct in�vestment into the countries with transition econo�mies expanded. The share of foreign direct invest�ment in the structure of the sources of externalfinancing in developing countries contracted to alittle more than 80% from 90% in 2001 and inthe countries in transition it declined to 60% frommore than 75% in 2001.

COMMODITY MARKETS. Growth resumed in worldtrade in goods in 2002. After a 0.5% contractionin 2002, it rose 3.1% in 2002, according to IMFdata. Prices on world commodity markets mainlyincreased during the year. In 2002, the averageprice of Brent, Dubai and WTI crude rose 2.8%year on year to $25 per barrel. Prices of non�en�ergy products went up 0.7% on average.

Oil price growth in 2002 was stimulated bythe resumption of growth in demand, connectedwith the increased consumption of energy in theworld. Among other factors that caused oil pricesto rise were the decision by the OPEC membercountries to keep oil production quotas unchangedfor 2002, the escalation of tension in the MiddleEast, Iraq’s embargo on oil supplies to the USmarket and the decision by the European Unionand some other countries to increase their strate�gic oil reserves. One of the main factors that de�termined oil price dynamics in the second half of2002 was tension in relations between the UnitedStates and Iraq. In addition, a sharp rise in theprice of oil in December 2002 was provoked by a

political crisis in Venezuela that paralysed thecountry’s oil industry and caused a contractionin oil supplies to the world market. Petroleumproduct price dynamics were affected not only bythe price of oil, but also a rising demand for fuel.Despite the resumption of growth in natural gasprices, in 2002 their level was 15% lower than in2001 on the US market and 25% lower on theEuropean market.

Although prices of metal products in 2002 fell2.7% on average year on year, the world’s eco�nomic recovery caused the demand for some met�als and their prices to rise in 2002. A minor priceupturn was registered on the steel market, whilean upward price trend was seen on the aluminiumand copper markets; the dynamics of aluminiumand copper reserves were volatile in 2002. Theprice of nickel mainly rose in 2002 as its supplydeclined significantly and reserves dwindled. Theprice of aluminium in 2002 fell 6.6% on averageyear on year to $1,351 per tonne, the price ofcopper was down 1.3% to $1,560 per tonne andthe price of nickel rose 13.6% to $6,783 pertonne. The main factors of growth in gold pricesin 2002 were not only the dollar’s fall againstmost other major currencies, the decline of ma�jor stock indices and investors’ increased interestfor gold, but also the escalation of tension in theMiddle East. At the end of 2002, the price of goldhad soared to a five�year high of nearly $350 pertroy oz. Platinum and palladium prices changeddifferent ways. Growth in platinum prices, causedby market shortages, was accompanied by a fallin the price of palladium that resulted from a dropin demand as producers accumulated considerablereserves. The average price of gold in 2002 rose14.4% year on year to $310 per troy oz, the priceof platinum increased 1.9% to $539 per troy ozand the price of palladium fell 44% to $337 pertroy oz.

Bad weather and rising demand led to a risein food prices and prices of agricultural raw ma�terials in 2002. Food prices increased 0.9% yearon year and prices of agricultural raw materialsrose 1.8%. Prices of beverages (tea, coffee andcocoa) in 2002 rose 16.5% after their significantdecline in the period from 1998 through 2001.

FOREIGN EXCHANGE MARKET. The US dollar fellagainst every other major world currency except


60

RATES OF GROWTH IN EXCHANGE RATES OF FOREIGN CURRENCIES

AGAINS US DOLLAR IN 2002 (as % of 2001)*

Euro

Japanese yen

British pound sterling

Australian dollar

Canadian dollar

Swiss franc

Hungarian forint

Polish zloty

Czech coruna

Indian rupee

South Korean won

Brazilian real

Mexican peso

—25 —20 —15 —5—10 0 5 10 15 20

* (—) signifies appreciation of th dollar; (+) signifies its depreciation.

Source: Reuters.

Chart 26

the Japanese yen in 2002. The main reason forthe dollar’s decline was growth in the US cur�rent account deficit. At the same time, US inter�est rates in 2002 were lower than in 2001. Asthe anticipated return on capital invested in UScorporate stocks decreased, doubts appearedabout the fairness of US corporate financial re�porting. As a result, in 2002 net inflow of foreigncapital to the United States (the balance of op�erations connected with US residents’ financialobligations to non�residents) declined year onyear.

The average annual rate of the US dollaragainst the euro fell 5.2% in 2002. It was forthe first time since 1999 when the single Euro�pean currency was introduced that the europosted a full�year gain against the dollar. InNovember 2002, for the first time since Decem�ber 2000, the euro’s average monthly rate ex�ceeded 1 dollar again. The US dollar lost 4.1%against the British pound, less than it lost againstthe euro owing to profound interrelations be�tween the UK and US corporate sectors. Thedollar fell 8.2% against the Swiss franc, a sig�nificant decline caused by the decreased cred�ibility of US and EMU financial institutions. Atthe same time, the dollar gained 3.1% againstthe Japanese yen, as the maintenance of a weakyen was in 2002 practically the only instrumentof economic policy capable of ensuring growthin production.

MONEY MARKET. The average annual level of in�terest rates on the money markets of the leadingindustrialised nations in 2002 was considerablylower than in 2001. It was mainly the result oftheir fall in 2001 when the monetary authoritiesof these countries sought to stimulate economicgrowth by low interest rates on loans. Through�out 2002, the central banks of most of theindustrialised nations did not change the bench�mark interest rates they had set in 2001 until thefourth quarter of last year.

In continuing to implement a policy of zeromoney market interest rates, the Bank of Japanin October raised the banking sector liquiditybenchmark from 10—15 trillion yen to 15—20 trillion yen. The US Federal Reserve in No�vember lowered the benchmark federal funds ratefrom 1.75% to 1.25%. The European CentralBank in December cut the base refinancing ratefrom 3.25% to 2.75%. The Bank of England leftthe repo rate unchanged in 2002. The NationalBank of Switzerland reduced twice the bench�mark 3�month LIBOR on the Swiss franc, in Mayand in June 2002 (by half a percentage point inboth cases).

STOCK MARKET. Share price levels on the stockmarkets of the United States, Western Europeand some Asian countries declined in 2002. Adecisive factor of the US share price downturn in2002 was a loss of confidence in US companies,


61

AVERAGE ANNUAL GROWTH IN SHARE PRICE INDICES IN 2002

(as % of 2001)

Dow Industrial Average (USA)

NASDAQ (USA)

Nikkei 225 (Japan)

Xetra DAX (Germany)

Hang Seng (Hong Kong)

KOSPI (South Korea)

Bovespa (Brazil)

I.P.C. (Mexico)

MerVal (Argentina)

BUX (Hungary)

PX�50 (Czech Republic)

WIG (Poland)

—40 —30 —10—20 0 10 20 30 40

Source: Reuters.

Chart 27

caused by corporate reporting and audit fraudscandals. The poor financial performance of long�distance telecommunications companies andlosses incurred by financial institutions had anadverse effect on the stock markets of the leadingindustrialised nations in 2002. In Japan, the low�ering of the investment ratings of credit institu�tions and the absence of a final programme andexact schedule for banking sector reform playeda negative role. The price level of US industrialcorporate shares declined 9.7%, while the pricelevel of US high�tech corporate stocks was down33.1%. Share price levels fell 25.6% in Germany,16.2% in Japan and 16.3% in Hong Kong.

In the meantime, there was a rise in price lev�els on the stock markets of South Korea, Taiwanand most of the South East Asian nations in 2002.This growth was the result of a rise in businessactivity in these countries, especially the improve�ment of the export situation and the increaseddemand for high�tech equipment components.

A rise in share prices on Central Europeanmarkets, excluding Poland, was the result of dy�namic economic growth in these countries, thecontinued inflow of foreign direct investment andthe achievement of a new level of certainty re�garding EU membership. Despite significantintrayear fluctuations, the average level of shareprices in Argentina in 2002 was higher than in2001. The country’s switch to a floating exchangerate policy was accompanied by a sharp devalua�

tion of the peso and had numerous negative con�sequences, but at the same time, it made Argen�tinian goods more competitive.

CAPITAL MARKET. Yields fell on US, EMU andJapanese government securities in 2002. A risein investor demand for highly secure financial as�sets that paid guaranteed income was attribut�able to the expectations of a low level of returnon capital invested in stocks and various circum�stances that undermined confidence in privatenon�financial companies and financial institu�tions. Forecasts for the short�term prospects forthe US economy in 2002 stabilised (not finally,though), but longer�term projections deterio�rated, affecting the US government securitiesyield curve accordingly. The average yield onshort�term debt instruments in 2002 was consid�erably lower than in 2001. It was the result of itsfall in 2001, caused by the unprecedented easingof monetary policy by the Federal Reserve.Throughout 2002, the yield on short�term debtobligations was relatively stable, while the yieldson 2� to 10�year bonds in 2002 fell more steeplythan in 2001.

The yield on US government securities (de�nominated in dollars) with all terms to maturityin 2002 was lower on average than the yield onthe EMU’s euro�denominated bonds with the sameterms to maturity. The yield on EMU governmentbonds fell in 2002 and the shorter the term to ma�


62

turity was, the deeper the fall. This trend reflectedthe unfavourable nature of short�term prospectsfor the eurozone economy and the worsening fore�casts for the next two to three years amid relativelystable forecasts for the next five to 10 years. Theaverage annual yields on EMU securities with dif�ferent terms to maturity in 2002 formed a gentlyrising curve (in 2001 they had the outlines of aparabola with its minimum falling on instrumentswith 1�year terms to maturity). The yield on Japa�nese government bonds also declined in 2002. Theyields on securities with terms to maturity from3 months to 1 year were close to nil. The yield curvehad a positive inclination in the interval between2 years and 30 years, while the differences betweenthe average annual yields on papers with differentterms to maturity remained virtually unchangedin 2002.

The corporate reporting fraud scandals in theUnited States seriously undermined investors’confidence in private corporate borrowers. Inves�tors had doubts about the creditworthiness of USand Western European telecommunications com�

panies and there was concern about the lossesincurred by European financial institutions as aresult of the devaluation of their stock and corpo�rate bond portfolios and the bankruptcies of somecompanies that owed big debts to US and Euro�pean banks.

Credit became more expensive for corporateborrowers with both “speculative” and “invest�ment” credit ratings and that led to a reductionin 2002 in the net value of securities issued onthe international capital market. Last year saw adramatic fall in confidence in Latin Americancountries, especially Argentina, which was com�pletely barred from the international capital mar�ket. Investors’ attitude to the emerging marketsremained selective, an encouraging change fromuniversal mistrust noted in 1998 after a series ofmonetary and financial crises in Asia. A relativelyhigh level of confidence in the economic policy andbalances of payments of Asian countries in 2002allowed some of them to regain access to the in�ternational capital market, while other secured abroader access to this market.

IIBANK OF RUSSIA

ACTIVITIES

64


II.1. MONETARY POLICY

II.1.1. OBJECTIVES AND RESULTS OF MONETARY POLICY

uidelines for the Single State MonetaryPolicy for 2002 set as the ultimate objec�tive of monetary policy the reduction ofinflation to 12—14% a year, a rate which

corresponded to the projected GDP growth of3.5—4.5%.

To keep inflation within the established limitsand at the same time preserve a controllable float�ing exchange rate regime, the Bank of Russia usedthe M2 aggregate of money supply as an interme�diate monetary policy target, because despitevarying time lags and frequent changes in domes�tic and external economic environment, there isan obvious interconnection between money sup�ply and inflation.

It was no easy task for the Bank of Russia tocorrect inflation promptly through monetaryregulation, as a large part of service prices wereregulated by the government. Their short�termdynamics are not the direct consequence of mon�etary policy; they depend on the state of localbudgets, changes in the prices of goods producedby the natural monopolies and the efficiency ofthe sectors that provide paid services to the pub�lic and almost instantly tell on consumer pricedynamics. Therefore, to evaluate the relevanceof monetary policy at any given stage to the tar�get set for the general rate of inflation, the Bankof Russia in 2002 used core inflation as an indi�cator which characterised better than any other

indicator persistent and long�term results of theeffect of monetary factors on inflation in theeconomy.

The actual rate of inflation in 2002 stood at15.1% (calculated from December to December),a fall from 2001 (18.6%). Core inflation, whichran at 10.2%, was practically equal to the levelconsidered by the Bank of Russia as a target. Theovershoot of the actual inflation rate over the tar�get rate reflected the increased influence of struc�tural factors on price dynamics in 2002 and waslargely caused by the persistently rapid rates ofgrowth in prices for paid services provided to thepublic. Growth in service prices accounted for38.9% of the overall price growth on the con�sumer goods market against 27.6% in the previ�ous year.

In determining the demand for money in2002, the Bank of Russia believed that it wouldbe affected, above all, by such factors as contin�ued economic growth, a rise in real disposablemoney income and the increased propensity tosave. Taking macroeconomic forecasts into con�sideration, the Bank of Russia expected the de�mand for rubles to rise 22—28% in 2002. Atthe same time, it did not rule out changes in thedemand for the national currency during the yearowing to the volatile dynamics of the velocity ofmoney and uncertainty about foreign trade de�velopments.

G

I I . 1 . M O N E T A R Y P O L I C Y

65

M2 MONEY SUPPLY AND CONSUMER PRICES

GROWTH RATES (%)

170

165

160

155

150

145

135

140

130

200220012000

140

136

132

128

124

120

112

116

108

M2 relative to corresponding months of previous year

Consumer prices in moving 12�month period

M2 Consumer prices

126

124

120

116

112

122

118

114

110

108

168

164

156

148

140

160

152

144

136

132

M2 MONEY SUPPLY AND CORE INFLATION DYNAMICS

IN MOVING 12�MONTH PERIOD (%)Core inflation М2

1.11

.200

0

1.01

.200

3

1.01

.200

1

1.03

.200

1

1.05

.200

1

1.07

.200

1

1.09

.200

1

1.11

.200

1

1.01

.200

2

1.03

.200

2

1.05

.200

2

1.07

.200

2

1.10

.200

0

1.08

.200

2

1.12

.200

0

1.04

.200

1

1.08

.200

1

1.12

.200

1

1.04

.200

2

1.10

.200

2

1.02

.200

1

1.06

.200

1

1.10

.200

1

1.02

.200

2

1.06

.200

2

1.12

.200

2

1.09

.200

2

1.11

.200

2

Core inflation М2, 8�month lag

Chart 28

Chart 29

Building upon the controllable floating ex�change rate regime, the Bank of Russia in 2002pursued a policy aimed at ensuring smooth dy�namics of the ruble/dollar rate and preventingsharp fluctuations. Over the year (from Janu�ary 1 to December 31, 2002), the exchange rateof the ruble against the dollar changed from30.1372 to 31.7844, which means that the rublelost 5.5% of its value. In 2001, it lost 7.0% ofits value.

The average annual real appreciation of theruble against the dollar, an indicator allowing totake into account the intrayear exchange rate fluc�tuations and the rates of inflation in Russia andthe United States, decreased from 13.9% in 2001to 6.1% in 2002.

High prices for major Russian export com�modities allowed Russia not only to maintain sta�bility on the domestic foreign exchange market,but also increase its international reserves to a

66


PROJECTED AND ACTUAL M2 GROWTH RATES (moving year, %)

70

60

50

40

30

20

200220012000

Actual Projected

70

60

50

40

30

20

M2 GROWTH RATES IN 2001 AND 2002 (%)

50

40

30

20

10

0

—101.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.01

2001 2002

50

40

30

20

10

0

—10Chart 31

Chart 30

higher�than�expected level. In 2002, Russia’sinternational reserves (net of the Bank of Russiashort�term liabilities denominated in freely con�vertible currencies) expanded by $13.2 billion to$47.8 billion as of the beginning of 2003.

As Russia continued to enjoy a strong balanceof payments in 2002, the main source of growthin the money supply for most of the year was Bankof Russia purchases of foreign exchange on thedomestic market.

The analysis of the monetary situation in 2002showed that all the substantive assumptions laidat the basis of the projected demand for moneythat year proved right. The money supply (mon�etary aggregate M2) expanded 32.3% in 2002, a

significant decrease on the previous year’s growthof 40.1%, and on the whole corresponded to theforecast path of the demand for money. However,despite a strong balance of payments, the effortsto offset increases in government�regulated ser�vice prices by tightening the dynamics of monetaryaggregates failed.

Although the quantitative parameters of thevelocity of money cannot be accurately predictedat present, its dynamics last year almost com�pletely corresponded to the forecast trend for theyear. The velocity of money, calculated by the M2aggregate, for example, slowed in 2002 from 7.0to 6.2 on an average annualised basis. Significantgrowth in long money in the money supply struc�


67

32

28

24

20

12

4

0

1997 20022001200019991998

RATIO BETWEEN BALANCES IN FEDERAL AND REGIONAL GOVERNMENT ACCOUNTS

IN BANK OF RUSSIA AND M2 AGGREGATE (actual values and trend, %)

32

28

24

20

12

4

16

8

16

8

0

8.8

8.4

8.0

7.6

7.2

6.4

6.0

1998 2002200120001999

VELOCITY OF M2 MONEY

(on an average annualised basis)

6.8

8.8

8.4

8.0

7.6

7.2

6.4

6.0

6.8

Chart 33

Chart 32

ture was of great importance for the slowing ofthe velocity in 2002. Among the contributing fac�tors were year�on�year increase in real disposableincome, the appreciation of the ruble, the in�creased confidence in the banking system andmore or less attractive terms of household bankdeposits. As a result, in 2002 time deposits of pri�vate individuals were the most dynamic elementof the money supply.

As was expected, the velocity of money in 2002decreased more slowly than in the previous year:in 2001 it slowed by 15.6%, whereas in 2002 itslowed by 10.7%. A factor that has contained thereduction of the velocity in the past few years is alarge proportion of cash in the money supply, de�

spite the expansion of the share of its less liquidcomponents.

The velocity of money dynamics were seriouslyaffected last year by significant year�on�yeargrowth in foreign exchange accumulations by thehousehold sector (in both cash and non�cashform). The public’s persistent tendency to keepsavings in foreign currency to some extent con�tained demand for the national currency.

The state of settlements continued to improvelast year and the share of money in companies’working assets expanded, although the contribu�tion of the increased monetisation of settlementsto the slowing of the velocity in 2002 was notice�ably smaller than a year earlier. Thus, the share

68


Chart 34

DYNAMICS OF AVERAGE MONTHLY BALANCES IN CREDIT INSTITUTIONS’

CORRESPONDENT ACCOUNT IN 2001 AND 2002 (billion rubles)

115

110

100

105

90

80

70

95

85

75


2001 2002

115

110

100

105

90

80

70

95

85

75

65

1 These are Goskomstat data on payments for the products shipped, work performed and services provided by the

largest Russian taxpayers and industrial monopolies.

of products that was paid for in cash as a propor�tion of the total value of paid�for products1 in 2002was 82% on average, an increase of 4.6 percent�age points compared with 2001, while in 2001the increase stood at 7.9 percentage points.

Nevertheless, growth in the money supply,commensurate with the demand for money, raisedthe general level of monetisation of the economy(by the M2 aggregate) from 14.3% to 16% lastyear and, taking into account foreign currencydeposits (by the M2X aggregate), from 19.1% to20.8%.

The federal budget surplus in 2002 was ac�companied by the accumulation for most of theyear of vast funds in all budget accounts and theaccounts of government extrabudgetary funds inthe Bank of Russia. At the same time, the poten�tial of this means of containing the money supplydeclined significantly in 2002 and the changeddynamics of the ratio of government deposits withthe Bank of Russia to the money supply bear thisout to some extent. In 1999—2001 this ratio con�stantly increased, whereas in 2002 the oppositetendency prevailed and the ratio of the govern�ment deposits with the Bank of Russia to the M2aggregate of money supply decreased over the yearto about 22% on average against 27% in 2001.

Monetary regulation brought about somechanges in banking sector liquidity compared with

the previous year. In 2001, the average annuallevel of funds in credit institutions’ correspondentaccounts rose 6.4%, whereas in the year underreview their growth stood at just 2.4%. At thesame time, there was a significant rise in the valueof commercial bank deposits with the Bank ofRussia, which almost doubled year on year.

As the money supply expanded significantlyowing to increase in net international reserves,the rate of growth in bank claims on the non�fi�nancial enterprise and household sectors in 2002decreased by almost half year on year. As before,most of the loans were extended to corporate bor�rowers, but the share of loans extended to indus�trial enterprises in 2002 contracted to 36.8% ofthe total amount of the clients’ debt on loansagainst 41.1% in 2001, while the share of loansextended to trade and public catering establish�ments expanded to 21.5% from 19.5% in 2001.The share of debt on bank loans extended to pri�vate individuals slightly expanded (to 8.2% from7.2% in 2001).

The money multiplier, calculated by the broadmonetary base, remained practically unchangedin 2002.

Regulating banking sector liquidity by con�ducting its operations and changing the refinanc�ing rate, the Bank of Russia in 2002 exerted in�direct influence on the dynamics of interest rates


69

0.18

0.16

0.14

0.12

0.10

0.06

0.04

1998 2002200120001999

DYNAMICS OF RATIO BETWEEN FUNDS IN CREDIT INSTITUTIONS’

CORRESPONDENT ACCOUNTS AND NON�FINANCIAL SECTOR DEPOSITS

0.08

0.18

0.16

0.14

0.12

0.10

0.06

0.04

0.08

Chart 35

on commercial banks’ operations. A cut in therefinancing rate did not imply an easing of mon�etary policy in the conditions of a strong balanceof payments, but brought it closer to the existinginterest rates amid the declining level of inflationand inflation expectations. Along with the reduc�tion of credit risk, this preconditioned a lowerlevel of interest rates on commercial banks’ loansto businesses compared with 2001.

The margin on banks’ lending and deposit op�erations continued to fall last year, declining from11.3 percentage points in December 2001 to 10.7percentage points in December 2002. At the sametime, the difference between credit and depositprices remains quite big, reflecting the existenceof high credit risk and inadequate legislative pro�tection of creditors’ rights.

The analysis of the developments in 2002 showsthat the trends and factors that influenced the in�flation process in the year under review createdproblems for the attainment of the principal objec�tive of monetary policy. Owing to a massive inflowof foreign exchange into the country as a result of

rising world energy prices, in the second half ofthe year the M2 dynamics tended to move closerto the upper limit of the projected path. Neverthe�less, the expansion of the money supply in the firsthalf of 2002 was commensurate with the demandfor money with inflation running at 14%. At thesame time, the measures taken by the Bank ofRussia to regulate the money supply amid a strongbalance of payments failed to bring about the de�sired slowing of money supply growth with the aimof offsetting more rapid rates of increase in regu�lated prices. In the last few months of the year thepossibility of radically changing the current mon�etary situation with the aid of the exchange ratepolicy was limited, because it was unclear how thistactic would affect the economy as a whole.

At the same time, moderate growth in themoney supply until the summer of 2002 and theruble exchange rate dynamics in the fourth quar�ter of last year, regulated by the Bank of Russia,made it possible to keep the rate of core inflationwithin the projected range and avert a more sig�nificant increase in full�year inflation.

70


II.1.2. DYNAMICS OF MONETARY AND CREDIT INDICATORS

o achieve the objectives of the monetarypolicy aimed at gradually slowing inflationin the medium term, the Bank of Russia car�

ried out measures to control the dynamics of themoney supply and regulate banking sector liquid�ity. In so doing, it took into consideration the factthat the money supply and the demand for moneywere influenced by external and internal eco�nomic developments.

As of January 1, 2003, the money supply (M2)amounted to 2,119.6 billion rubles, an increaseof 32.3% on the beginning of 2002. In real terms,however, money supply growth slowed to 14.9%from 18.1% in 2001, reflecting the slowing ofgrowth in the demand for money connected withthe dynamics of macroeconomic indicators.

The enlarged structure of the M2 monetaryaggregate has been stable over the past two years:the share of cash outside the banking system con�tracted from 36.6% to 36.0% in 2001—2002,while the share of non�cash funds, which includehousehold deposits and non�financial enterprises’deposits, expanded from 63.4% to 64.0%.

The improvements in the money supply struc�ture in this period were characterised by the ac�celerated growth in household deposits comparedwith the other components of the money supply.In 2001 the biggest growth in absolute terms wasregistered in cash outside the banking system (M2expanded 36%), while in 2002 the biggestgrowth was demonstrated by household deposits(more than 39%). Last year’s rate of growth inruble household deposits (45.2% in nominalterms, or 26.2% in real terms) resulted from asignificant rise in nominal money income(27.7%), changes in the structure of income useand a scarcity of alternative outlets for savingsfor most of the households.

The share of spending on goods and servicesas a proportion of household income has beengradually contracting (in 2002 it narrowed to73.2% from 74.6% in 2001, according toGoskomstat), while the public’s propensity fororganised savings has been growing.

Throughout the period under review, house�hold time deposits rose faster than other deposits

and their share expanded from 74.1% to 79.3%in the total value of deposits (household depositswith terms longer than 1 year accounted for 60%of the year’s growth in household deposits andtheir share expanded from 29.2% to 38.8%). Thevalue of time deposits with all banks rose 35% inreal terms (the value of demand deposits increased1%). These structural changes were facilitated bythe structure of interest rates by term. The shareof time deposits with the Savings Bank (Sberbank)expanded from 79% to 85% and other banks from53% to 60%. Demand deposits with banks otherthan Sberbank increased more slowly in real termsthis year than in 2001 — 31% against 59%. Thevalue of demand deposits with Sberbank fell in realterms. Overall, in 2000—2002 Sberbank’s sharein the total value of household ruble deposits con�tracted from 88.4% to 78.1%.

Growth in the balances of funds in non�finan�cial enterprises’ accounts continued to slow in2002: they declined to 23.8% from 36.0% in2001 and in real terms to 7.5% from 14.7%. Theirshare in the money supply contracted from 35.7%to 33.4% over the year. In addition to the slow�ing of growth in the key branches of the economy,a major factor that contained the expansion ofnon�financial enterprises’ bank deposits and pre�determined low rates of growth in investmentactivity in 2002 was the deterioration of the fi�nancial standing of the non�financial enterprisesector compared with the previous year, whichwas manifest in a fall in profits and a reduction inthe profitability of production. According toGoskomstat data, the net financial result (profitnet of loss) of enterprises in the key branches ofthe economy decreased 18.9% year on year. Thedeterioration of the financial standing of the realeconomy was due to a rise in production costs,caused by raw material and energy price in�creases, including increases in the prices of goodsproduced and services provided by the naturalmonopolies, wage increases, which surpassedgrowth in labour productivity, and competitionfrom imports.

The dynamics of foreign currency deposits ofthe non�financial enterprise and household sec�

T


71

tors in 2002 were affected by a wide range of dif�ferent factors, such as the change in the balanceof payments, including the balance of trade andcapital and financial accounts, the exchange ratedynamics of the ruble and euro against the USdollar, inflation and devaluation expectations andinterest rate trends on the domestic and interna�tional financial markets. For most of the year theshare of foreign currency deposits in the totalvalue of non�financial enterprise and householddeposits continued slowly to contract, just as itdid in the preceding period.

The structure of the money supply by source,including foreign currency deposits, was affectedin 2002 by the same main factors as in the previ�ous year and hence it did not change much. Dur�ing the year under review, the dynamics of netforeign assets and domestic credit of the bankingsector had a key role to play in the expansion ofthe money supply, foreign currency deposits in�cluded.

Net foreign assets of the monetary authoritiesand credit institutions rose by 479.2 billion rublesin 2002, while Russia’s international reserves,which do not include the Bank of Russia’s short�term liabilities denominated in freely convertiblecurrencies, increased by $13.2 billion. Net for�eign assets of credit institutions continued to de�crease in absolute terms and their reduction lastyear was more significant than in 2001 — 24.8billion rubles against 3.3 billion rubles. Thesedynamics, the result of growth in foreign liabili�ties of credit institutions continuing to exceedgrowth in their foreign assets, were formed in theconditions of the continued rise of the exchangerate of the ruble in real terms and a low level ofinterest rates on international financial markets.The situation on the domestic and foreign mar�kets was conducive to growth in credit institu�tions’ foreign liabilities owing to external borrow�ing and an inflow of funds to the Russian moneymarket with its persistent demand for long�termcredit resources. Thus, the contraction of creditinstitutions’ net foreign assets in 2002 continuedto serve as a source of growth in resources for theexpansion of the banking sector’s domestic credit.

The banking sector’s domestic credit in 2002expanded by 651.9 billion rubles and during thatyear was a major source of growth in the moneysupply. In the past two years the dynamics of do�

mestic credit were stable: domestic credit ex�panded about 30% a year, a growth that in abso�lute terms corresponded to about nine�tenths ofthe increase in the money supply, including for�eign currency deposits, in the same period.

As for the structure of domestic credit, it un�derwent some alterations as a result of thechanged dynamics of its main components. In2000—2001, growth in domestic credit resultedentirely from the expansion of banking sectorclaims on the non�financial enterprise and house�hold sectors, which rose at more rapid rates inthat period, whereas in 2002, the dynamics ofthis component of domestic credit slowed: theyear’s growth was 36% against 56% and 65% in2001 and 2000 respectively.

Several factors were responsible for such dy�namics: the slowing of economic growth, in�creased credit risk owing to the expansion of therange of borrowers, the deterioration of the fi�nancial standing of many potential corporate bor�rowers, the slowing of growth in funds attractedby credit institutions from enterprises and thetendency of some large companies to combine bor�rowing at home with taking big foreign loans,which become increasingly attractive as interestrates on them stay low and the ruble’s exchangerate rises.

At the same time, in 2002, for the first timesince 1999, the banking sector’s net credit to thegovernment resumed its growth. Its increase,which amounted to 113.3 billion rubles, or 16%,was almost entirely due to growth in credit insti�tutions’ net claims on the government. The prin�cipal source of growth in this kind of credit wasthe expansion of credit institutions’ governmentsecurities portfolio, which includes sub�federaland municipal loan bonds, in the conditions ofgrowth in domestic borrowings by the FinanceMinistry and some regional governments com�pared with the previous year.

In controlling the formation of the money sup�ply and evaluating its effect on the rate of infla�tion, the Bank of Russia considered the dynamicsand structure of the monetary base as a key mon�etary indicator.

The broad monetary base, which includes cashin circulation, credit institutions’ required re�serves for the funds borrowed in the national andforeign currencies, credit institutions’ correspon�

72


RATES OF GROWTH IN BANKING SECTOR

DOMESTIC CREDIT AND ITS COMPONENTS

(% growth over the year)

80

60

40

20

0

—20

Domestic credit

Net credit to government

Claims on non�financial enterprises and households

2000 2001 2002Chart 36

dent and deposit accounts in the Bank of Russiaand the latter’s obligations to repurchase securi�ties and whose size characterises the supply ofmoney from the monetary authorities, amountedto 1,232.6 billion rubles as of January 1, 2003,an increase of 32.8% over the year (15.4%growth in real terms). The money multiplier, cal�culated as the ratio of the M2 aggregate to thebroad monetary base, remained practically un�changed over the year. At the same time, the ac�celeration of year�on�year growth in the moneysupply (in 2001 it expanded 28.6%) shows thatthe conditions in which it is formed have changed.

As was forecast in the Guidelines for the SingleState Monetary Policy for 2002, the monetarybase dynamics last year, as in the previous year,when Russia continued to enjoy a strong balanceof payments, were formed under the effect ofgrowth in net international reserves of the mon�etary authorities. In 2002, net international re�serves, measured at the fixed cross rates of for�eign currencies to the US dollar as of the end of2001, expanded by $12.9 billion, an increase of$2.2 billion over the previous year.

As foreign exchange flowed to the domesticmarket in quantity, the monetary authoritiessterilised a part of the money supply in order toachieve the targets of their monetary policy andbalance out the supply and demand for money.

The principal means of sterilising excess liquidityin 2002 were taking credit institutions’ funds ondeposits with the Bank of Russia and increasingbalances in the federal and regional governments’accounts in the Bank of Russia. As a result, netdomestic assets of the monetary authorities con�tracted in absolute terms. At the same time, thescale of the sterilisation operations in 2002 ex�panded compared with 2001 and hence the broadmonetary base, calculated net of the value of ab�sorbed liquidity, expanded 28.1% against 31.9%in 2001.

Although the balances of federal governmentaccounts in the Bank of Russia, counted as partof the monetary authorities’ net credit to the fed�eral government, more than doubled, the budgetin 2002, as in 2001, was mainly an instrumentfor the short�term absorption of liquidity. Therewere several reasons for this.

In December 2002, repeating the previousyears’ tendency, though in a milder form, a sig�nificant fall in the balances of funds in federal andregional government accounts in the Bank ofRussia led to the expansion of the monetary au�thorities’ net credit to the federal and regionalgovernments and growth in the monetary base.The same factors, including a reduction in thebalances of federal and regional government ac�counts in credit institutions, affected the dynam�ics of the money supply: in the last month of 2002,the M2 aggregate expanded 9.8%, whereas inJanuary—November its growth stood at 20.4%.The Bank of Russia used all the instruments ithad at its disposal to absorb surplus liquidity (op�erations on the foreign exchange market, depositoperations and modified repo auctions) but theyproved insufficient to sterilise the entire moneyoverhang caused by the budget expansion.

In addition, growth in the balances of federalgovernment accounts in the Bank of Russia wasaccompanied by a comparable reduction in thebalances of government extrabudgetary fund ac�counts in the Bank of Russia, which was caused,to some extent, by Pension Fund investments ofspare resources in securities. In 2001, growth inthe balances of funds in the federal governmentaccounts in the Bank of Russia was accompaniedby a simultaneous reduction in the balances ofregional and local government accounts in theBank of Russia.


73

Net international reserves

MAJOR SOURCES OF GROWTH IN MONETARY BASE IN 2001 AND 2002

(quarterly growth as % of monetary base as of beginning of quarter)

30

10

—5

20

5

15

0

—10

—15I II III IV I II III IV

30

25 25

10

—5

20

5

15

0

—10

—15

Broad monetary base

Net credits to federal and regional governments

20022001

Chart 37

As a result, the aggregate balances of fed�eral and regional government accounts in theBank of Russia decreased in real terms in 2001—2002.

There were minor changes in the money sup�ply structure in 2002. The share of cash in circu�lation, including till cash balances at banks, hadcontracted by the end of the year by 1.2 percent�age points compared with the level registered asof January 1, 2002, and stood at 66.0%. Cash incirculation increased 13.4% in real terms against17.7% in 2001.

The rate of growth in the balances of creditinstitutions’ correspondent accounts in the Bankof Russia in 2002, as in 2001, was close to theindustrial producer price index in the same pe�riod (117.4% and 117.1% in 2002 and 111.1%

and 110.7% in 2001). Their share in the mon�etary base contracted from 15.6% to 13.8%.

As the required reserve ratios remained un�changed in the period under review, their dynam�ics depended on the value of the funds borrowedby credit institutions and their share in the mon�etary base slightly contracted (from 16.9% to16.3%). The share of credit institutions’ depos�its with the Bank of Russia expanded from 0.4%to 3.8% of the monetary base.

The aggregate reserves of credit institutions(till cash, required reserves, balances of creditinstitutions’ correspondent accounts and depositaccounts in the Bank of Russia and Bank of Rus�sia obligations for repurchase of securities)amounted to 471.5 billion rubles as of January 1,2003, an increase of 31.8% over the year.

74


II.1.3. INSTRUMENTS OF MONETARY POLICY

o regulate banking sector liquidity, theBank of Russia in 2002 used instrumentsof monetary policy that allowed it to absorb

free funds and provide additional liquidity tobanks. During the year, the Bank of Russia be�gan to use market instruments more actively toregulate the level of interest rates on the inter�bank market. As Russia continued to enjoy astrong balance of payments, priority was attachedto the development of the instruments to absorbliquidity that were designed to contain the mon�etary component of inflation.

DEPOSIT OPERATIONS. In 2002, the Bank ofRussia actively conducted deposit operations withresident banks in rubles, using the Reuters Deal�ing System. These operations, with different valuedates and borrowing terms, allowed the Bank ofRussia quickly to tie up banks’ free funds and in�fluence the general level of banking sector liquid�ity and interbank market interest rates.

To regulate credit institutions’ short�term li�quidity, the Bank of Russia conducted deposit op�erations, using the Reuters Dealing System, onstandard demand, with the maturities of over�night, tom�next, spot�next, 1 week, spot�week,2 weeks and spot — 2 weeks conditions. At thesame time, it changed the interest rates on de�posit operations, depending on the situation onthe money market, keeping at a high level the in�terest rates on medium�term (1� and 3�month)deposits and lowering interest rates on short�termdeposits.

In 2002, the Bank of Russia made somechanges in the system of existing instruments ofmonetary policy in order to facilitate a transitionto regular use of medium�term market instru�ments for sterilising money supply at interest ratesset by auction and simultaneously restricted op�erations to absorb liquidity conducted at a fixedrate. In accordance with the decision of its Boardof Directors, the Bank of Russia on November 21,2002, began to conduct 2�week deposit auctions,using the Reuters Dealing System, and depositoperations with overnight, tom�next, spot�next,1 week and spot�week maturities at a fixed in�

terest rate of 3%, while suspending 1�month and3�month fixed�rate deposit operations. In addi�tion, on November 28 the Bank of Russia beganto conduct modified 4�week repo auctions.

Three deposit auctions were held in Novem�ber and December 2002, in which 57 banks fromeight regions participated. The cut�off prices seton the results of the auctions were at the level of6.95% and 7.5% p.a. The deposit auctions heldin the year under review and this year allowedthe Bank of Russia to bring the deposit auctioninterest rates closer to the money market ratesand exert greater influence on the latter.

In all, 139 banks from 10 regions took part inBank of Russia deposit operations in the yearunder review; of these, 135 banks that partici�pated in deposit operations conducted with theaid of the Reuters Dealing System were servicedby the Bank of Russia Moscow Branch, the Bankof Russia St. Petersburg, Vologda, Ryazan,Sverdlovsk, Tyumen and Chelyabinsk regionalbranches, the Bank of Russia Krasnodar andKrasnoyarsk territorial branches and the NationalBank of the Republic of Bashkortostan.

Interest rates on Bank of Russia deposit op�erations in 2002 varied from 0.6% to 14.5% p.a.The minimum amount of funds taken on depositremained unchanged during the year under re�view: 20 million rubles on deposits with fixed in�terest rates and 10 million rubles on deposits madeat auctions. The average annual balance of fundstaken on deposit with the Bank of Russia in 2002amounted to 72.2 billion rubles against 36.7 bil�lion rubles in 2001.

In 2002, the Bank of Russia continued to up�grade the procedure for conducting deposit op�erations. Specifically, it drafted and enforced Pro�vision No. 203�P, dated November 5, 2002,“On the Procedure for Conducting Deposit Op�erations by the Central Bank of the Russian Fed�eration with Credit Institutions in the RussianFederation Currency,” which allowed non�bankcredit institutions to participate in Bank of Rus�sia deposit operations and enabled the Bank ofRussia to use the Reuters Dealing System in con�ducting deposit auctions with credit institutions.

T


75

REQUIRED RESERVES. Taking into considerationa fairly high level of banking sector liquidity, theBank of Russia in 2002 did not change the re�quired reserve ratios and made no contingencychanges in the level of the required reserves.

Owing to growth in the balances of funds bor�rowed by credit institutions from their corporateand individual clients, their required reservesdeposited with the Bank of Russia increased by44.5 billion rubles over the year, or 1.28 times,of which the balances of ruble accounts rose by27.5 billion rubles, or 1.29 times, and the bal�ances of foreign currency accounts grew by17.0 billion rubles, or 1.27 times. No significantchanges were registered in the structure of therequired reserves in the year under review. Theshare of the required reserves in credit institu�tions’ ruble liabilities expanded from 59.8% to60.3% over the year, while the share of the re�quired reserves in credit institutions’ foreign cur�rency liabilities contracted from 40.2% to 39.7%.

The Bank of Russia and its regional branchesin 2002 ensured that credit institutions depositedthe required reserves fully and on time. The Bankof Russia regional branches regularly examinedthe correctness of credit institutions’ requiredreserve calculations and reports. Credit institu�tions that had branches were inspected with aview to ascertaining that their branches correctlyrecorded on their accounts their share in the re�quired reserves.

Most of the credit institutions deposited theirrequired reserves with the Bank of Russia fullyand on time. The share of credit institutions thatfailed to deposit the full amount of their requiredreserves decreased by 2.64 times in the year un�der review to 0.37%.

Credit institutions that violated the requiredreserve procedure in 2002 paid a total of 5.6 mil�lion rubles in fines.

REFINANCING BANKS. To build a uniform bankrefinancing system, controlled from a single cen�tre, the Bank of Russia in 2002 established asingle procedure for co�operation between Bankof Russia branches and divisions in extendingintraday, overnight and Lombard loans to banksand a procedure for setting a limit on intradayand overnight credit on a bank’s correspondentaccount (subaccount). These measures allowed

the Bank of Russia to continue spreading to theRussian regions (as soon as the correspondingBank of Russia regional payment systems weretechnically ready for that) the mechanism tomaintain banking sector liquidity by extendingintraday and overnight loans to banks (Bank ofRussia Provision No. 19�P, dated March 6,1998). In the spring of 2002, the Bank of Russiaprovided the opportunity to use this mechanismto banks in the Sverdlovsk Region and in Decem�ber 2002 the same decision was taken with re�gard to banks in the Rostov Region. Previously,only banks in the Moscow Region, St. Petersburgand the Novosibirsk Region could take intradayand overnight loans. In addition, the Bank ofRussia developed the practice of granting intradayand overnight loans to banks’ correspondentsubaccounts, opened in various divisions of theBank of Russia settlement network.

During the year, the Bank of Russia extendedovernight loans to 41 banks (out of the total of77 banks party to general credit agreements), in�cluding bank branches, to the total amount of13.1 billion rubles, an increase of 60% over 2001.All loans were repaid on time. The averagemonthly amount of overnight loans in 2002 var�ied from 300 million to 3.8 billion rubles. Thetotal value of intraday loans in 2002 rose by1.6 times year on year to 327 billion rubles.

At present all Bank of Russia regional branchesare technically ready to extend Bank of Russiaintraday and overnight loans in compliance withBank of Russia Provision No. 19�P, dated March6, 1998 (with amendments and addenda).

In June 2002, the Bank of Russia took the de�cision to raise the correction index for federal loanbonds on the Lombard list to 0.8 from 0.6. In ad�dition, seeking to extend the Lombard list, theBank of Russia in August 2002 took the decisionto include in it debt depreciation federal loan bonds(OFZ�AD) and variable coupon�income federalloan bonds (OFZ�PK), sold by the Bank of Russiafrom its portfolio with an obligation to repurchase.

All Lombard credit auctions were cancelled inthe year under review as banks showed no inter�est in them and on July 1 the Bank of Russia tookthe decision to suspend the extension of Lombardloans.

In 2002, the Bank of Russia made efforts toupgrade and disseminate the procedure for ex�

76


tending its loans against promissory notes andrights of claim under credit agreements withmanufacturing companies and bank guarantees(pursuant to Bank of Russia Provision No. 122�P,dated October 3, 2000). In the year under re�view, it extended 100 million rubles worth of suchloans to banks for a term of 6 months and thebanks repaid their debt on them on time.

In November 2002, the Bank of Russia tookthe decision to spread this refinancing mechanismto the banks serviced by the Bank of Russia Mos�cow branch, the Bank of Russia Vladimir, Kursk,Nizhni Novgorod, Novosibirsk, Ryazan andSaratov regional branches, the Bank of RussiaKrasnoyarsk territorial branch and the nationalbanks of the Republic of Altai, Republic ofBashkortostan and Republic of Khakasia.

The debt on loans extended in accordance withthe special decisions of the Bank of Russia Boardof Directors in support of the measures to increasefinancial stability amounted to 1.5 billion rublesas of January 1, 2003. In accordance with theBank of Russia Board of Directors’ decisions, theremaining loans in 2002 were prolonged for oneyear with an obligation to repay them in the firsthalf of 2003.

In 2002, the Bank of Russia took steps to en�sure repayment of the centralised credits extendedto banks in 1992—1994 in accordance with thedecisions of the Government Financial and Mon�etary Policy Commission to finance individualenterprises. As of January 1, 2003, the debt onthese credits amounted to 700 million rubles, in�cluding interest. This represents a decrease of400 million rubles, or 38%, on January 1, 2002.The entire remaining debt is overdue.

The total sum of the debt on Bank of Russialoans amounted to 1.9 billion rubles as of Janu�ary 1, 2003, a decrease of 8.8 billion rubles fromthe amount registered as of January 1, 2002. Thecontraction of the debt is the result of repaymentof loans by some banks in accordance with theagreements concluded with them and the restruc�turing of the debt on previously extended loansinto an interest free promissory note in accor�dance with the provisions of the amicable settle�ment.

The Bank of Russia conducted operations withthe Finance Ministry’s Series APK bills it hadbought out from banks, restructured them into

Series IV�APK federal loan bonds and presentedSeries V�APK bills to the Finance Ministry for pay�ment in accordance with the Federal Law passedto this effect. In all, 1.0 billion rubles of Series IV�APK bills were restructured into federal loan bondsin 2002. The Finance Ministry transferred 1.0 bil�lion rubles to the Bank of Russia in repayment ofSeries V�APK bills, increasing Bank of Russia in�come by 400 million rubles. As of January 1, 2003,the Bank of Russia kept in the depository of its FirstOperations Department 45,699 Finance MinistrySeries VI—VIII�APK bills with a total nominalvalue of 3.6 billion rubles and redemption datesin 2003—2005.

The debt on bank bills acquired by the Bankof Russia during the transfer of household depos�its to Sberbank after the 1998 crisis and bills re�ceived by the Bank of Russia in 2001—2002 un�der the amicable settlements with banksamounted to 12.4 billion rubles as of January 1,2003, an increase of 6.8 billion rubles on theamount registered January 1, 2001. This growthin debt is the result of the restructuring of debtowed to the Bank of Russia in accordance withthe provisions of the amicable settlement. Thedebt on the cession of the right of claim on billsamounted to 400 million rubles as of January 1,2003, i.e. it decreased by 100 million rubles dur�ing the year owing to its repayment by the dead�lines set by the agreements.

OPEN MARKET OPERATIONS. To enhance the ef�ficiency of the management of the current levelof banking sector liquidity and overcome seasonalvolatility on the money market, the Bank of Rus�sia resorted to transactions on selling governmentbonds from its own portfolio with an obligationto repurchase (exchange modified repo opera�tions) and direct repo operations.

In February 2002, it held two auctions to sellfederal loan bonds from its own portfolio with anobligation to repurchase under Bank of RussiaProvision No. 176�P, dated January 11, 2002. Asa result, bonds with a nominal value of nearly420 million rubles were placed at the averageweighted yield to offer of 13.81% and 14.17% p.a.

In the second half of the year under review,the volume of market participants’ free liquidityexpanded significantly. In November, the Bank ofRussia introduced an alternative mechanism to


77

regulate the level of free funds: it began to conductoperations supplying or withdrawing liquidity ona permanent basis by auction. The principalmethod used by the Bank of Russia to sterilise sur�plus liquidity for four weeks was selling federal loanbonds from its own portfolio with an obligation torepurchase. At the end of the year, the total valueof funds raised with the aid of operations to sellfederal loan bonds with an obligation to repurchaseamounted to 1.8 billion rubles and the interest ratevaried from 10.55% to 10.95% p.a.

In addition to sterilising surplus liquidity, theBank of Russia conducted direct repo operationswith GKO—OFZ market dealers who had con�cluded the corresponding agreements with it inorder to smooth intramonth fluctuations of liquid�ity levels. Since November 18, 2002, direct repoauctions have been held on a regular basis twicea day, significantly reducing interbank lendingrate fluctuations and the average level of theserates. The total amount of liquidity providedthrough direct repo operations exceeded 26 bil�lion rubles in 2002 and the average interest ratestood at 6.9% p.a.

In 2002, the Bank of Russia did not issue itsown bonds (OBR) because of some legislativerestrictions that significantly reduced the effec�tiveness of this instrument for the regulation ofthe current level of market participants’ freefunds. In the year under review, the Bank of Rus�sia continued to campaign against the restrictions

imposed on the issue of OBR bonds, sending tothe Government draft amendments to the Fed�eral Law on the Security Market and Federal Lawon the Protection of the Rights and LegitimateInterests of Investors.

INTEREST RATE POLICY. The Bank of Russia’sinterest rate policy in 2002 was aimed at secur�ing fewer fluctuations and gradually reducing thelevel of short�term interest rates on the moneymarket in order to create conditions conducive toa reduction in the general level of interest ratesin the economy and maintain sustainable eco�nomic growth.

In a series of landmark decisions taken duringthe year under review, the Bank of Russia gradu�ally reduced the refinancing rate from 25% to21% p.a. and its own rate on overnight loans from22% to 18% p.a. On November 21, it set a singlefixed rate of 3% p.a. on deposit operations con�ducted through the Reuters Dealing System onstandard demand, overnight, tom�next, spot�next, 1 week and spot�week maturities and in thethird and fourth quarters of the year under re�view it broadened the range of market instru�ments of monetary policy used in sterilising liquid�ity and supplying it to banks. This allowed theBank of Russia to make more active use of inter�est rates for monetary regulation.

The measures taken by the Bank of Russia fa�cilitated the reduction of the average level of in�

60

50

30

20

10

40

0

DYNAMICS OF INTERBANK MARKET OVERNIGHT INTEREST RATE

IN DECEMBER 2001 AND 2002 (% p.a.)

60

50

30

20

10

40

02 4 6 10 15 17 19 233 5 9 11 16 18 20 24 25 26 27 30

2001 2002

Chart 38

78


terest rates in various segments of the financialmarket. Specifically, the average interest rate onovernight interbank loans fell from 10.1% p.a. in2001 to 8.2% p.a. in 2002.

The Bank of Russia used the mechanism tosterilise liquidity and supply it to banks in orderto influence the general level of short�term inter�

est rates on the money market and maintain itsstability. In tackling the set of problems involvedin the upgrading of monetary policy instruments,the Bank of Russia is seeking to increase the roleof interest rates on its operations in that process.Work to this end continued in the year under re�view.


79

II.1.4. EXCHANGE RATE POLICY AND RESERVE MANAGEMENT

XCHANGE RATE POLICY. Following theGuidelines for the Single State MonetaryPolicy for 2002, the Bank of Russia last

year implemented its exchange rate policy in theconditions of the floating exchange rate regime.

The situation on international markets re�mained favourable for major Russian export com�modities in 2002, ensuring a steady inflow of ex�port currency earnings to the country. Despite aslight year�on�year contraction in the current ac�count surplus, mainly as a result of growth in im�port volumes, a balanced situation remained on theforeign exchange market. The Bank of Russia fo�cused its efforts on smoothing exchange rate fluc�tuations in order to ensure economically justifiedrates of the ruble’s appreciation in real terms.

The principal instrument of foreign exchangepolicy used by the Bank of Russia in 2002 was,as before, ruble/dollar conversion operations inthe exchange and over�the�counter segments ofthe domestic foreign exchange market, which theBank of Russia combined with other instrumentsof monetary policy. In the period under review,the Bank of Russia used conversion operationswith T+2 settlements in conducting currency in�terventions.

For most of 2002 (until the enforcement ofthe new procedure for compulsory sale of exportcurrency earnings and the change in the STS trademechanism), the Bank of Russia purchased for�eign exchange from exporters, mainly by buyingdirectly from the authorised banks that servicedthem. Since December 1, 2002, it has been buy�ing foreign exchange on the exchange and over�the�counter currency market. The value of for�eign exchange bought by the Bank of Russia fromexporters in 2002 on the domestic foreign ex�change market fell 23% year on year, mainly be�cause of the lowering of the level of compulsorysale of export earnings in the year under review.At the same time, overall net sales of foreign ex�change by the Bank of Russia in the exchange andover�the�counter segments of the domestic for�eign exchange market decreased by 1.6 times yearon year, while the net result of the Bank of Rus�sia currency operations on the domestic foreign

exchange market in the same period increased by$1.5 billion year on year to $17.3 billion.

To improve the regulation of the current li�quidity of financial market participants and its in�fluence on the exchange rate of the ruble, theBank of Russia not only conducted deposit, repoand modified repo operations, but also began toconduct overnight currency swap operations.Using this set of instruments, the Bank of Russiawas able quickly to respond to any changes in thesituation on the money market and regulate thesupply of foreign exchange and the demand for it.

In 2002, the Bank of Russia took measures toturn currency swap operations into a permanentinstrument for replenishing the current liquidityof the banking sector. To this end, in Septemberit enforced its Order “On the Conduct of CurrencySwap Transactions by the Bank of Russia on theDomestic Foreign Exchange Market,” which es�tablished the procedure for conducting such op�erations. The fact that the Bank of Russia regu�larly announced the terms and conditions of suchoperations played a major role in enhancing theimportance of the instruments of exchange ratepolicy. The value of the currency swap operationsconducted by the Bank of Russia in the periodunder review amounted to nearly $1.0 billion.

The establishment in 2002 of the market in�terest rate band, with the Bank of Russia inter�est rates on the refinancing instruments (currencyswap and overnight loan operations) as its upperlimit and the rates on the resources borrowed bythe Bank of Russia (exchange modified repo op�erations and banks’ deposits with the Bank ofRussia) as its lower limit, and the practice of regu�larly announcing the terms and conditions of op�erations with these instruments created precon�ditions for increasing the role played by interestrates in general and in exchange rate policy inparticular.

Despite the introduction of the new instru�ments of monetary policy by the Bank of Russia,the volume of operations with them was small andhence the purchase of foreign exchange by theBank of Russia on the domestic market remainedthe principal refinancing channel.

E

80


DYNAMICS OF NOMINAL US DOLLAR EXCHANGE RATE AGAINST RUBLE

IN 2001 AND 2002 (rubles per US dollar)

32.0

31.5

30.5

31.0

30.0

29.5

29.0

28.5

28.0I II III IV V VI VII VIII IX X XI XII

2001 2002

32.0

31.5

30.5

31.0

30.0

29.5

29.0

28.5

28.0Chart 39

In the period under review, the exchange ratedynamics continued to play a major role in theinflation process in the Russian economy. TheBank of Russia, therefore, paid special attentionto the maintenance of stability on the foreign ex�change market and tried to keep the rate of growthin the nominal rate of the ruble within the limitsensuring relative stability of import prices and alow level of devaluation expectations.

Despite the euro’s significant rise on interna�tional markets, the rate of the US dollar againstthe ruble continued to play the role of the nomi�nal benchmark for the Bank of Russia exchangerate policy in 2002. At the same time, the euro’sdynamics on the world market correspondinglyaffected the evaluation of the results of the USdollar/ruble exchange rate policy from the view�point of the achievement of the year’s target forthe real effective rate of the ruble.

As a result of the Bank of Russia exchange ratepolicy, which took into consideration the changesin the currency flow balance in various periods ofthe year under review and included measures de�signed to dampen short�term surges in the demandfor foreign exchange and its supply on the domes�tic market, the exchange rate dynamics in 2002were smooth, while the rate of the nominal de�valuation slowed year on year.

New favourable trends emerged on the foreignexchange market in the early months of the yearunder review. Strong pressure exerted on theruble at the end of 2001, which was mainly caused

by short�term fluctuating circumstances (espe�cially the establishment of long currency positionsby the banking sector, a low level of export earn�ings sales, increased devaluation expectations andmassive withdrawals of funds from governmentaccounts in the Bank of Russia), was neutralisedby and large by the middle of January by Bank ofRussia currency interventions. As the exchangerate stabilised and business activity rose, exportcurrency earnings sales increased.

A rise in the prices of major Russian exports,which caused the exchange rate growth rates toslow, played a major role in shaping conditionson the domestic foreign exchange market in Feb�ruary and March. The effect of the improvementof the situation on the world’s hydrocarbon rawmaterials market became clear in March whenexport earnings volumes rose again after the Feb�ruary fall. In April and May, the volume of ex�port earnings continued to expand and that alongwith growth in the demand for money (owingto the increased credit portfolio activity of thebanks) and periodical shortages of current li�quidity stimulated foreign exchange sales bybanks and provided additional support to theruble.

In summer, the domestic foreign exchangemarket was affected by the traditional seasonaldecline in business activity in the non�banking andbanking sectors of the economy and the supply offoreign exchange on the market matched the de�mand for it. A recovery in operators’ activity was


81

AVERAGE MONTHLY REAL RUBLE EXCHANGE RATE GROWTH IN 2002 (%)

3

2

0

—2

—3

—4I II III IV V VI VII VIII IX X XI XII

1

—1

3

2

0

—2

—3

—4

1

—1

Against US dollar Against euro Real effective rate

AVERAGE ANNUAL REAL RUBLE EXCHANGE RATE GROWTH IN 1996—2002 (%)

30

10

—10

20

0

—20

—30

1996 19981997 1999 200220012000

30

10

—10

20

0

—20

—30

Against US dollar Against euro Real effective rate

Chart 40

Chart 41

registered at the beginning of autumn when thedemand for foreign exchange rose amid traditionalseasonal increases in devaluation expectations andforeign exchange purchases by banks for their cli�ents’ future orders. Nevertheless, thanks to thefavourable economic situation at home and abroadand the operations conducted by the Bank of Rus�sia on the domestic foreign exchange market, theexchange rate remained stable in that period:growth rates in September did not exceed aver�age annual levels.

In October, the demand for foreign exchangerose again, mainly as a result of the increased for�eign exchange purchases against import contractsand corporate foreign debt service. Although the

inflow of unusually large amounts of export cur�rency earnings in that period supplied practicallythe entire growing demand for foreign exchange,the Bank of Russia had to step up its correctiveinfluence on the market situation in order tochange market participants’ sentiment in favourof the ruble’s downturn.

The market was relatively calm in the secondhalf of November and December. By the end ofNovember, the exchange rate’s stability and thevigorous efforts exerted by the Bank of Russia hadchanged market participants’ expectations regard�ing the ruble’s usual accelerated devaluation inDecember and January. As a result, foreign ex�change flows relating to the current account came

82


1,500

1,400

1,200

1,100

1,000

1,300

900

7.00

6.75

6.25

6.00

5.75

6.50

5.50

DYNAMICS OF BANKING SECTOR CURRENCY POSITION

IN 2002Assets, liabilities Currency position

Banking sector’s aggregate currency position, billion US dollars

Foreign currency assets, billion rubles

Foreign currency liabilities, billion rubles

1.01.2002 1.01.2003

1.02.2002

1.03.2002

1.04.2002

1.05.2002

1.06.2002

1.07.2002

1.08.2002

1.09.2002

1.10.2002

1.11.2002

1.12.2002

Chart 42

to play an important role, while minor excesses ofdemand over supply in some periods were elimi�nated by Bank of Russia pinpoint interventions.

Overall, in 2002 the nominal rate of theUS dollar against the ruble rose 5.5%, from30.1372 rubles to the dollar to 31.7844 rubles tothe dollar (a growth of 7.0% was registered in2001). The monthly rates of growth in the ex�change rate varied from —0.2% in December to1.8% in January, while the average monthly ratein the year under review stood at 0.4% against0.6% in 2001.

The official exchange rate of the euro againstthe ruble rose 25% in 2002 against 1.8% in 2001,from 26.6172 rubles to 33.2719 rubles to theeuro. That growth was the result of the euro’ssignificant upturn on the international market.

There was no single trend in the ruble’s realrate dynamics in 2002. While rising against thedollar in real terms for most of the year, the aver�age monthly real rate of the ruble against the eurowas negative for the most part. The monthly ef�fective real rate of the ruble also had a tendencyto fall in the period under review. In December2002, the ruble gained 6.2% against the dollarin real terms compared to December 2001, butlost 6.9% against the euro. The real effective rateof the ruble fell 3.1% over that period.

The average annualised real rate of the rubleagainst the US dollar (period to period) rose6.1%, the real rate of the ruble against the euroremained virtually unchanged and the real effec�tive rate rose 1.5%. Thus, while the fall in theruble’s real rate against the euro in 2002 practi�cally made up for its growth in 2001, the real ef�fective rate of the ruble in 2002 fell less than itrose in the previous year.

The results of the Bank of Russia exchangerate policy contributed to the improvements in theRussian economy as a whole. Specifically, a fallin devaluation expectations made the ruble�de�nominated assets more attractive to investors andthat led to a decrease in capital flight from Rus�sia. At the same time, as the demand for bankingcredit rose, stimulating the expansion of GDP andbusiness activity in the real economy, the currencyposition of the banking sector continued to de�cline in 2002.

The year’s real exchange rate dynamics showthat it practically had no effect on the competi�tiveness of domestic production. The overall ex�port efficiency of major Russian export commodi�ties was high, while a favourable price situationbrought about an expansion in export volumes ofsome key products, such as oil and petroleumproducts.


83

The ruble’s stability potential increased in2002. The adequate level of international re�serves, which serve as a source of resources andhence a means of repelling short�term specula�tive attacks on the exchange rate, made it pos�sible to increase the cover of the broad monetarybase with international reserves from 112% to123%1.

The exchange rate policy pursued by the Bankof Russia in 2002 proved effective in the currenteconomic situation. The floating exchange rateregime enabled the monetary authorities quicklyto respond to any change in the economic situa�tion and the country’s balance of payments whiletackling the task of replenishing international re�serves and preventing abrupt fluctuations of theexchange rate. As a result, the exchange rate dy�namics last year were smoother than in the pre�vious year and that allowed economic agents tostand on firmer ground in making economic deci�sions and stimulated demand for assets denomi�nated in the national currency.

MANAGING FOREIGN EXCHANGE RESERVES. TheBank of Russia managed foreign exchange re�serves in 2002 in compliance with the Basic Prin�ciples of Managing Bank of Russia Foreign Ex�change Reserves, approved by the Bank of Rus�sia Board of Directors.

The principal objective of reserve managementis to find the best way of preserving reserve as�sets without undermining their liquidity and yield,so the Bank of Russia tackled this problem by di�versifying investment and hedging risk by con�ducting operations on international currency andfinancial markets. The ratio between risk andreturn in reserve management was determined inaccordance with the Investment Directives for theTransaction and Investment Portfolios of theBank of Russia Foreign Exchange Reserves. Inaddition, credit risks were restricted by credit risklimits set for Bank of Russia counterparties.

The following factors were taken into consid�eration when tackling the problems involved inreserve management in 2002: a current accountsurplus, which ensured a steady inflow of foreignexchange to the country, the persistent necessity

for the government to make big foreign debt pay�ments and a fall in interest rates on major inter�national financial market instruments.

The management of reserve assets was basedon the portfolio principle, which requires all as�sets to be divided between the transaction andinvestment portfolios. The standard ratio betweenrisk and award expected for the risks assumed bythe Bank of Russia in managing reserves is deter�mined as benchmark returns for each portfolio.

The transaction portfolio contains the mostliquid instruments of the money market and partlythe capital market. Funds from the investmentportfolio are placed into relatively longer�termand, consequently, higher�yielding instruments ofthe international capital market.

The value of the transaction portfolio of theforeign exchange reserves, i.e. the amount of theBank of Russia’s most liquid funds which may beimmediately used in currency interventions andother contingencies, rose 40% in 2002. The mainreason for the expansion of the transaction port�folio was the active purchase of US dollars on thedomestic foreign exchange market for most of theyear under review. At the same time, the trans�fer of some liquid funds to the investment portfo�lio led to a slight fall in the value of the transac�tion portfolio in the fourth quarter of 2002.

The transaction portfolio yield in 2002 was alittle below the standard level because the dura�tion of the actual portfolio was slightly shorterthan the duration of the standard portfolio. This,in turn, was the result of the fact that the Bankof Russia purchased foreign exchange on the do�mestic market during the entire period under re�view, reducing the average weighted term of in�vestments.

The value of the investment portfolio rose al�most 50% in 2002. The main reasons for the ex�pansion of this component of foreign exchangereserves were the aforementioned transfer offunds from the transaction portfolio and a rise inthe prices of US and eurozone securities. The yieldof the investment portfolio in 2002 slightly devi�ated from the yield of the standard portfolio,whose makeup is established by the InvestmentDirectives for the Transaction and Investment

1 The value of Russia’s international reserves net of the Bank of Russia short�term liabilities and the official US

dollar/ruble exchange rate are used in this calculation.

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1 The value of Bank of Russia foreign exchange reserves net of Bank of Russia short�term liabilities is used in this

calculation.

Portfolios of the Bank of Russia Foreign ExchangeReserves. The main reasons for the deflection ofthe investment portfolio yield from the standardlevel were a shorter duration of the instrumentsin that portfolio and the difference between theprices of actual transactions with securities andthe buyer’s indicative quotations used in the stan�dard portfolio yield calculation.

In 2002, the Bank of Russia Board of Direc�tors approved a new version of the Basic Prin�ciples of Managing Bank of Russia Foreign Ex�change Reserves, which established a uniformstandard currency structure of Bank of Russiareserves. As a result, by the end of 2002, theeuro’s share in Bank of Russia foreign exchangereserves had more than doubled and exceeded20% (including forward currency transactions),while the share of the US dollar had contractedfrom 90% to less than 75%. The respective por�tions of other reserve currencies also expanded.

Overall, in the period under review Bank ofRussia foreign exchange reserves increased from$29.8 billion to $42.1 billion1, a rise of more than40% against 33% in 2001, while Russia’s inter�national reserves expanded from $34.6 billion to$47.8 billion, an increase of 38.2%1. The mainreasons for the acceleration of growth in foreignexchange reserves were a reduction in Bank ofRussia foreign exchange sales amid almost un�changed foreign exchange purchases on the do�mestic market.

The currency component of the Bank of Rus�sia gold and currency reserves expanded from90% to 93% in 2002, while the share of mon�etary gold contracted from 10% to 7%. The valueof gold in Bank of Russia reserve assets, calcu�lated at the price of gold of $300 per troy oz, de�clined from $3.5 billion to $3.1 billion in the yearunder review owing to the transfer of gold to Bankof Russia metal accounts in foreign banks.

I I . 2 . B A N K I N G R E G U L A T I O N A N D S U P E R V I S I O N

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II.2. BANKING REGULATION AND SUPERVISION

II.2.1. UPGRADING THE LEGAL FRAMEWORK

n 2002, the Bank of Russia actively partici�pated in upgrading the applicable legislationregulating the activities of credit institutions.

It carried out this work in pursuance of the Bank�ing Sector Development Strategy, set out in a jointstatement of the Government and Bank of Rus�sia in December 2001.

The most important federal law passed in 2002was the Federal Law on the Central Bank of theRussian Federation (Bank of Russia), which in�troduced the following new aspects of bankingregulation and supervision:— the Bank of Russia has been granted the right

to supervise not only credit institutions, butalso banking groups (paragraph 1 of Article56 and paragraph 2 of Article 62);

— the Law stipulates that the Bank of Russia mayestablish required ratios for banking groups(Articles 62, 64, 65, 67, 70 and 71);

— the Law specifies the procedure for the Bankof Russia to fine credit institutions for viola�tions of the required reserve ratios;

— the Law stipulates that new rules set by theBank of Russia shall apply to the accountingand statistical reports for the period startingno earlier than the date of the publication ofthese rules (Article 57);

— the Law has broadened the powers of the Bankof Russia to discipline credit institutions forviolations (Article 74). It grants the Bank of

Russia the right to prohibit the re�organisationof a credit institution if the re�organisationprovides grounds for the use of the bank�ruptcy�prevention measures laid down in theFederal Law on the Insolvency (Bankruptcy)of Credit Institutions and the right to proposethat the founders (members) of a credit insti�tution take action with the aim of increasingthe credit institution’s own funds (capital) toa level that would ensure compliance with therequired ratios;

— the Law has established standards regardingthe Bank of Russia qualification requirementsfor candidates nominated to executive posi�tions in a credit institution (Article 60), ob�taining Bank of Russia prior permission to ac�quire more than 20% of shares (stakes) in acredit institution and the notification of theBank of Russia about the acquisition of morethan 5% of shares (stakes) in a credit institu�tion (Article 61), bringing these standardsinto conformity with the Federal Law onBanks and Banking Activities.In 2002, the Bank of Russia actively partici�

pated in drafting the Federal Law on HouseholdDeposit Insurance. The establishment of a depositinsurance system will require making amend�ments to the Civil Code and Tax Code of the Rus�sian Federation, Federal Law on Banks and Bank�ing Activities, Federal Law on the Central Bank

I

86


of the Russian Federation (Bank of Russia) andsome other federal laws.

The Russian Federation Code on Administra�tive Offences, which came into force on July 1,2002, provides for the following:— the possibility of disciplining a credit institu�

tion as an individual offender (Article 15.26)or as one of a group of corporate offenders. Forthe first time the Bank of Russia has been in�cluded in the Code as a body whose executivesare entitled to initiate administrative action;

— Article 14.14 provides for responsibility forobstructing the actions of a provisional admin�istration appointed by the Bank of Russia to acredit institution;

— responsibility for violation of legislation oncountering the legalisation (laundering) of in�come obtained by criminal means and the fi�nancing of terrorism (Article 15.27).The Code of Arbitration Procedure, which

came into force on September 1, 2002, establisheda detailed procedure for appealing against rulesand regulations, including Bank of Russia rulesand regulations.

The Federal Law on the State Registration ofLegal Entities, which came into force on July 1,2002, established a single procedure for the stateregistration of legal entities, including credit in�stitutions.

The Federal Law on Countering theLegalisation (Laundering) of Criminally ObtainedIncomes and the Financing of Terrorism allows abank to refuse to conclude a bank account (de�posit) agreement with a private individual or le�gal entity if the latter fail to produce a documentconfirming information contained in this law orproduces false documents or if there is evidence,obtained in accordance with this Law, implicat�ing a person in terrorist activities.

The Federal Law on Amending Point 2 of Ar�ticle 855 of the Civil Code of the Russian Federa�tion established the calendar order of writingdown funds on settlement documents, providingfor payments to the budgets of all levels and gov�ernment extrabudgetary funds and the transferand/or payment of funds for settlements relatingto the payment of wages and salaries to personsworking on contract.

In 2002, the Bank of Russia drafted a FederalLaw on Amending the Civil Code of the Russian

Federation, which established rules for setting adate for interest payment on deposits from the dayfollowing the day on which funds were depositedup to and including the day on which the creditinstitution returned the deposit.

The amendments to the applicable bankinglegislation that came into force in 2002 were ofgreat importance for the development and im�provement of the legislative basis of banking su�pervision, the regulation of the registration ofcredit institutions and licensing of banking activi�ties, bankruptcy prevention and streamliningbank liquidation procedures. The enforcement ofthe above amendments allowed the Bank of Rus�sia to make the following amendments to its rulesand regulations:— the Bank of Russia drafted a new version of

Instruction No. 1, dated October 1, 1997,“On the Procedure for Regulating the Activi�ties of Banks,” which struck off the list ofthe required ratios the N8, N9 and N11 ra�tios, because the new version of the FederalLaw on the Central Bank of the Russian Fed�eration (Bank of Russia) does not have themon the list of the required ratios which theBank of Russia has the right to establish. Atthe same time, for methodological reasons thedraft instruction does not contain the re�quired ratios N11.1 and N14, but it specifiesthe methodology of calculating some requiredratios;

— the Bank of Russia drafted the Provision onConsolidated Reporting, which establishedinter alia the procedure for a banking/consoli�dated group to calculate its own funds (netassets) and the procedure for the Bank ofRussia consolidated supervision of credit in�stitutions in connection with the granting tothe Bank of Russia of the right to disciplinebanking groups in the event of situations en�dangering the legitimate interests of creditorsand depositors of credit institutions that aremembers of the above groups;

— in pursuance of Article 51 of the Federal Lawon the Central Bank of the Russian Federa�tion (Bank of Russia), the Bank of Russiadrafted a regulation “On the Procedure forExchanging Information between the Bank ofRussia and Central Banks and SupervisoryAuthorities of Foreign States;”


87

— the Bank of Russia changed the procedure forthe state registration of credit institutions,stipulating that the state registration of creditinstitutions when they are founded,reorganised or liquidated and the state regis�tration of the changes in their founding docu�ments is conducted by the federal bodies ofexecutive power (hereinafter referred to as theauthorised registering body), but the decisionon the state registration of a credit institutionis made by the Bank of Russia;

— the Bank of Russia established the procedurefor co�operation between the Bank of Russiaand the authorised registering body in the pro�cess of the state registration of credit institu�tions and the state registration of changes intheir founding documents;

— the Bank of Russia established the level of thestamp duty levied for the state registration ofcredit institutions, including the stamp dutylevied for the state registration of changes intheir founding documents, and the license feefor considering the question of issuing a bank�ing licence;

— the Bank of Russia established administrativeresponsibility for executives of a credit insti�tution if they obstruct the provisional admin�istration appointed to the credit institution,and determined the range of Bank of Russiaexecutives who have the right to draw up pro�tocols on administrative offences committed byemployees of credit institutions;

— the Bank of Russia stipulated that its regionalbranches are obliged to prohibit the reor�ganisation of a credit institution if its reor�ganisation will create grounds for the imple�mentation of the bankruptcy�prevention mea�sures envisaged by the Federal Law on the In�solvency (Bankruptcy) of Credit Institutions;

— the Bank of Russia stipulated that the liqui�dation of a credit institution is considered com�plete and the credit institution is consideredliquidated after the corresponding entry hasbeen made by the authorised registering bodyin the single state register of legal entities.In 2002, the Bank of Russia continued to con�

vert the existing system of banking regulation tointernational standards, including those laid downin the documents of the Basel Committee on Bank�ing Supervision, and international accounting

standards. The most significant step taken in thatdirection was the drafting of a new version of theBank of Russia Provision “On the Procedure forCreating Reserves for Possible Losses by CreditInstitutions” and a new version of the Instruc�tion “On the Procedure for Creating and UsingReserves for Possible Loan Losses.”

To exclude from the capital calculation thesources of credit institutions’ own funds(authorised capital, income from the issue of se�curities, profit, etc.) created by using various“schemes,” i.e. fictitiously, the Bank of Russiadrafted the Provision “On the Methodology ofDetermining Credit Institutions’ Own Funds(Capital)” (registered with the Ministry of Jus�tice on March 17, 2003).

The Bank of Russia drafted an operating in�struction, entitled “On Lending to Related Bor�rowers,” recommending banks to take additionalprecautions regarding the risks involved in lend�ing to related borrowers.

In 2002, the Bank of Russia began to prepareproposals for amending the legislation on corpo�rate governance of credit institutions. The aimsof these amendments are to ensure the observanceof the priority of interests of a credit institutionand its creditors and depositors over the interestsof its individual founders (members) and man�agers, prevent a conflict of interests in the man�agement of a credit institution and establish re�quirements for managers’ decision�making prac�tices. The corresponding proposals by the Bankof Russia for amending the Federal Law on Banksand Banking Activities and Federal Law on theCentral Bank of the Russian Federation (Bankof Russia) are being worked out taking into con�sideration the opinion of the banking community.

Continuing to promote advanced foreign ex�perience in banking regulation and supervision,the Bank of Russia made known to the credit in�stitutions the following recommendations of theBasel Committee on Banking Supervision: Inter�nal Audit in Banks and the Supervisor’s Relation�ship with Auditors and Supervisory Guidance onDealing with Weak Banks.

In 2002, the Bank of Russia began to draft anupdated regulation setting rules for organisinginternal control in credit institutions and bank�ing groups and requirements for monitoring com�pliance with these rules.

88


Aware of the increased role of informationtechnologies in banking and a rise in related bank�ing risks, the Bank of Russia in 2002 continuedto work on the principles of banking supervisionand regulation in this area. Taking into consider�ation the rapid advance of the Internet�relatedtechnologies in banking, the Bank of Russia con�ducted a survey of credit institutions’ websites.Having summarised and analysed the data it col�lected, the Bank of Russia drafted regulations onhow credit institutions should inform the Bankof Russia about the Internet technologies theyintroduce and use in banking and recommenda�tions on the content and format of credit institu�tions’ websites.

In 2002, the Bank of Russia participated indiscussing draft regulations on auditing practices

in Russia, prepared by the Finance Ministry inpursuance of the Federal Law on Auditing, in�cluding drafts of federal audit rules (standards).

In pursuing the Banking Sector DevelopmentStrategy, since December 2002 the Bank of Rus�sia has published the Internet version of itsmonthly bulletin Russian Banking Sector Review

(www.cbr.ru), which provides information onthe Russian banking sector and its institutionalcharacteristics and major aggregate data on creditinstitutions and macroprudential indicators of thebanking sector, such as capital adequacy, creditand market risks and liquidity. The disclosure ofthis information will allow credit institutions, in�vestors, supervisors and other users to keep trackof the Russian banking sector’s key performanceindicators.


89

II.2.2. OFF�SITE SUPERVISION

AND INSPECTION OF CREDIT INSTITUTIONS

n 2002, the Bank of Russia carried out a se�ries of measures to maintain the stability ofthe Russian banking sector and protect the

legitimate interests of credit institutions’ credi�tors and depositors and took decisions on currentissues of banking supervision.

Its activities in the field of off�site supervisionwere aimed, above all, at evaluating the natureand level of risks assumed by banks and the ex�tent of their financial stability and optimising su�pervisory practices. Adequate supervisory re�sponse was ensured by a sensible assessment ofthe situation, taking into consideration its mostprobable outcome, and the effective implementa�tion by the supervisory authority of the possibili�ties and powers conferred on it by the applicablelegislation.

The dynamics of sanctions used against creditinstitutions in 2002 testify to a fall in the totalnumber of violations of applicable rules and regu�lations. As before, supervisors tended to use pre�ventive measures and the number of coercive ac�tions taken against credit institutions declined.

Various legal measures were taken against vio�lator banks as a result of the analysis of banks’financial statements in 2002. The managementsand/or the boards of directors (supervisoryboard) of 1,187 credit institutions were warnedin writing about the shortcomings discovered intheir work and meetings were held with the man�agers of 301 banks.

In 2002, the Bank of Russia imposed restric�tions on or prohibited 28 banks from taking house�hold savings on deposit (64 banks were penalisedin this way in 2001); 83 banks were prohibitedfrom opening branches (131 banks in 2001);473 banks were fined for violating prudentialstandards. Credit institutions were also servedwith notices demanding that they bring their re�quired ratios into compliance with the Bank ofRussia regulations (150 banks were served withsuch notices compared with 250 in 2001).

As of January 1, 2003, four credit institutionswere prohibited from transferring funds to the

budgets of all levels and governmentextrabudgetary funds at the instruction of legalentities. Of all operating credit institutions, onlybanks under the control of the government Agencyfor the Restructuring of Credit Organisations(ARCO) had a backlog of unpaid settlement docu�ments on payments to budgets of all levels, butArticle 13 of Federal Law No. 144�FZ, dated Ju�ly 8, 1999, “On the Restructuring of Credit In�stitutions” forbade the Bank of Russia to use sanc�tions against them.

To optimise banking supervision, the Bank ofRussia in 2002 took steps to improve the instru�ments used in analysing the financial position ofcredit institutions, such as making a preliminaryassessment of the situation in banks and identify�ing all high�risk areas in their activities and evalu�ating the standard and quality of management,the effectiveness of the internal control system andensuring that banks compile true and fair accountsand reports on the risks they assume. The Bankof Russia began designing an early warning sys�tem, testing various statistical forecasting mod�els and methods, selecting forecast and explana�tory variables and determining the forecastinghorizons (regressive and cluster analyses wereused).

The Bank of Russia completed the elaborationand testing of the Recommendations on Conduct�ing the Analysis of the Activities of Credit Insti�tutions and the Development of Banking Servicesin the Region, designed to provide methodologi�cal aid to Bank of Russia regional branches inanalysing the activities of credit institutions intheir respective regions, evaluating the extent towhich the region is provided with banking ser�vices and, on this basis, determining the finan�cial stability of regional credit institutions andprospects for their development.

To improve supervision, the Bank of Russiadrew up a programme to introduce the instituteof curators of credit institutions. The experimentto appoint curators to individual banks, launchedin 10 Russian regions, including Moscow, has

I

90


been conducted since August 1, 2002 on the ba�sis of the Bank of Russia draft recommendations“On the Experimental Introduction in Supervi�sory Practices of the Institute of Curators of CreditInstitutions.”

In addition, the Bank of Russia tackled thetask of improving the general organisation of cur�rent supervision in its regional branches, includ�ing the problem of raising the level of co�ordina�tion (co�operation) between various off�site in�spection and supervision units, in order to ensuremore effective use of inspection findings for com�prehensive analysis of the situation in individualcredit institutions and determine appropriate su�pervisory response whenever necessary.

The principal objective of the inspections con�ducted by the Bank of Russia in 2002 was to findout the actual financial standing of credit institu�tions. Bank of Russia inspectors paid special at�tention to the evaluation of:— how credit institutions complied with the re�

quirements of federal legislation and Bank ofRussia rules and regulations;

— the state of accounting and credibility of theaccounting, financial and statistical reportssubmitted to the Bank of Russia;

— the quality of assets of credit institutions;— the appropriateness of the formation of credit

institutions’ own funds (capital).In 2002, the Bank of Russia conducted

4,600 inspections of credit institutions and theirbranches, of which 1,953 inspections were con�ducted in credit institutions and 2,647 inbranches of credit institutions. It also conducted565 comprehensive inspections of credit institu�tions, of which 275 were conducted in branchesof credit institutions. The number of thematicinspections of credit institutions and theirbranches amounted to 3,760.

The Bank of Russia conducted 1,838 sched�uled comprehensive and thematic inspections ofcredit institutions and their branches. Inspectionswere planned taking into account the objectivesof banking supervision and the situation in thebanking sector in the Russian regions.

Inspections of credit institutions and supervi�sion over their branches, which is conducted byother Bank of Russia regional institutions, wereco�ordinated by Bank of Russia regional branches,which supervised parent credit institutions. In

2002, interregional inspections were organisedin 53 credit institutions and their 107 branches.

The Bank of Russia conducted 2,762 unsched�uled inspections of credit institutions and theirbranches, or 60% of the total number of Bank ofRussia inspections. Such inspections were con�ducted after off�site supervision uncovered situa�tions that required verification as to the existenceof potential threats to the interests of creditorsand investors of credit institutions.

Owing to the enforcement in 2002 of the Fed�eral Law on Countering the Legalisation (Laun�dering) of Criminally Obtained Incomes, the Bankof Russia organised unscheduled inspections of allcredit institutions and their branches to make surethat they complied with the requirements of thisLaw.

Bank of Russia inspections of credit institu�tions and their branches in 2002 helped discover25,028 violations of federal laws and Bank ofRussia rules and regulations and 1,463 shortcom�ings in the activities of credit institutions and theirbranches, including shortcomings in theorganisation of risk management and internalcontrol systems in credit institutions.

The most common violations of legislation andBank of Russia rules and regulations were com�mitted by credit institutions in the year underreview in conducting operations with clients, op�erations with cash and precious metals and for�eign exchange operations and in accounting.

Credit institutions which inspectors foundguilty of violating legislation or Bank of Russiarules and regulations, failing to provide informa�tion or providing incomplete or false informationwere served with notices requiring them to takecorrective action and penalised in accordance withArticle 74 of the Federal Law on the Central Bankof the Russian Federation (Bank of Russia).

A number of organisational changes weremade in the bank inspection system in 2002. Inpursuance of the Bank of Russia Board of Direc�tors’ decision passed on September 4, 2002 (min�utes No. 20), the Bank of Russia adopted newapproaches to inspecting credit institutions andtheir branches, as is required by Article 73 of theFederal Law on the Central Bank of the RussianFederation (Bank of Russia). To ensure co�ordi�nation in conducting inspections, the function ofproviding the organisational and methodological


91

guidance of inspections of credit institutions andtheir branches in Russia was conferred on theBank of Russia Chief Inspectorate, formed in com�pliance with Bank of Russia Order No. OD�602,dated September 16, 2002. The above changeswere made in order to make inspections moresubstantive and ensure that inspection resultsserve specific practical purposes: it is importantthat inspectors realise the full impact of the risksassumed by the credit institutions they inspectand that credit institutions correctly classifythem and make proper reserves for possible loanlosses and realise how the violations and short�

comings uncovered by inspectors may affect thefinancial position of the credit institution and itsfuture.

In the year under review, the Bank of Russiaexercised control within the powers granted to itover the conduct of obligatory annual audits ofcredit institutions and banking groups andanalysed the quality of audits. The work carriedout by the Bank of Russia within the frameworkof the working groups formed by the Finance Min�istry was aimed at upgrading bank audit practicesand bringing them closer to internationally ac�cepted standards.

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II.2.3. REGISTRATION AND LICENSING OF BANKING ACTIVITIES

major element of banking supervisionis control over the compliance with therequirements of the legislation and

Bank of Russia rules and regulations regardingthe state registration of credit institutions and is�suing banking licences. In the year under review,the Bank of Russia took steps to fulfil the tasksset in the Banking Sector Development Strategy:— to prevent the establishment and expansion of

credit institutions incapable of ensuring theirfinancial stability and without any sound com�mercial prospects;

— to ensure effective control over the lawfulnessof the authorised capital formation and ascer�tain the origins of the founders’ (members’)money in order to prevent financially unsoundorganisations and dishonest persons from es�tablishing control over credit institutions;

— to make sure that the members of the board ofdirectors (supervisory board), managers andchief accountants of credit institutions andtheir branches meet the qualification and busi�ness reputation requirements set by the law.In the year under review, the Bank of Russia

paid special attention to building mechanisms tomake the shareholding (stakeholding) structureof credit institutions more transparent. It tack�led this problem by establishing the procedure forproviding information about the affiliated personsin credit institutions and data on bank holdingcompanies and banking groups. In addition, trans�parency of the ownership structure became oneof the factors taken into account when grantingpermission for the expansion of activities of acredit institution. The Bank of Russia procedurefor providing information on the affiliated per�sons makes it possible to determine interconnec�tions between members of credit institutions anddetect persons or a group of persons capable ofdirectly or indirectly controlling the activities ofa credit institution.

In 2002, the Bank of Russia established theprocedure requiring the parent organisations(managing companies) of the bank holding com�panies to provide information about the membersof the bank holding companies. This information

is important for the implementation by the Bankof Russia of measures to increase the transpar�ency of the shareholding (stakeholding) structureof credit institutions.

The establishment of requirements regardingthe evaluation of commercial prospects of a creditinstitution was a significant element of the workaimed at upgrading the system of requirementsfor credit institutions. The analysis of credit in�stitutions’ business plans is a major element inthe evaluation of the standard of corporate gov�ernance in credit institutions and their ability tomake profit in the selected segment of the bank�ing services market.

Since July 1, 2002, when the procedure forthe state registration of legal entities was changed,the Bank of Russia has taken decisions on the stateregistration of credit institutions and co�operatedwith the authorised registering body.

The total number of operating credit institu�tions in 2002 rose from 1,319 to 1,329.

Forty�one credit institutions were registeredin 2002 (30 credit institutions were registeredin 2001 and 17 in 2000), including 35 banks andsix non�bank credit institutions. These figuresshow that the tendency towards growth in thenumber of new credit institutions, first registeredin 2000, continued.

The attractiveness of the Russian banking sec�tor for foreign investors is confirmed by the factthat four wholly foreign owned banks were foundedin Russia in 2002 (none was created in 2001). Asof January 1, 2003, there were 126 credit institu�tions with foreign interest, of which 27 were whollyforeign owned banks and 10 had foreign interestof less than 100% but more than 50%. Non�resi�dent investment in the authorised capital of cre�dit institutions amounted to 15.9 billion rublesas of January 1, 2003, a year�on�year increase of2.0 billion rubles, or 14.8% (the percent share ofnon�resident participation in the aggregateauthorised capital of operating credit institutionsremained unchanged from 2001 at 5.3%).

As of January 1, 2003, the share of credit in�stitutions in the form of joint�stock companies ex�panded from 60.3% to 63.0%, mainly because

A


93

NUMBER OF OPERATING CREDIT INSTITUTIONS BY REGION

Central

Northwestern

Southern

Volga

Urals

Siberian

Far Eastern

0 100 200 400300 500 600 700 800

1.01.2000 1.01.2001 1.01.2002 1.01.2003

CHANGE IN BANKING SECTOR STRUCTURE BY TYPE OF CREDIT INSTITUTIONS

(as % of total number of operating credit institutions)

64

60

52

44

56

48

40

361.01.1996 1.01.20001.01.19991.01.1997 1.01.1998 1.01.2001 1.01.20031.01.2002

40.7

45.8

42.9

52.5

43.1

37.0

59.3

54.2

57.1

43.3

56.7

47.5

56.9

63.0

39.7

60.3

64

60

52

44

56

48

40

36

Joint�stock companiesLimited liability companies (partnerships)

Chart 43

Chart 44

41 credit institutions had been transformed fromlimited liability companies into joint�stock com�panies (66 credit institutions in 2001). Credit in�stitutions in the form of joint�stock companies aremore transparent than other credit institutionsbecause the applicable legislation requires joint�stock companies to disclose far more informationthan limited liability companies.

Credit institutions continued to becomeuniversalised in 2002. As of January 1, 2003, ofthe total number of operating credit institutions:— 90.4% against 92.7% as of January 1, 2002,

had the right to take household savings on de�

posit (the contraction resulted from the factthat new credit institutions must operate fortwo years to apply for this licence and the num�ber of banks conducting such operations fellfrom 1,223 to 1,202 due to licence revocationsor cancellations);

— 63.1% against 61.4% conducted banking op�erations in rubles and foreign currency;

— 22.0% against 19.9% held general licences;— 13.2% against 13.0% had the right to conduct

operations with precious metals.The aggregate registered authorised capital

of credit institutions in 2002 expanded from

94


NUMBER OF OPERATING CREDIT INSTITUTIONS

AND BANKING LICENCES GRANTED TO THEM

1,500

1,000

500

01.01.2000 1.01.2001 1.01.20031.01.2002

1,500

1,000

500

0

Operating credit institutions

Credit institutions with licence to conduct operations with private individuals

Credit institutions with licence to conduct foreign exchange operations

Credit institutions with general licence

Credit institutions with licence to conduct operations with precious metals

1,329

1,202

839

293

175

1,349

1,264

669

242

152

1,319

1,223

810

262

171

1,311

1,239

764

244

163

Chart 45

261.0 billion rubles to 300.4 billion rubles, anincrease of 39.4 billion rubles, or 15.1%). At thesame time, the size of and rate of growth in regis�tered authorised capital decreased in 2002 yearon year (growth stood at 53.6 billion rubles, or25.8%). The slowdown resulted from high capi�tal adequacy levels and the decreased need to at�tract funds to authorised capital to maintain cur�rent banking business volumes and meet the regu�latory requirements, calculated according to theRussian banking supervision standards.

The following data confirm the tendency to�wards the concentration of capital of credit institu�tions. The number of operating credit institutionswith an authorised capital of more than 300 mil�lion rubles rose 30% (170 credit institutions, or12.8% of the total) and the number of credit in�stitutions with an authorised capital from 60 mil�lion rubles to 300 million rubles increased 20%(321 credit institutions, or 24.2% of the total).

Three mergers of credit institutions were reg�istered in 2002.


95

II.2.4. LIQUIDATION, FINANCIAL REHABILITATION

AND RE�ORGANISATION OF CREDIT INSTITUTIONS AND MATCHING

THEIR AUTHORISED CAPITAL WITH THEIR OWN FUNDS

he Bank of Russia constantly takes measuresto identify credit institutions that qualify forbeing subjected to bankruptcy�prevention

procedures under Article 4 of the Federal Law onthe Insolvency (Bankruptcy) of Credit Institu�tions. The situation in the banking sector in 2002was different from the situation in other yearsin that most of the credit institutions that quali�fied for being subjected to bankruptcy�preven�tion procedures managed to restore their sol�vency before the Bank of Russia took actionagainst them (61 credit institutions).

In 2002, the Bank of Russia began to imple�ment financial rehabilitation plans with regardto 22 credit institutions. At the same time, Bankof Russia regional branches controlled 64 creditinstitutions that carried out such plans, of which42 credit institutions had begun to carry out fi�nancial rehabilitation plans before January 1,2002. In 2002, 39 credit institutions completedthe implementation of their financial rehabilita�tion plans under Bank of Russia supervision.

The Bank of Russia in 2002 paid special at�tention to monitoring credit institutions’ report�ing and accounting practices and the analysis ofinspection results in order to make sure that creditinstitutions did not allow their own funds (capi�tal) to fall below the level of their authorised capi�tal set by their founding documents.

In the year under review, five credit institu�tions had restored their own funds (capital) be�fore the Bank of Russia sent them a notice thatthey should match their own funds (capital) withtheir authorised capital, while 46 credit institu�tions received such notices. Five credit institutionshad their banking licences revoked for failing tocomply with this requirement.

To protect the interests of creditors and de�positors, the Bank of Russia used as a bankruptcy�prevention and supervisory measure the appoint�ment of provisional administrations to credit in�stitutions. In 2002, it monitored the activities of

37 provisional administrations, of which 24 wereappointed in 2002, six of them to operating creditinstitutions which subsequently had their bank�ing licences revoked, and 18 were appointed tocredit institutions after they had had their bank�ing licences revoked.

One of the practical tasks relating to bankingsector development is increasing stability of thebanking sector through weeding out insolventcredit institutions from the banking services mar�ket. Acting in compliance with the applicable leg�islation, the Bank of Russia as of January 1, 2003,revoked banking licences of 1,376 credit institu�tions (in 2002, 25 credit institutions had theirbanking licences revoked and one credit institutionhad its licence cancelled in accordance with thedecision taken by its members). Provisional admin�istrations were appointed to all the credit institu�tions that had their banking licences revoked.

The amendments to the banking legislationwhich came into force in 2001 broadened theBank of Russia’s powers to withdraw financiallytroubled credit institutions from the market be�fore they reneged on their obligations to credi�tors. The fact that 13 out of 25 credit institutionshad no backlog of unpaid settlement documentswhen their banking licence was revoked may serveas an example of the effective preventive use ofsupervisory instruments.

As of January 1, 2003, 468 credit institutionswere liquidated in accordance with the procedureestablished by the law, of which 71 credit insti�tutions were wound up in 2002. Receivers (liq�uidators) were appointed to and liquidation com�missions were set up in 412 credit institutions,111 of them in 2002. Bank of Russia employeeswere appointed receivers to five credit institu�tions, declared debtors in absentia by arbitrationcourts, under Article 6 of the Federal Law on theInsolvency (Bankruptcy) of Credit Institutions.

As regards 321 out of the aforementioned468 credit institutions, arbitration courts are yet

T

96


to complete bankruptcy proceedings against themor liquidate them.

As of January 1, 2003, 876 credit institu�tions were struck off the State Register owingto the revocation of licences (212 in 2002). Theanalysis of documents of the liquidated creditinstitutions and 64 inspections of receivers (liq�uidators), conducted by the Bank of Russia in2002, showed that receivers violated federallaws in conducting liquidation procedures,while arbitration courts closed bankruptcy pro�ceedings before finding out all the facts relevantto the case. The Bank of Russia sent corre�sponding reports on 90 credit institutions to theSupreme Arbitration Court of the Russian Fed�eration.

In 2002, the Bank of Russia issued 193 bankreceiver’s certificates, extended the terms of497 receiver’s certificates, cancelled five

receiver’s certificates and refused to issue re�ceiver’s certificates to 136 candidates.

In pursuance of the Federal Law on the Re�structuring of Credit Institutions and using theinformation provided to the Bank of Russia by theAgency for the Restructuring of Credit Orga�nisations (ARCO) and Bank of Russia regionalbranches, the Bank of Russia in 2002 oversawthe restructuring of 12 credit institutions (fourcredit institutions as of January 1, 2003), ofwhich 10 credit institutions were under the con�trol of ARCO. Six credit institutions withdrewfrom the control of ARCO in 2002; ARCO com�pleted the liquidation procedure with regard toone credit institution and the restructuring of onecredit institution, which had not been transferredunder the control of ARCO, was completed. Threecredit institutions had the terms of their restruc�turing plans extended by the Bank of Russia.

I I . 3 . T H E R U S S I A N P A Y M E N T S Y S T E M

97

1 These figures are based on data from the Russian BIC Directory. They may differ from data in the State Register

of Credit Institutions owing to gaps in the time of updating figures.

II.3. THE RUSSIAN PAYMENT SYSTEM

II.3.1. THE STATE OF THE RUSSIAN PAYMENT SYSTEM.

THE DEVELOPMENT AND UPGRADING OF THE BANK OF RUSSIA

PAYMENT SYSTEM

he Russian payment system, which is com�prised of the Bank of Russia payment sys�tem and private payment systems, func�

tioned reliably and efficiently in 2002 and by andlarge met the needs of the country’s economy.Much credit for this goes to the Bank of Russia,which made persistent efforts to enhance the ef�ficiency of the effectuation of non�cash paymentsand settlements, organise cash circulation andregulate cash settlements.

The participants in the Russian payment sys�tem as of January 1, 2003, were 1,172 Bank ofRussia institutions, 1,331 credit institutions1, in�cluding 41 non�bank settlement credit institu�tions, and 3,326 credit institution branches. Inaddition, settlement services were provided toclients by 6,387 additional offices of credit insti�tutions.

As of January 1, 2003, the participants in theRussian payment system had opened 271.4 mil�lion bank accounts for their resident and non�resi�dent clients in the Russian currency, of which4.2 million accounts (1.6%) were opened for le�

gal entities that are not credit institutions and267.2 million accounts (98.4%) were opened forprivate individuals; most of the individual ac�counts (90.1%) were opened in the Savings Bank(Sberbank). The average number of bank ac�counts per resident of Russia rose from 1.8 to 1.9.

As of January 1, 2003, Russia had on aver�age one participant in the payment system per24,700 residents, an increase of 1.2% year onyear, and 660 legal entities, a rise of 8.9%. Atthe same time, taking into account the additionaloffices opened by credit institutions and theirbranches, the respective ratios were one paymentsystem participant per 11,800 residents, a fall of1.7%, and 315 legal entities, a rise of 5.7%.

On the whole, these changes testify to the ex�pansion of the volume and range of settlement ser�vices provided by credit institutions.

In 2002, the Russian payment system con�ducted 737.9 million payments worth a total of130.1 trillion rubles. This represents an increaseof 22.0% year on year, which is higher than theinflation rate. This growth along with a 16.5%

T

98


Payments effected through private payment systems

Payments effected through Bank of Russia payment system

400

300

200

0

100

20022001

Number (million) Volume (trillion rubles)

NUMBER OF PAYMENTS EFFECTED BY RUSSIAN PAYMENT SYSTEM

283.2

387.2

350.7350.280

60

40

0

20

20022001

53.8

43.4

63.3

76.3

Charts 46, 47

increase in the number of payments was the re�sult of a rise in the business activity of economicagents.

The ratio between non�cash payments effectedby the Bank of Russia payment system and pri�vate payment systems in the country’s paymentsystem remained virtually unchanged in 2002.

As in previous years, payments effectedthrough the Bank of Russia payment system in2002 accounted for a large portion of non�cashpayments: 47.6% in number and 58.7% in vol�ume. A constantly high level of payments effectedthrough the Bank of Russia payment system isdue to its efficient and uninterrupted function�ing and the fact that the risk�free funds in Bankof Russia accounts, used in settlements betweencredit institutions, minimise the latter’s finan�cial risks.

The dynamic development of the Bank of Rus�sia payment system was accompanied by the rapiddevelopment of private payment systems, whichallowed credit institutions and their clients tooptimise their payments, reducing their time andcosts.

The payment order remained the principalinstrument of payment in non�cash settlements,accounting for 77.1% of the total number of pay�ments and 90.6% of the total volume of payments.Year on year this represents an increase of 2.8%and 3.9% respectively.

Payment orders were the predominant formof settlements because they were widely used aspayment for goods and services and in non�com�modity operations, such as the transfer of taxes,duties and other compulsory payments to budgetsof all levels and extrabudgetary funds. Their wideuse was also connected with rapid growth in elec�tronic payments, made by payment orders, whichhelp reduce settlement times to a minimum.

In 2002, there was a slight increase in the useof payment requests and collection orders (1.7%in 2002 against 1.6% in 2001 in number and0.6% against 0.5% in volume). The use of pay�ment instruments such as letters of credit andcheques issued by credit institutions remainedunchanged (0.2% in number and 0.1% in vol�ume).

Other instruments of payment, such as pay�ment warrants, which are used in the partial pay�ment of settlement documents when clients do nothave enough funds in their accounts and in a num�ber of special cases when a bank or a bank’s cli�ent changes their details, accounted for 21.0% ofall payments in number and 8.7% in volume.

Electronic payments accounted for 72.3% ofthe total number of payments and 84.0% of thetotal volume of payments effected through theRussian payment system in 2002, while paymentseffected on paper accounted for 27.7% and 16.0%respectively. Electronic payments dominated in�


99

terbank settlements, whereas paper documentsaccounted for a large portion of settlements ef�fected between clients of one unit of a credit in�stitution, because the speed with which such pay�ments are effected met the clients’ requirements.

Most of the payments effected through theRussian payment system were intraregional pay�ments, which accounted for 91.0% of the totalnumber and 84.1% of the total volume of pay�ments. Interregional payments accounted for9.0% and 15.9% respectively.

The overall amount of cash passing throughthe cash departments of the Bank of Russia andcredit institutions in 2002 increased 32.5% yearon year, mainly as a result of a rise in nominalmoney income and consumer price growth. Thisrepresents a slowdown of 5.9 percentage pointscompared to 2001. The average daily cash turn�over expanded by 8 billion rubles to 32.2 billionrubles (in 2001 it increased by 6.7 billion rubles).

The Bank of Russia and credit institutionssupplied with their own cash resources 96.1% oftheir clients’ needs in cash against 95.2% in 2001.

The rate of growth in cash turnover in the yearunder review (32.5%) was faster than the rate ofexpansion in non�cash payment volumes (22%).

The following indicators characterised theBank of Russia payment system.

The participants in the Bank of Russia paymentsystem as of January 1, 2003, were 1,172 Bank ofRussia branches and divisions, 1,331 credit insti�tutions and 1,773 branches of credit institutions,which, according to the Russian BIC Directory,had correspondent accounts (subaccounts)opened for them in the Bank of Russia.

Compared to January 1, 2002, the number ofcredit institutions that opened correspondent ac�counts in the Bank of Russia rose by eight, or0.6%, while the number of branches of credit in�stitutions that had correspondent subaccounts inthe Bank of Russia fell by 44, or 2.5%, owing tothe continued reorganisation of the branch net�work of credit institutions and extensive use ofinformation technologies.

In addition, in accordance with the applicablelegislation, the Bank of Russia provided servicesto the bodies that executed budgets of all levels,including the Federal Treasury bodies, budget�financed institutions, regional and municipal trea�suries, government extrabudgetary funds and

other clients in areas where there were no creditinstitutions. The number of such clients declinedfrom 74,410 as of January 1, 2002, to 66,388 asof January 1, 2003, or 10.8%, mainly due to thetransfer to servicing by the federal treasury bod�ies of budget�financed institutions and regionaland local budgets, as well as the establishment oftreasuries in Russian regions and municipalitiesand similar reforms conducted by them. The re�duction in the number of clients other than creditinstitutions was also the result of the transfer bythe Bank of Russia of clients that did not complywith the requirements of the law to servicing bycredit institutions and their branches.

The number of the Finance Ministry’s FederalTreasury bodies, clients of the Bank of Russia,fell from 1,402 to 1,384, or 1.3%, owing to theirre�organisation.

In 2002, the Bank of Russia payment systemeffected 350.7 million payments, or 1.4 millionpayments a day on average; the total annual vol�ume of payments amounted to 76.3 trillion rubles.Compared with 2001, the number of paymentsincreased 23.8%, the average daily number ofpayments rose 27.3% and the volume of paymentsexpanded 20.5%. The increase resulted, aboveall, from a rise in the number of payments madeto the budgets of all levels owing to the need tomake a detailed accounting of these payments foreffective budget formation and allocation.

The principal participants in the Bank of Rus�sia payment system in 2002, as in the previousyears, were credit institutions and their branches,which accounted for 82.4% of the total numberof payments and 79.5% of their total volume (therespective percentages for 2001 were 81.6% and75.2%).

The share of payments effected by Bank ofRussia clients that are not credit institutions con�tracted from 16.9% in 2001 to 16.4% in 2002 innumber and from 24.0% to 19.8% in volume.There was also a contraction in the share of pay�ments effected by Bank of Russia branches anddivisions on their own settlement operations: from1.5% to 1.2% in number and from 0.8% to 0.7%in volume.

Credit institutions and their branches pre�ferred to effect settlements through the Bank ofRussia payment system because it is reliable anduses advanced technologies and information pro�

100


Charts 48, 49

RATIO BETWEEN PAYMENTS EFFECTED

THROUGH BANK OF RUSSIA PAYMENT SYSTEM

ELECTRONICALLY AND ON PAPER

(million payments)

400

200

350

300

150

250

100

50

0

Number of electronic payments

Number of payments effected on paper

1999 2000 20022001

tection methods, ensuring the effective and se�cure provision of services to all settling partici�pants and allowing them quickly to exchange in�formation without any credit risk. The process�ing of the constantly rising number of paymentsis ensured by the development of information andtelecommunications systems.

Most of the payments effected through theBank of Russia payment system were intra�regional payments, which in 2002 accounted for89.1% of the total number of payments and 82.1%of their volume. Interregional payments ac�counted for 10.9% and 17.9% respectively.

In 2002, the Bank of Russia continued to makeefforts to enhance the efficiency of its paymentsystem and reduce the risks involved in its opera�tion, mainly by consistently encouraging the useof electronic payments.

Electronic payments in 2002 accounted for92.7% of the total number of payments and92.1% of the total volume of payments (88.0%and 82.2% in 2001).

Interregional electronic payments are nor�mally effected within one day or no later than thenext day, depending on the distance between thetime zones of the regions where the payer andpayee are located.

Settlements on intraregional electronic pay�ments are effected within one day according to

the schedule of exchange and processing of elec�tronic payments. In 59 out of 78 Bank of Russiaregional branches settlements were effected by thecentralised method and in 19 by the decentralisedmethod by Bank of Russia institutions. In 55 outof the above 59 Bank of Russia regional branchespayments were processed continuously within oneday and in three Bank of Russia regional branchespayment information was processed on a discretebasis at the fixed time several times a day. In theMoscow branch of the Bank of Russia informa�tion was processed both discretely and continu�ously.

The continuous processing of payments makesit possible to debit and enter funds onintraregional payments instantly, creating con�ditions for the acceleration of their turnover.

As of January 1, 2003, the participants inintraregional electronic settlements were 1,138out of 1,172 Bank of Russia institutions, or 97.1%of the total (as of January 1, 2002, 1,135 out of1,175 Bank of Russia institutions, or 96.6% ofthe total), while the participants in interregionalelectronic settlements were 1,083 Bank of Rus�sia institutions, or 92.4% of the total (as of Janu�ary 1, 2002, 1,031 out of 1,175 Bank of Russiainstitutions, or 87.7% of the total).

The measures taken to engage Bank of Russiainstitutions in the electronic settlement system

RATIO BETWEEN CHARGEABLE

AND FREE OPERATIONS CONDUCTED

BY BANK OF RUSSIA PAYMENT SYSTEM

(million operations)

250

125

188

63

01999 2000 20022001

81

165

120118

95

212

141148

Chargeable operations

Free operations


101

made it possible to step up the efforts to engagecredit institutions in the exchange of electronicdocuments. As of the end of 2002, 76 Bank ofRussia regional branches exchanged electronicdocuments with 2,771 credit institutions and theirbranches, or 89.3% of the total number of creditinstitutions and branches of credit institutions(3,104) serviced by the Bank of Russia (as ofJanuary 1, 2002, 2,502 out of 3,140, or 79.7%of the total number). Simultaneously, the Bankof Russia continued to make efforts to engage inthe electronic document exchange its other cli�ents that are not credit institutions, especiallythe Federal Treasury bodies. As of the end of2002, the latter’s share in the electronic docu�ment exchange with the Bank of Russia stood at28.8% of their total number (1,384); as of Janu�ary 1, 2002, 266 out of 1,402, or 19% of thetotal number.

The turnover of average balances of funds ofcredit institutions and their branches in corre�spondent accounts and subaccounts in the Bankof Russia in 2002 was 0.32 days, or 3.14 turn�overs a day, against 0.42 days, or 2.4 turnoversa day, in 2001.

The acceleration in turnovers resulted from arise in the activity of credit institutions and theirclients, the consolidation of credit institutions’accounts and more efficient management of liquid�ity, which was facilitated by the measures takenby the Bank of Russia to spread electronic settle�ments and reduce payment times.

The improvements in the general structure ofpayments effected through the Bank of Russiapayment system in the year under review led to a4.7% fall in the number of payments made onpaper and a 9.9% decline in the value of suchpayments.

The Bank of Russia effected payments on pa�per if there were clients’ instructions to makepayments by mail or by wire transfer, if electronicpayments had to be accompanied by settlementdocuments on paper, containing all informationabout the payment, and also in some regionswhere the Bank of Russia decided not to conductelectronic payments.

The average actual settlement time for paperpayments at intraregional level in 2002 did notchange from 2001 (1.1 days), while it changed alittle at interregional level (from 4.7 days to

4.8 days), owing to the change in the structureof payments made on paper: the proportion of pay�ments made at clients’ instruction by wire con�tracted relative to the share of postal payments,which take more time to conduct.

As of January 1, 2003, the value of settlementdocuments that had not been paid because of thelack of funds in credit institutions’ correspondentaccounts or credit institution branches’ corre�spondent subaccounts amounted to 8.5 billionrubles, declining by 1.2 times from 10.2 billionrubles as of January 1, 2002.

The value of unpaid settlement documentsdecreased as the total number of credit institu�tions and branches of credit institutions with abacklog of unpaid settlement documents declinedby 2.1 times (from 95 to 45). As of January 1,2003, 42 credit institutions whose licence hadbeen recalled accounted for 59.1% of the totalvalue of unpaid settlement documents, two creditinstitutions under the control of ARCO accountedfor 40.9% and one credit institution, which wasnot under ARCO’s control, accounted for less than0.01%.

The Bank of Russia’s pricing policy did notchange much in 2002. The fees charged by theBank of Russia for its settlement services wereunchanged from the previous year. In compliancewith federal legislation, the Bank of Russia con�ducted operations with budget funds of all levelsfree of charge. Operations conducted by the Bankof Russia for a fee accounted for 39.9% of all op�erations and free operations accounted for 60.1%.

The private payment systems are representedby intrabank payment systems designed for settle�ments between the divisions of one credit institu�tion, the payment systems established by creditinstitutions for settlements on correspondent ac�counts opened in other credit institutions, thepayment systems of non�bank settlement creditinstitutions and the systems of settlements be�tween clients of one division of a credit institu�tion or its branch.

Private payment systems demonstrated dy�namic growth in 2002; they focused their effortson the introduction of advanced techniques forprocessing settlement documents and the provi�sion of the widest possible range of high�qualitysettlement services with the aim of attracting cli�ents.

102


280

200

120

0

40

20022001

Number (million payments) Value (trillion rubles)

NUMBER AND VALUE OF PAYMENTS EFFECTED THROUGH PRIVATE PAYMENT SYSTEMS

12.6

115.6

17.3

95.5

2.3

251.7

2.6

239.8

35

25

15

0

5

240

160

80

30

20

10

20022001

12.19.6

30.6

25.6

7.5

10.3

0.6 0.7

Paymets conducted through credit institutions' correspondent accounts

opened in other credit institutions

Paymets conducted between divisions of a credit institution

Paymets made to clients within one unit of a credit institution

Paymets conducted by non�bank settlement credit institutions

Charts 50, 51

Payments effected through settlement sys�tems between clients of one division of a creditinstitution or its branch in 2002 accounted for65.0% of the total number of payments and56.9% of the total volume of payments effectedthrough private payment systems and paymentsbetween the divisions of one credit institutionaccounted for 29.9% and 22.6% respectively(the respective percentages for 2001 were27.2% and 22.1%). These figures show thatcredit institutions have upgraded their ownsettlement systems, giving the economic agentsthey service the opportunity to make settlementsmore effectively.

Payments conducted through credit institu�tions’ correspondent accounts opened in othercredit institutions accounted for 4.5% of the to�tal number and 19.1% of the total volume. At thesame time, these payments demonstrated the mostrapid rates of growth (36.7% in number and37.0% in volume), whereas payments effectedthrough the Russian payment system increased16.5% in number and 22.0% in volume.

The share of payments conducted throughnon�bank settlement credit institutions in 2002was practically unchanged from 2001 and ac�

counted for 0.6% of the number of payments con�ducted through private payment systems and1.4% of the volume of such payments.

The tendency towards growth in the issue ofbank cards continued in Russia in 2002. Year onyear, the number of bank cards grew 47.6% to15.5 million. Bank cards issued by the Russiansystems accounted for 51.7% and internationalsystems 48.3% of the total number of bank cards.However, in 2002, as in 2001, cards issued byinternational systems grew faster than those is�sued by the Russian systems — 73% and 27%respectively.

The number of payment card operations con�ducted in Russia in 2002 amounted to 281.2 mil�lion, an increase of 147.5% year on year, andtheir volume expanded 163.7% to 720.7 billionrubles. Such significant growth in card operationswas the result of the dynamic development of theinfrastructure designed for such operations. Thenumber of ATMs rose by 53.7% in 2002 to 9,000(as of January 1, 2003), cash dispensers by 5.7%to 14,100 and trading outlets accepting paymentcards by 52.2% to 49,100. At the same time, theshare of card payments for goods and servicesexpanded slightly in 2002, from 0.9% in 2001 to


103

1.3% of the total volume of paid services and pub�lic catering and retail trade turnover.

Cash withdrawal operations accounted for92.8% of the entire volume of card operations andthe share of card payments for goods and servicesstood at 7.2% (in 2001, 92.1% and 7.9% respec�tively). Cash withdrawal operations made up sucha large portion of card payments because of thelarge number of bank schemes for the transfer ofcompanies’ wage payments using bank cards, socash withdrawals were the most common opera�tion conducted by workers and employees of suchcompanies.

In 2002, the Bank of Russia continued to up�grade the legislative framework of the Russianpayment system.

To upgrade the system of non�cash settle�ments, the Bank of Russia issued a new versionof its Provision No. 2�P, “On Non�Cash Settle�ments in the Russian Federation,” which speci�fied the procedure for implementing settlementsby payment orders paid with an acceptance anddefined the finality and irrevocability of pay�ments in order to safeguard settling participantsagainst financial risk and make the payment sys�

tem even more reliable and secure. In 2002, theBank of Russia drafted jointly with the Ministryof Finance and Ministry of Taxes and Duties aset of rules and regulations designed tostandardise settlement documents in order toexpedite the transfer of tax and other paymentsto the budgets of all levels and governmentextrabudgetary funds and for the financing ofbudget expenditures.

To improve the organisation of cash circula�tion and the regulation of cash settlements, theBank of Russia and the Ministry of Taxes andDuties in 2002 made clarifications regarding theBank of Russia limit set on the maximum amountof cash that can be used in settlements betweenlegal entities.

The Bank of Russia continued to oversee thepayment systems in order to ensure their stableand effective functioning and make them moreopen and transparent.

Continuing consistently to upgrade its pay�ment system, the Bank of Russia developed newmethodologies and worked out practical solutionsdesigned to facilitate the introduction of a realtime gross settlement system.

104


II.3.2. THE DEVELOPMENT OF THE TECHNICAL INFRASTRUCTURE

OF THE BANK OF RUSSIA PAYMENT SYSTEM

he technical infrastructure of the paymentsystem is comprised of a number ofspecialised automated systems located

throughout Russia in accordance with theorganisational structure of the Bank of Russia. Itis an inalienable part of the Bank of Russia infor�mation and telecommunications system.

The work carried out in 2002 in the interestsof the payment system aimed to ensure theachievement of these two principal objectives:— to ensure the continuous operation of the tech�

nical facilities of the payment system;— to enhance the efficiency of the technical in�

frastructure of the payment system.The Bank of Russia continued to replace obso�

lescent and obsolete equipment and fit out itsbranches and divisions with advanced hardwareand software. Specifically, it installed a new work�station for the data processing centres of eight re�gional branches using the Ryazan automated banksettlement system and transferred the Moskva au�tomated bank settlement system to a more power�ful workstation ensuring the necessary level of pro�ductivity, dependability and reliability. The Bankof Russia also replaced obsolescent subscriber pay�ment systems in the cash settlement centres of itseight regional branches with the RABIS�NP stan�dard software system and re�equipped its 45 re�gional branches and 130 field institutions with ad�vanced computers and software systems.

By now, 59 out of 78 Bank of Russia regionalbranches have been transferred to a centralisedintraregional system of processing payment docu�ments, which processes up to 90% of the entirevolume of payment documents passing throughthe Bank of Russia system. Fifty�four Bank ofRussia institutions have been included in the in�terregional electronic settlement system and21 Bank of Russia field institutions have becomeparticipants in intraregional electronic settle�ments. In all, 1,132 out of 1,172 Bank of Russiacash settlement centres and main cash settlementcentres participate in interregional electronicsettlements.

As of the end of 2002, 74 Bank of Russia re�gional branches and central office divisions ex�changed information via the Unified Telecommu�nications Banking Network (UTBN). The put�ting into operation of 72 regional segments of theUTBN made it possible to send most payment or�ders to the Bank of Russia electronically. Pay�ment orders made by clients on paper account forless that 10% of all payment orders made for elec�tronic settlements.

To maintain banking sector liquidity by ex�tending intraday and overnight loans to banks,the Bank of Russia modernised the software sys�tem used for these purposes.

The Bank of Russia upgraded and monitoredthe development of software systems on the basisof the existing legislative framework of the pay�ment system and improved the techniques of col�lecting and processing reports and accounts fromBank of Russia branches and divisions and creditinstitutions. To create a single information envi�ronment for non�cash settlements in Russia andcollect, process and analyse financial, accountingand statistical reports, the Bank of Russia con�stantly updated its regulatory and reference in�formation.

To enhance the efficiency of the technical in�frastructure of the payment system and work outpractical solutions for the implementation of thenext stage of the Concept of the Real Time GrossSettlement System, the Bank of Russia developedthe required technology for the future. It analysedthe requirements and technological decisions re�garding the automated processing of payment in�formation of several Bank of Russia regionalbranches in a single data processing centre andconducted an experiment to process accountingand operational data from several regionalbranches in a single centre, using a standard soft�ware system.

Standard formats of electronic data exchangebetween the Bank of Russia and its clients in con�ducting payment operations were developed andtested. The results received will make it possible

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to introduce standard formats for all softwaresystems used in accounting, simplifying the ex�change of payment data between settlement par�ticipants. International formats of payment mes�sages have been automatically converted intostandard formats and standard formats have beenconverted into international ones.

Vigorous efforts were made to introduce au�tomated means of managing and operating theBank of Russia information and telecommuni�cations system. By the end of the year under

review, regional control centres, united in asingle system, had been installed in 62 Bank ofRussia regional branches. That work facilitatedthe creation of a central control service whichmonitors and controls on a round�the�clockbasis the accounting, information, telecommu�nications, and communications systems andutilities. This service has significantly increasedthe reliability of the Bank of Russia paymentsystem, quickly reacting to any failure or emer�gency.

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II.4. FOREIGN EXCHANGE REGULATION

AND FOREIGN EXCHANGE CONTROL

he Bank of Russia in 2002 continued toimprove the system of foreign exchangeregulation and foreign exchange control

against the background of the favourable situa�tion on world raw material markets. The mea�sures it took in that area were designed to fur�ther liberalise foreign exchange legislation and,at the same time, enhance the efficiency of theinstruments and methods of foreign exchange con�trol in order to reduce illegal capital flight andraise the quality of statistical accounting and re�porting of foreign exchange operations.

In 2002, resident exporters, who are requiredto sell a part of their currency earnings, sold$48.3 billion. Thanks to macroeconomic stabil�ity and the favourable foreign trade situation,which allowed Russia to enjoy a strong balanceof payments, the lowering of the compulsory salerequirement for exporters from 75% to 50% inAugust 2002 did not create any imbalances be�tween the demand for foreign exchange and itssupply on the domestic market. The reduction inobligatory foreign exchange sales was accompa�nied by growth in sales of foreign exchange notsubject to compulsory sale.

On December 1, 2002, the Bank of Russia,seeking to promote free�market principles andcreate more favourable conditions for foreign ex�change market participants amid a vast supply ofexport currency earnings on the domestic mar�ket, lifted the requirement for exporters to sell

their currency earnings on interbank currencyexchanges only. The compulsory sale segment ofthe market was expanded significantly as residentlegal entities were granted the right to sell for�eign exchange on the over�the�counter market ordirectly to the authorised bank that serviced theresident exporter.

Vast amounts of currency earnings offered onthe domestic foreign exchange market on thewhole not only met the growing demand of thenon�financial and household sectors for foreignexchange, but also led to growth in the country’sforeign exchange reserves. In 2002, the demandfor foreign exchange in the foreign trade sectorincreased by $2.8 billion year on year to $47.8 bil�lion. At the same time, the structure of the de�mand for foreign exchange by purpose, deter�mined on the basis of contracts, agreements andother substantiating documents presented to theauthorised banks, did not change significantly.About 50% of foreign exchange ($23.6 billion)was purchased by the non�financial sector to re�pay its debts on financial loans (of which $4.6 bil�lion were paid on debts to non�residents) and45% ($21.5 billion) to pay for imported goodsand services.

To cut the cost of buying foreign exchange,the Bank of Russia in December 2002 reducedfrom 100% to 20% the amount of rubles residentlegal entities were required to deposit when buy�ing foreign exchange to make advance payments

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under import contracts. At the same time, resi�dents were also allowed to retain the right to de�posit a smaller sum or not to deposit any moneyat all, if they used internationally accepted guar�antees in settlements with non�residents (thiscould be an irrevocable letter of credit opened fora resident by the authorised bank or a guaranteegiven by a foreign bank to a resident as securityfor a non�resident’s obligations under an importcontract or an agreement insuring the risk of non�return of foreign exchange or a bill of exchangeissued by a non�resident to a resident and guar�anteed by a foreign bank).

According to banks’ reports, owing to a risein household income and significant growth in op�erations conducted by non�resident individuals onthe domestic foreign exchange market, net indi�vidual demand for foreign exchange (the differ�ence between the amount of foreign exchange soldto individuals and paid out from their accountsand the amount of foreign exchange bought fromindividuals and entered to their accounts) in 2002rose to $12.7 billion from $8.9 billion in 2001.The non�resident share in the total value of netindividual demand for foreign exchange expandedfrom 44% in 2001 to 58% in 2002. At the sametime, the balances in resident individuals’ foreigncurrency accounts (deposits) increased continu�ally. As of the end of December 2002, theyamounted to $12.3 billion in dollar terms against$7.9 billion as of the end of 2001.

In regulating the procedure for conductingforeign exchange operations connected with capi�tal flow and the opening of accounts abroad byRussian residents, the Bank of Russia, taking intoconsideration the favourable trends in the Rus�sian economy, continued the transition from per�mission procedures to notification ones. The aimof this policy was to attract long�term foreign capi�tal to the real sector of the Russian economy andimprove the investment climate in the country.

An analysis of the application during the yearof a notification procedure for taking financialloans from non�residents for a term of more than180 days, established by the Bank of Russia atthe end of 2001 to make the Russian economymore attractive to investors, showed that it wasa timely decision. Overall, medium� and long�terminvestments made up the largest portion of non�resident credit extended to the real economy. In

2002, the value of loans taken from non�residentsfor a term of more than 180 days amounted to$15.7 billion, or 70% of the total of $22 billion ofnon�resident financial loans. At the same time,during the year Russian borrowers paid $14.7 bil�lion on the principal amount of the debt and asinterest, of which $8.4 billion were paid on loanswith terms over 180 days.

Acting within the powers conferred on it bythe applicable legislation, the Bank of Russia con�tinued to phase out the system of permits appliedto residents who wish to open accounts abroad.To create more comfortable conditions for Rus�sian businesses and promote their interestsabroad, the Bank of Russia in October 2002 re�placed the permission procedure applied to resi�dent legal entities opening accounts in foreignbanks for their overseas offices and branches bythe notification procedure. Taking into consider�ation that representation expenses involve a smallnumber of operations, the Bank of Russia estab�lished a special regime for such accounts (draw�ing up a list of operations which legal entities areallowed to conduct through such accounts) andset up a procedure to monitor the movement offunds through such accounts.

One of the results of the measures taken toliberalise the procedure for conducting foreignexchange operations connected with capital flowand simplify the procedure for opening accountsabroad by Russian residents was a significantfall in the number of permits issued by the Bankof Russia. In 2002, the Bank of Russia issued1,400 permits (a decrease by almost one�thirdcompared with 2001) worth a total of $6.5 bil�lion ($10.6 billion in 2001). Of this sum, thevalue of the licensed foreign exchange operations,which involve the taking of capital out of the coun�try, amounted to nearly $4.2 billion (of thisamount, $600 million were taken out of the coun�try upon the occurrence of special circumstancesstipulated by agreements with non�residents) andforeign capital invested in the non�financial sectorof the Russian economy amounted to $2.2 billion.

The supervision and accounting of residentforeign exchange operations in foreign trade fromthe viewpoint of the completeness and timelinessof the repatriation of currency earnings from ex�ports and the effectuation of payments and thedelivery of goods under import contracts contin�

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ued to be implemented within the framework ofthe customs�banking foreign exchange controlsystem. To expand its sphere of action, the Bankof Russia and State Customs Committee on Janu�ary 1, 2002, extended the customs banking for�eign exchange control procedures to settlementseffected in exporting goods in the following cus�toms regimes: re�export, temporary export andthe processing of goods outside the customs terri�tory. In 2002, this system covered practically allforeign trade operations involving cash settle�ments: 86% of Russian exports and 80% of cus�toms�registered imports.

As a result of the measures described above,illegal capital flight through foreign trade opera�tions, such as non�repatriation of ruble and for�eign currency export earnings and non�reim�bursement of advances received for imports, in2002 decreased by more than half compared with2001, to $1.6 billion, and its share in foreign tradeturnover contracted to 1% from 2%.

At the same time, balance of payments dataindicate that illegal capital flight has increasedthrough transactions which are the hardest tocontrol from the viewpoint of the confirmationof the actual cost of assets acquired. In their capi�tal flight schemes, residents increasingly use fic�titious transactions with non�residents on im�ports of “invisible” services (marketing, adver�tising, consultancy, etc.) and securities purchaseand sale deals. Such deals are usually paid for inrubles through the ruble accounts kept by non�residents and the latter subsequently convert

rubles into foreign currency and transfer themoney abroad.

The Bank of Russia believes that in the currentmacroeconomic situation, when the country is stillin the process of transition to market economics,the system of foreign exchange regulation and for�eign exchange control should retain some of its fun�damental principles, such as the requirement forthe compulsory repatriation and sale of export cur�rency earnings and the regulation of the conditionsand procedure for conducting a number of capitalflow operations that have the most significant im�pact on the balance of payments. It is importantthat the measures taken within the framework offoreign exchange regulation and foreign exchangecontrol at the time of economic stability shouldfocus on ensuring the completeness and effective�ness of the statistical accounting of foreign ex�change operations for the purpose of their effi�cient monitoring and the compiling of a balanceof payments. At the same time, the system of for�eign exchange regulation should have a set of in�struments which the Government and Bank ofRussia could use if the situation in the economyin general and on the domestic foreign exchangemarket in particular changes for the worse.

The above principles have found their expres�sion in a new version of the draft Federal Law onForeign Exchange Regulation and Foreign Ex�change Control, which the Government submit�ted to the State Duma on December 30, 2002.The Bank of Russia actively participated in elabo�rating this draft law.

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II.5. BANK OF RUSSIA

ANTI�LAUNDERING ACTIONS

he Federal Law on Countering theLegalisation (Laundering) of Criminal In�comes, which came into force on February

1, 2002, laid the groundwork for building in Rus�sia a system to fight laundering of criminally ob�tained incomes. This law conferred upon the Bankof Russia, which is the banking supervision au�thority, a number of functions designed to ensureand maintain the effectiveness of the anti�laun�dering system being built in the banking sector.Specifically, the Bank of Russia should organisespecialised internal control, ensure that creditinstitutions pass information to the authorisedbody on operations with money or property sub�ject to compulsory control and other operationsthat may be connected with money laundering andmonitor the observance of the anti�launderinglegislation by credit institutions.

Participation in building an anti�launderingsystem by carrying out the corresponding workin the banking sector was one of the new impor�tant activities of the Bank of Russia in 2002.

Before the enforcement of the Federal Law onCountering the Legalisation (Laundering) ofCriminal Incomes, the Bank of Russia had elabo�rated and adopted the necessary regulatory andmethodological framework. It issued Recommen�dations for Credit Institutions to Establish Inter�nal Control Rules Designed to Counter theLegalisation (Laundering) of Criminal Incomes.In working out these recommendations, the Bank

of Russia extensively used international experi�ence in preventing proceeds from crime penetrat�ing the banking sector, notably the recommenda�tions of the Financial Action Task Force (FATF)of the Basel Committee on Banking Supervisionand Global Anti�Laundering Guidelines for Pri�vate Banking, known as the Wolfsberg Principles,worked out by the world’s leading banks.

As regards the techniques of transferring in�formation, the Bank of Russia made the deci�sion to use its own information and telecommu�nications networks to pass on data, as stipulatedby the law, from credit institutions to the Rus�sian Financial Monitoring Committee (FMC).Experience has shown that taking into consid�eration the size of Russia’s territory, the num�ber of credit institutions and the great numberof time zones in Russia, that decision ensuredthe passing on of information to the FMC withinthe time periods required by the law. In addi�tion, the use of standard formats and specialcommunications channels guaranteed a highlevel of security for the transmitted data againstunsanctioned access and made possible the au�tomatic processing of information and verifica�tion of its completeness and authenticity in theFMC. Two levels of the cryptographic protec�tion of information were used in the process:coding and the means of ensuring the complete�ness and authenticity of information (the mes�sage authentication code).

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Realising that the functions conferred on thecredit institutions by the law were new to them,the Bank of Russia constantly provided method�ological assistance to credit institutions, keepingthem up to date on issues relating to compliancewith the anti�laundering legislation. During theperiod of the banking sector’s adaptation to thenew anti�laundering practices, the Bank of Rus�sia and its regional branches organised a round�the�clock telephone hot line service for credit in�stitutions, which operated for several months. Inaddition, throughout the year the Bank of Russiaanalysed and explained various aspects of thepractical implementation of its rules and regula�tions issued in pursuance of the anti�launderinglaw. It sent out through its regional branches 12memos to credit institutions.

Aware of the commitments undertaken byRussia to the international community regardingthe fight against terrorism and complying with therequirements of the Russian Federation Pre�sident’s Decree No. 6, dated January 10, 2002,“On Measures to Fulfil UN Security CouncilResolution 1373 of September 28, 2001” andDecree No. 393, dated April 17, 2002, “On Mea�sures to Fulfil UN Security Council Resolutions1388 of January 15, 2002, and 1390 of January16, 2002,” the Bank of Russia in 2002 sent outto credit institutions lists of organisations and in�dividuals considered by foreign countries and in�ternational organisations to be connected withterrorism and implicated in terrorist financing.Those lists contained information on 122 legalentities and 435 private individuals.

Exercising its powers to control the observanceby credit institutions of the Federal Law on Coun�tering the Legalisation (Laundering) of CriminalIncomes, conferred on it by the law, the Bank ofRussia established the procedure for monitoringthe activities of credit institutions in this area andformulated uniform methodological principles oforganising inspections of credit institutions fromthe viewpoint of their compliance with anti�laun�dering requirements.

From March to July 2002, the Bank of Russiaregional branches inspected all head offices andfrom September to December all branches ofcredit institutions (not counting Sberbankbranches). In all, in 2002 the Bank of Russia in�spected 1,328 head offices and 2,077 branches of

credit institutions from the viewpoint of theircompliance with the anti�laundering legislation.

The inspections showed that most credit in�stitutions fulfilled in good faith the functions con�ferred on them by the law. They carried out thenecessary organisational and technical measuresto establish specialised internal control designedto counter money laundering and within the timeperiod established by the law, passed on infor�mation to the FMC on operations with money orother property subject to obligatory control. Atthe same time, as a result of the inspections it wasdiscovered that 9% of the total number of headoffices inspected and 11.7% of the total numberof branches of credit institutions inspected com�mitted violations of the anti�laundering legisla�tion. The credit institutions that committed theseviolations were disciplined in accordance with theprocedure established by the law.

In connection with the adoption in October2002 of the Federal Law on Amending the Fed�eral Law on Countering the Legalisation (Laun�dering) of Criminal Incomes, which extended thelegal and organisational anti�laundering proce�dures to the fight against the terrorist financingand granted to credit institutions additional pow�ers to prevent the proceeds from crime penetrat�ing the banking system and prevent the use of thebanking system for laundering criminally obtainedincomes, the Bank of Russia made the necessarychanges in its rules and regulations. Specifically,taking into consideration the requirements of thenew federal law and the experience gained bycredit institutions in creating and sending elec�tronic messages, the Bank of Russia revised theprocedure for passing on information by creditinstitutions to the FMC on operations with moneyand other property subject to obligatory control,or other operations which a credit institution maysuspect of being connected with money launder�ing or terrorist financing. In addition, the Bankof Russia made amendments to the Recommen�dations for Credit Institutions to Establish Inter�nal Control Rules Designed to Counter theLegalisation (Laundering) of Criminal Incomes,which corresponded to the requirements of thenew law.

Taking into consideration the fact that one ofthe main conditions of the functioning of the anti�laundering system is the employment of qualified

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specialists responsible for organising anti�launder�ing internal control systems, the Bank of Russiapaid special attention to training credit institu�tions’ specialists and employees of its regionalbranches. Twenty�two thematic seminars wereheld in 2002 and specialists from 1,164 creditinstitutions, or about 90% of all credit institu�tions, and more than 450 employees of Bank ofRussia regional branches received the appropri�ate training.

In addition to organising and providing regu�lar instruction, the Bank of Russia worked out asystem of comprehensive and continuous train�ing for executives and specialists with the anti�laundering divisions of its regional branches. InSeptember 2002, it approved the Standard Semi�nar Programme for its employees, which was in�cluded in the Bank of Russia advanced trainingcatalogue for 2003.

In fulfilling the functions conferred on it bythe law, the Bank of Russia attached great im�portance to co�ordinating its actions with the Fi�nancial Monitoring Committee. To this end, inJanuary 2002 it signed an agreement on co�op�eration in sharing information with the FMC pur�suant to the Federal Law on Countering theLegalisation (Laundering) of Criminal Incomesand in June this agreement was amended to takeinto account the changes made in the anti�laun�

dering legislation. Specifically, an interagencyworking group was formed to deal with day�to�day affairs in co�operation between credit insti�tutions, the Bank of Russia and the FMC in imple�menting the anti�laundering legislation.

The Bank of Russia actively co�operated withinternational anti�laundering organisations andorganisations fighting the financing of terrorism.In September 2002, the Bank of Russia jointlywith the FMC and other federal government agen�cies conducted large�scale work to prepare a FATFdelegation’s visit to Russia. Bank of Russia rep�resentatives were included in the Russian delega�tion that participated in FATF plenary meetingsand meetings of the FATF’s regional arm, theMONEYVAL Committee of the Council of Europe(the Select Committee of Experts on the Evalua�tion of Anti�money Laundering Measures). InDecember 2002, the Bank of Russia took part ina conference for the countries of Europe and Cen�tral Asia, co�sponsored by the World Bank andInternational Monetary Fund.

The efforts made by the Bank of Russia to buildan anti�laundering system in the Russian bank�ing sector have been praised by international fi�nancial and economic organisations and it islargely thanks to these efforts that in October2002 the FATF voted to take Russia off the list ofnon�cooperating countries and territories.

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II.6. BANK OF RUSSIA ACTIVITIES

RELATING TO GOVERNMENT FINANCE

conomic growth in 2002, the favourableforeign trade situation and an excess of fed�eral budget revenues over the amount

stipulated by the 2002 Federal Budget Law con�tributed to the further stabilisation of governmentfinances.

The Bank of Russia and Finance Ministry con�tinued to co�ordinate their monetary and budgetpolicies, focusing their attention on the forecast�ing and monitoring of federal budget expenditureswhich affect growth in the money supply and therate of inflation.

Attaching so much significance to this matterwas dictated by the need to react promptly to fluc�tuations in federal budget fund flows, which ex�ert pressure on banking sector liquidity, and tomake sensible use of the monetary policy instru�ments.

Taking into consideration that the implemen�tation of the monetary programme depended onthe dynamics of net credit to the federal and re�gional governments, the Bank of Russia, whenanalysing the state of debt the Finance Ministryowed it, made sure that the Finance Ministry ful�filled on time its debt obligations to it, settled thedebt the CIS and Baltic states owed it on intereston overdrafts and interstate settlements and con�ducted direct and reverse repo operations withRussian government debt instruments. At thesame time, in pursuance of Article 1081 of the2002 Federal Budget Law, the Bank of Russia

exchanged Vneshtorgbank shares it owned forpermanent coupon�income federal loan bondswith a nominal value of 42.1 billion rubles. TheFinance Ministry’s debt to the Bank of Russia hasincreased as a result.

The structure of the Finance Ministry’s debtto the Bank of Russia did not change much, how�ever, as the Finance Ministry, notwithstandingthe Bank of Russia’s repeated calls, refused torestructure the securities received by the Bank ofRussia as a result of the 1999—2000 restructur�ing of 15.0 billion rubles of government securi�ties into variable coupon�income federal loanbonds and the share of outstanding governmentsecurities on the market remained the same.

When implementing the Concept of a SingleFederal Treasury Account of Federal Budget Rev�enue and Federal Budget Funds, the Bank ofRussia in 2002, as in the previous years, providedconsiderable methodological and information as�sistance to the Federal Treasury and hence facili�tated the speediest transition of the Federal Trea�sury bodies to a single account and helped theFederal Treasury bodies to carry out their workin full in accordance with the budget law.

As of January 1, 2003, Bank of Russia insti�tutions provided services to 56,200 budget�fi�nanced institutions, which had more than123,000 accounts opened for them. Over theyear, their number fell by 10.3% and 22% re�spectively, owing to the centralisation of federal

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budget revenue and federal budget funds account�ing operations, the transition of budget�financedinstitutions and regional and local budgets to ser�vicing in the Federal Treasury bodies and the cre�ation of treasuries in Russian regions and munici�palities.

In addition, the centralisation of operations toaccount for the revenues allocated by the FederalTreasury bodies continued. In 2002, the accountsto record the revenues allocated by the FederalTreasury bodies, opened for the Finance Ministry’sFederal Treasury Departments, were closed in73 constituent entities of the Russian Federation.

The measures taken changed the procedure fortransferring federal budget revenues to the financ�ing of expenditures, accelerating the movementof federal budget funds and creating preconditionsfor the more accurate prediction of federal bud�get performance indicators and better manage�ability of federal budget funds.

The changes in the procedure for handlingFederal Treasury accounts were accompanied bychanges in the procedure for compiling bank re�ports on the balances in federal budget revenueaccounts and federal budget funds accounts.

Realising that the implementation of the Con�cept of a Single Federal Treasury Account of Fed�eral Budget Revenue and Federal Budget Fundshinged upon the establishment of a computerisedintegrated treasury system, the Bank of Russiain 2002 continued to switch to the exchange ofinformation on the basis of the electronic ex�change of documents between the various divi�sions of the Bank of Russia settlement networkand Federal Treasury bodies with accounts inBank of Russia institutions. As of January 1,2003, 398 Federal Treasury bodies, or 28.8% ofthe total, had the technical facilities that allowedthem to link up with the system of electronic ex�change of documents with the Bank of Russia.

Pursuant to the 2002 Federal Budget Law(Article 51), the Bank of Russia in 2002 contin�

ued to transfer Russian regions subsidised fromthe Federal Fund for Assistance to Russian Re�gions and their budgets to the cash service of theFinance Ministry’s Federal Treasury bodies. Asof January 1, 2003, 1,092 bodies of the FinanceMinistry’s Federal Treasury had 1,109 accountsopened for them to service regional budgets and1,261 bodies had 1,436 accounts opened for themto service local budgets.

In accordance with the applicable federal leg�islation, the Bank of Russia manages the accountsof the government extrabudgetary funds. As ofJanuary 1, 2003, Bank of Russia institutionsmanaged the accounts of 1,530 Pension Fundbodies, 865 Social Insurance Fund bodies, theCompulsory Medical Insurance Fund and 500 re�gional compulsory medical insurance funds. A to�tal of 5,239 accounts were opened for these gov�ernment social extrabudgetary funds.

In 2002, as a result of the improvement ofbanking sector liquidity and persistent effortsmade by the Bank of Russia in prudential super�vision over credit institutions, there was a con�traction in credit institutions’ debt on paymentsto budgets of all levels and governmentextrabudgetary funds because of a lack of fundsin their correspondent accounts. The debt oncredit institutions’ client payments and own pay�ments decreased by 474 million rubles, or 13.9%,to 2,930 million rubles as of January 1, 2003, ofwhich the debt of operating credit institutionscontracted by 150 million rubles, or 5.5%, to2,600 million rubles. It should be noted that99.9% of the debt (2,598 million rubles) wasowed by credit institutions that as of January 1,2003, were under the control of ARCO. In addi�tion, one operating bank owed a debt to the bud�get, so in December 2002 the Bank of Russia dis�ciplined it by prohibiting it from transferring fundsto budgets of all levels and governmentextrabudgetary funds on behalf of legal entitiesfor six months.

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II.7. CASH ISSUE MANAGEMENT

he purpose of cash issue operations con�ducted by the Bank of Russia was to fulfilthe tasks and functions assigned to it in

organising cash circulation in Russia.According to the cash issue balance sheet, as

of January 1, 2003, there were 816,537.0 mil�lion rubles of Bank of Russia 1997 notes and coinsin circulation, of which 809,553.7 million rubleswere in notes and 6,983.3 million rubles in coins,including coins made of precious metals.Banknotes accounted for 99.1% of the totalamount of cash in circulation and coins 0.9%. Theamount of cash grew by 192,134.5 million rubles,or 30.8%, in 2002.

Growth in the amount of cash in circulationhad objective causes: it was the result of the ex�pansion of cash turnover brought about by nomi�nal money income and consumer price increases.According to preliminary data released by theState Statistics Committee, or Goskomstat,money income rose 27.7% in 2002, while wageincreased 35%. In 2002, the share of wage ex�panded to 66.2% of money income against 64.6%in 2001. The share of wage in GDP also expanded:from 42.7% in 2001 to 46.4% in 2002.

Thus, the amount of cash in circulationmatched the needs of the economy and popula�tion in cash amid the expanding market for goodsand services, which used cash as a means of pay�ment.

A rise in money income and consumer priceincreases in 2002 changed the note structure ofcash in circulation: the share of 10�, 50�, 100�

and 500�ruble notes contracted by 15.8 percent�age points over the year.

At the same time, the number of 1,000�rublenotes in circulation continued to increase in 2002and the share of these notes expanded to 30.7%of the total amount of banknotes in circulation asof January 1, 2003, against 14.9% as of January1, 2002.

When analysing the note structure of cash incirculation, the Bank of Russia forecast andorganised the production of banknotes and coinsand ensured their regular delivery to reserve fundsin the amounts that met fully and on time theneeds of the economy and population in cash.Bank of Russia institutions never failed to pay outcash in 2002.

Acting in compliance with the Provision on theProcedure for Taking and Sending the RussianCurrency from and to the Russian Federation,dated October 6, 1993 (with changes and amend�ments), the authorised banks in 2002 broughtRussian currency to and took Russian currencyfrom Ukraine, the Republic of Belarus, Republicof Azerbaijan, Republic of Armenia, Kyrgyz Re�public and Georgia. Those operations were nec�essary to provide cash rubles for the correspon�dent accounts of non�resident banks and theircash departments, which supplied enterprises andorganisations with the rubles they needed for theirtravel expenses, and supply cash rubles to theexchange offices opened in the above states. Atotal of 2,840 million rubles were brought toRussia and 287 million rubles were taken out of

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840

800

720

680

640

600

560

840

800

760 760

720

680

640

600

560

CHANGE IN AMOUNT OF CASH IN CIRCULATION IN 2002 (billion rubles)

1.01.2002 1.01.2003

1.02.2002

1.03.2002

1.04.2002

1.05.2002

1.06.2002

1.07.2002

1.08.2002

1.09.2002

1.10.2002

1.11.2002

1.12.2002

624.4

566.4 578.9

587.1

651.4

643.1

684.6

698.4

719.0

717.2 716.7

732.7

816.5

50

40

20

10

0

—10

30

CASH GROWTH IN 2001 AND 2002 (%)

1.011.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12

—9.3—7.3

—5.0

4.3 4.1

12.4

16.3

19.9

25.5 25.9

25.0

39.7

—9.4 —7.6—6.0

3.4 3.0

9.611.8

15.2 14.9 14.817.3

30.8

2001 2002

50

40

20

10

0

—10

30

Chart 53

Chart 52

Russia (in 2001, 540 million rubles and 238 mil�lion rubles respectively).

In compliance with the Russian FederationPresident’s Decree No. 1387, dated December 3,2001, “On Amending the Russian FederationPresident’s Decree No. 822, dated August 4, 1997,‘On Changing the Nominal Value of the RussianCurrency and the Standard of Price’,” the Bankof Russia on December 31, 2002, ended the ex�change of Bank of Russia 1993 notes and their 1994modifications, 1995 notes, USSR and Bank ofRussia 1961—1996 coins and USSR 1�, 2� and3�kopeck coins minted before 1961 for Bank of Rus�sia 1997 notes and coins for private individuals.

Old currency with a new nominal value of27.8 million rubles was presented for exchange

in the year under review against 45.1 millionrubles in 2001. In all, in the period from 1998 to2002 old currency with a new nominal value of135,977.2 million rubles was withdrawn fromcirculation. This represents 99.2% of the amountthat was in circulation by the beginning of theexchange (January 1, 1998).

In accordance with the corresponding agree�ments, Bank of Russia institutions provided cashservices to 5,533 credit institutions and theirbranches and 123,826 organisations that werenot credit institutions but were entitled to suchservices under the applicable federal laws andBank of Russia regulations. There were no com�plaints from clients about the cash services pro�vided by Bank of Russia institutions.

116


DYNAMICS OF DETECTION

OF COUNTERFEIT BANK OF RUSSIA

NOTES AND COINS (pieces)

17,000

13,000

15,000

11,000

16,000

12,000

14,000

10,000

9,0001998 1999 2000 2001 2002

16,558

10,745

9,202

12,538

14,135

The Bank of Russia attached great importanceto the improvement of the quality of cash issuemanagement in its branches and divisions. There�fore, it organised conferences, meetings to ex�change experience and the training of specialistswith cash settlement centres and cash issue divi�sions of Bank of Russia regional branches. Sched�uled inspections of cash issue management andaudits of valuables were conducted and letters ofcomplaint were sent to Bank of Russia institutionsafter them. The number of cash errors committedby Bank of Russia institutions in 2002 fell by 11.8%year on year, while their amount increased 34.4%.

The Bank of Russia provided its branches anddivisions and credit institutions with cash opera�tion methodologies and regulations. It improvedthe provision of cash services by Bank of Russiainstitutions to branches of credit institutions thathad no correspondent subaccounts in cash settle�ment centres, additional offices of credit institu�tions and their branches and budget funds man�agers and recipients with personal accounts inFederal Treasury bodies. The Bank of Russia re�vised the procedure for conducting cash opera�tions in credit institutions from the viewpoint ofestablishing the levels of technical strength of theoffices where credit institutions conducted opera�tions with valuables, increasing the role and re�sponsibility of managers of credit institutions withregard to security of credit institutions and theiremployees and widening the range of softwaresystems permitted for use by credit institutionsin handling cash.

Bank of Russia institutions verified the pay�ing capacity of Bank of Russia and foreignbanknotes and coins. In 2002, the number of ex�pert examinations of Bank of Russia banknotesand coins, conducted by Bank of Russia institu�tions, was roughly the same as in 2001 (about1,300,000). Most of the expert examinationswere conducted with the aim of determiningwhether damaged Bank of Russia banknotes andcoins retained their paying capacity and could beexchanged for good banknotes and coins. Bankof Russia experts examined 18,000 foreignbanknotes sent by credit institutions for exami�nation and 363 Bank of Russia and foreignbanknotes and coins at the request of law enforce�ment agencies.

The number of counterfeit Bank of Russianotes and coins detected by the Russian bankingsystem and passed to the Interior Ministry bodiesrose 17.1% year on year (in 2001, year on yeargrowth amounted to 53.6%). The increase re�sulted from a rise in the number of counterfeit1,000�ruble and 500�ruble banknotes. Most ofthe banknotes forged in 2002 were 500�ruble and100�ruble banknotes and the 5�ruble coin. Mostof the counterfeit banknotes and coins were de�tected in the Central Federal District (56.2% ofthe total number of counterfeit banknotes andcoins detected in Russia).

In 2002, the value of counterfeit Bank of Rus�sia notes and coins discovered by credit institu�tions accounted for 54.5% of the total value ofdetected counterfeit Bank of Russia notes andcoins, a decrease of 2.7% from 2001.

Bank of Russia institutions and credit institu�tions detected and passed on to Interior Ministrybodies 9,401 counterfeit foreign banknotes, adecrease of 1.1% from 2001. As before, most ofthe counterfeit banknotes were US banknotes:counterfeit US banknotes detected in the yearunder review accounted for 99.3% of the totalnumber of detected counterfeit foreign banknotes.Most of the counterfeit US banknotes were$100 bills, which accounted for 92.8% of the to�tal number of counterfeit US banknotes. There isevidence of a great diversity of counterfeit USbanknotes. Most of the forgeries are of poor qual�ity, but 16.1% of the total number of counterfeitUS banknotes are so good that a non�specialistcan hardly recognise them as forgeries.

Chart 54

I I . 7 . C A S H I S S U E M A N A G E M E N T

117

DYNAMICS OF COUNTERFEIT

BANK OF RUSSIA NOTES AND COINS

IN FEDERAL DISTRICTS (pieces)

10,000

4,000

6,000

8,000

2,000

0

1,082728

1,671

491

1,095

2,186

Central

Northwestern

Southern

Volga

Urals

Siberian

Far Eastern

9,305

DYNAMICS OF DETECTION OF COUNTERFEIT

FOREIGN BANKNOTES (pieces)

10,000

8,000

9,000

6,000

7,000

5,000

4,0001998 1999 2000 2001 2002

4,248

8,5638,364

9,501 9,401

Measures were taken to enhance the efficiencyof co�operation between the Bank of Russia andlaw enforcement agencies in combating counter�feiting. In addition to quarterly analytical reports,the Bank of Russia sent to the Interior Ministrymaterials on the detection of especially danger�ous counterfeit Bank of Russia notes in the bank�ing sector.

In 2002, the Bank of Russia continued tomechanise and automate cash operations, supply�ing its regional branches with new cash handlingequipment and automated cash issue machines,

and modernise the existing cash processing equip�ment. It began to test some future models of cashcounting and sorting equipment.

In 2002, the Bank of Russia continued to is�sue commemorative coins. In all, it issued 54 com�memorative coins, including 12 gold coins with atotal circulation of 70,100 (in 2001, it issuedseven commemorative gold coins with a total cir�culation of 11,800), 32 silver coins with a circu�lation of 298,500 (in 2001, it issued 18 silvercoins with a circulation of 130,300) and 10 coinsmade of non�precious metals with a circulationof 50.0 million (in 2001, it issued three such coinswith a circulation of 50.0 million).

Charts 55, 56

118


II.8. INTERNATIONAL CO�OPERATION

II.8.1. CO�OPERATION BETWEEN THE BANK OF RUSSIA

AND INTERNATIONAL FINANCIAL AND ECONOMIC ORGANISATIONS

n the year under review, the Bank of Russiacontinued to co�operate with the Interna�tional Monetary Fund (IMF), World Bank

Group, Bank for International Settlements(BIS), European Bank for Reconstruction andDevelopment (EBRD) and some other interna�tional organisations.

It participated in the meetings of the Interna�tional Monetary Committee and DevelopmentCommittee (April) and in the annual meeting ofthe International Monetary Fund and WorldBank (September) devoted to the resolution andprevention of financial crises, the implementationof a debt relief proposal for the poorest nationsand measures to combat money laundering andterrorist financing.

The Bank of Russia continued to co�operatewith the IMF and World Bank missions to en�hance the efficiency of Bank of Russia open�mar�ket and other monetary operations, the use of themonetary policy instruments and assistance givento financial market development and upgradingforeign exchange regulation and the payment sys�tem. The sides also worked together in implement�ing the joint IMF�World Bank programme toevaluate the state of the Russian financial sector(analysis and evaluation of the contents of pub�lished data on the financial sector, compatibility

of the Russian banking supervision system withthe Basel Committee’s core principles for effec�tive banking supervision, the code of good prac�tice for transparent monetary and financial policy,stress testing of Russian banks, building a depositinsurance system and compliance with the coreprinciples by the most important payment systemsof the country).

As part of its technical assistance programme,the IMF provided consulting services to the Bankof Russia on the establishment of credit bureaus,internal control and early warning systems to de�tect problems in credit institutions at the earlystages.

Guided by its monetary policy priorities andfollowing IMF recommendations, the Bank ofRussia made the decision to transform and up�grade the system of monetary policy instrumentsit used, emphasising the comprehensive use ofmarket instruments designed to manage creditinstitutions’ current liquidity more efficiently. Ittook into consideration the experience gained bythe IMF in building an automated system of dailymonitoring and forecasting of banking sector li�quidity levels.

The Bank of Russia exchanged informationwith the IMF in order to build an electronic data�base on banking regulation laws and publish data

I

I I . 8 . I N T E R N A T I O N A L C O � O P E R A T I O N

119

in the IMF’s International Financial Statistics.

Taking into consideration the economic situationin the country and the current state of economicstatistics, the Bank of Russia urged the FinanceMinistry and State Customs Committee to recon�sider the issue of Russia’s official accession to theIMF Special Data Dissemination Standard (SDDS)and take steps to ensure the full compliance of eco�nomic data disseminated by Russia with SDDS re�quirements. To this end, the Bank of Russiacomplemented its foreign debt statistics by data onthe amount of Russia’s foreign debt broken downinto different currencies and repayment terms.

The Bank of Russia conducted jointly with theIMF and World Bank a seminar for employees ofthe Bank of Russia, Ministry of Finance, FederalSecurities Commission and State Statistics Com�mittee to spell out the proposals of internationalfinancial organisations for elaborating and imple�menting standards and codes in various sectorsof the economy.

At the proposal of the IMF, the Bank of Rus�sia took part in the discussion of the IMF�draftedstatistical reporting forms of the IMF membercountries, which are to be introduced in accor�dance with the new Monetary and Financial Sta�tistics Manual.

The Bank of Russia discussed with the WorldBank issues pertaining to the use of funds and theextension of the term of the loan granted to fi�nance the development of financial institutionsand prospects for the implementation of theprogramme to assist the development of small andmedium�sized banks within the framework of thecorresponding World Bank project.

The World Bank provided technical assistanceto the Bank of Russia on issues pertaining to su�pervision on the basis of risk evaluation in accor�dance with international standards and using for�eign expertise, the functions fulfilled by the cura�tors of credit institutions, the improvement of thecapital calculation by preventing the use of vari�ous “padding” schemes and the financial analysisof the banks participating in the deposit insur�ance system. A seminar was held with the par�ticipation of the World Bank to discuss its report“Building Trust: Developing the Russian Finan�cial Sector.”

The Bank of Russia Chairman regularly par�ticipated in central bankers’ meetings in the Bank

for International Settlements (BIS), which dis�cussed prospects for the world economy and fi�nancial markets, the role of accounting and re�porting in enhancing the efficiency of the finan�cial system, sovereign debt and the role of mon�etary policy in facilitating economic growth andpreventing financial crises. Bank of Russia rep�resentatives took part in the work of the BIS Com�mittee on Payment and Settlement Systems andthe Basel Committee on Banking Supervision. TheBank of Russia collaborated with the BIS in writ�ing the Red Book on Russian Payment Systems.The preparatory stage of the project to provideaccess to the Bank of Russia to the electronic sys�tem for the exchange of information between cen�tral banks and the BIS was implemented andwhen the project is completed, the Bank of Rus�sia will be able to use statistical and analyticalmaterial from the BIS database. The Bank ofRussia also closely co�operated with the BIS increating the time series of indicators on Russiafor their presentation to the BIS.

The Bank of Russia continued to prepareevaluation reports on the Russian projects of theEuropean Bank for Reconstruction and Devel�opment (EBRD) at the request of the RussianEconomic Development and Trade Ministry, par�ticipated in the Council meetings of the Interna�tional Investment Bank and International Bankfor Economic Co�operation and was in constantcontact with the Finance Ministry on matters re�lating to the further development of these twobanks.

The Bank of Russia participated in the nego�tiations with the leadership of the Inter�Ameri�can Development Bank (IADB) on the condi�tions on which Russia could join the IADB andon the provision of technical assistance by theIADB for the establishment of a CIS regional de�velopment bank and took part in the conclusionof a framework agreement between Russia andthe European Investment Bank (EIB) on thelatter’s activities in this country.

The Bank of Russia continued to establishcloser ties with other Group of Eight centralbanks. Bank of Russia senior executives tookpart in the Group of Eight meetings of financeministers and central bankers held in Ottawa,Canada, in February and Washington, D.C., inSeptember.

120


The Bank of Russia participated in implement�ing the interagency plan for Russia’s participa�tion in Group of Eight activities, carrying out thedecisions of the Group of Eight summit in Genoa,Italy, and making preparations for the Group ofEight summit at Kananaskis, Canada.

The Bank of Russia Chairman took part in theGroup of 20 finance ministers and central bank�ers meeting, held in New Delhi, India, in Novem�ber, where Russia presented the report “Mea�sures to Ensure Financial Stability: Internal Eco�nomic Policy Conditions Necessary for the Recov�ery of International Capital Flows.”

At the 16th meeting of the Consultative Coun�cil on Foreign Investment in Russia, held in Sep�tember, the Bank of Russia presented the report“Banking Sector and Financial Market Develop�ments in Russia.”

The Bank of Russia was also represented atthe meetings of Asia�Pacific Economic Co�op�eration (APEC) deputy finance ministers andcentral bankers held in Washington, D.C., inApril and Los Cabos, Mexico, in September.

Involved in the process of negotiating Russia’saccession to the World Trade Organisation(WTO), the Bank of Russia took part in the talkswith WTO member countries on financial servicesand in drafting a report on the results of thesetalks. As the Russian government stepped up itsnegotiating activity, the Bank of Russia and theRussian Economic Development and Trade Min�istry made changes in Russia’s proposals on fi�nancial services in the course of the negotiations.At the end of 2002, the Bank of Russia activelyconducted negotiations on financial services withmore than 20 WTO member countries.

The Bank of Russia participated in draftingRussian proposals for the Monterrey ConsensusDocument, the final document of the Interna�tional Conference on Financing for Develop�ment, held under the aegis of the United Nations(UN) in Monterrey, Mexico, in March.

The Bank of Russia regularly sent statisticaldata to the UN Economic Commission for Eu�rope and the Organisation for Economic Co�op�eration and Development.


121

II.8.2. CO�OPERATION BETWEEN THE BANK OF RUSSIA

AND FOREIGN COUNTRIES AND THEIR CENTRAL (NATIONAL) BANKS

AND BANKING SUPERVISORY AUTHORITIES

n maintaining co�operation with foreigncountries and their central (national) banks,the Bank of Russia sought to advance

Russia’s foreign trade interests and createfavourable conditions for the development of in�terbank co�operation.

It actively co�operated with the NationalBank of the Republic of Belarus within theframework of the Union State Treaty of Decem�ber 8, 1999, the Russian�Belarussian agreementon a single currency and issuing centre and theagreement between the governments and cen�tral banks of the two countries on measures tocreate conditions conducive to the introductionof a single currency, signed on November 30,2000.

This work was co�ordinated with the Inter�bank Monetary Council of the National Bank ofthe Republic of Belarus and the Bank of Russia.In 2002, the Council held four meetings to dis�cuss, among other things, the implementation ofthe monetary policy guidelines of the two coun�tries in 2001 and 2002 and major objectives for2003, issues pertaining to the harmonisation ofthe principles of monetary and foreign exchangepolicy and foreign exchange regulation and for�eign exchange control and the practices of thecentral banks and banking systems of the twocountries. A bilateral balance of payments and aconsolidated balance of payments of Russia andBelarus were drafted and a draft model of theUnion State’s payment system was agreed. Atpresent, the Council is working on proposals forthe use of the Russian ruble as the sole form oflegal tender in Belarus after 2005.

On June 4, 2002, the governments and cen�tral banks of the two countries approved a jointplan of actions for the introduction of a singlecurrency of the Union State in the period from2001 to 2005. The Bank of Russia and the Na�tional Bank of the Republic of Belarus adopted adetailed programme for the implementation of the

provisions of the above plan within the purviewof the two banks.

In 2002, the Bank of Russia completed thedisbursement of a 4.5�billion�ruble loan to the Na�tional Bank of the Republic of Belarus, which wasextended under the interbank credit line agree�ment of December 15, 2000, to stabilise the ex�change rate of the Belarussian ruble against theRussian ruble.

The council of the central bankers of themember countries of the Eurasian EconomicCommunity, an organisation created to promoteintegration in monetary, financial, payment,settlement and interbank relations, held threemeetings in 2002. The aim of the council is toensure co�ordination of actions regarding invest�ments in the economies of the member countries,simplify the procedure for opening accounts in thenational currencies, harmonise the rules for tak�ing foreign exchange in and out of the membercountries and train personnel.

The Bank of Russia actively participated in thework of the CIS Interstate Monetary Commit�tee. As regards the results of the work of thisorganisation in 2002, mention should be made ofthe adoption on April 26 of the Memorandum onGuidelines for Co�operation in Monetary Rela�tions and the creation of a working group to studythe possibility of using the EU experience in mon�etary and financial integration in CIS conditions.The Committee continued to draft proposals forimplementing the concept of a CIS common bank�ing services market and the draft concept of co�operation and co�ordination of actions of the CISmember countries in monetary and financial re�lations. The Committee is currently discussingwith the CIS International Association of Ex�changes and central banks the idea of creating anintegrated exchange environment for the CISmember countries.

The Bank of Russia continued to assist thedevelopment of the Interstate Bank (ISB). In

I

122


2002, the Bank of Russia Chairman was re�elected Chairman of the ISB Council. One of themajor objectives of the ISB Council is to reformthe bank so that the member countries can use itas a settlement and payment centre and to buildup its investment potential. New Articles of As�sociation of the ISB were drafted and amendmentswere prepared to the Agreement on the Estab�lishment of the Interstate Bank, dated January22, 1993, in which the tasks and functions of thebank were updated.

The Bank of Russia co�operated with non�CIS states in 2002 in the form of bilateral co�operation between central banks and interbankcommissions and working groups and throughparticipation in bilateral intergovernmental com�missions on trade, economic, scientific and tech�nological co�operation. The Bank of Russia alsotook part in negotiations on drafting bilateral in�tergovernmental agreements, discussing issueswithin its competence.

The Bank of Russia continued to promote itslong�standing ties with the central banks of China,India and Vietnam and broadened its contactswith the central banks of Egypt, Indonesia, SouthAfrica and some Western European countries.

The Russian�Chinese Sub�Commission on In�terbank Co�operation held its third meeting inMay and as a result of the accords reached at thatmeeting, the Bank of Russia and the People’sBank of China signed the Agreement on Co�op�eration in Countering Legalisation of CriminallyObtained Incomes and Terrorist Financing, theagreement on foreign exchange control and theAgreement on Interbank Settlements in Cross�Border Trade.

Interbank co�operation continued betweenRussia and Vietnam within the framework of thepermanent Working Group on Banking Co�op�eration between the Central Bank of the RussianFederation and the State Bank of Vietnam. At thesecond meeting of the Working Group, held inJuly 2002, the discussion between the parties fo�cused on ways of expanding the network of cor�respondent relations between Russian and Viet�namese commercial banks, using advanced inter�nationally accepted forms of settlements.

The visit of a delegation of Russian bankers toEgypt in October 2002 resulted in the signing ofthe Memorandum of Understanding between the

Central Bank of the Russian Federation and theCentral Bank of Egypt. Simultaneously, seminarson the Russian banking legislation and a presen�tation of seven Russian banks were held in Cairoand Alexandria.

In December 2002, Bank of Russia represen�tatives participated in the Moscow roundtable“Russia�Egypt: New Horizons of Co�operationand Prospects for the Future,” organised by theEgyptian embassy.

In 2002, the Bank of Russia continued to seekbetter conditions and forms of co�operation withforeign supervisory authorities. In October, itsigned the Memorandum of Understanding in theField of Banking Supervision with the LatvianCommission for the Financial and Capital Markets.

A new version of the Agreement on Co�opera�tion in Banking Supervision with the CentralBank of Armenia was drafted and the Bank ofRussia and the National Bank of the Republic ofKazakhstan drafted a protocol on amendments tothe banking supervision agreement between thetwo banks.

The Bank of Russia invited the UK FinancialServices Authority, the US Federal Reserve Boardand the Swiss Federal Banking Commission toreturn to the discussion of the issue of signingagreements on co�operation in banking supervi�sion (in the form of a memorandum of under�standing or a statement of co�operation).

In 2002, the Bank of Russia considered draftmemorandums of understanding in the field ofbanking supervision it received from the BankingRegulation and Supervision Agency of the Turk�ish Republic, the Banking Supervision Commis�sion of the Republic of Poland and the NationalBank of Slovakia and prepared comments andproposals on them.

The Bank of Russia closely co�operated withforeign experts who were stress testing the Rus�sian banking sector within the framework of theFinancial Sector Assessment Programme(FSAP), carried out in Russia by the IMF andWorld Bank. Stress testing is a means of evaluat�ing stability of the banking sector under adverseexternal influences, such as general economicshocks or abrupt changes in price factors, inter�est rates and exchange rates.

In July 2002, the Banking and Financial Sub�Group of the Russian�Indian Intergovernmental


123

Commission on Trade, Economic, Scientific,Technological and Cultural Co�operation held itsseventh meeting, after which India’s EXIM Bankand Vneshtorgbank signed an agreement on theopening of a $25�million credit line forVneshtorgbank.

In July 2002, the Bank of Russia organised aroundtable in St. Petersburg within the frame�work of the Sub�Group to discuss ways of expand�ing business co�operation between Indian com�mercial banks and credit institutions based in theNorthwestern region of Russia.

Bank of Russia representatives also tookpart in the work of the Russian governmentcommission on co�operation with the Euro�pean Union and mixed commission on eco�nomic co�operation between Russia and theBelgium�Luxembourg Economic Union, whichdiscussed, among other things, ways to im�

prove the forms of interbank co�operation andcredit relations.

In compliance with the Russian GovernmentResolution of June 9, 2001, the Bank of Russiaand the Economic Development and Trade Min�istry and other government ministries and agen�cies concerned took part in negotiations with11 countries (Bulgaria, Belgium, Guinea, Indo�nesia, Iceland, Yemen, Malta, China, the Neth�erlands, Thailand and Finland) on the draftingof intergovernmental agreements on the encour�agement and mutual protection of capital invest�ments. Such agreements have been signed withYemen and Thailand.

The Bank of Russia continued to co�operatewith the EU European Commission within theframework of the TACIS programme in assistingthe implementation of the accounting and report�ing reform in the banking sector.

124


II.9. UPGRADING THE BANK OF RUSSIA SYSTEM

AND ENHANCING ITS EFFICIENCY

II.9.1. THE BANK OF RUSSIA ORGANISATIONAL STRUCTURE

AND MEASURES TAKEN TO IMPROVE IT

n 2002, the Bank of Russia continued to up�grade its organisational structure, carry onthe work that has been conducted over the

past few years. Taking into consideration the tasksassigned to it, the Bank gradually and consistentlycarried out the reform of the system of its struc�tural units. At the same time, the efficiency of theexisting organisational structure and its ability toadapt itself to the changing conditions allowed theBank of Russia to avoid radically overhauling thissystem.

The Bank of Russia had slightly to increase itspersonnel to enable it to fulfil its functions success�fully. In 2002, as in the previous year, the Bank ofRussia personnel expanded by a little more than1%. It managed to cope with the increasedworkload and broader functions without makingany greater increases by eliminating overlappingfunctions and raising the qualification level of itsemployees and their labour productivity.

As the task of building a stable banking sys�tem capable of meeting the needs of the expand�ing economy was still on the agenda, the Bank ofRussia was encouraged to rationalise its supervi�sory procedures and hence make significantchanges in its supervisory divisions.

I In 2002, it set up the Main Inspectorate ofCredit Institutions with the purpose of introduc�ing new inspection procedures and co�ordinatingthe activities of regional inspectorates.

At the same time, the Bank of Russia reviewedthe functions of its supervisory divisions. The MainInspectorate of Credit Institutions (MICI) was as�signed the function of organising, providing themethodology for and conducting inspections ofcredit institutions, while the Banking Regulationand Supervision Department was made responsiblefor the methodological and organisational aspectsof banking regulation and supervision of currentactivities of credit institutions.

The liberalisation of the foreign exchange leg�islation required the Bank of Russia to merge itsdepartments responsible for monitoring compli�ance with this legislation by economic agents. TheForeign Exchange Regulation Department andForeign Exchange Control Department werereorganised into the Department for Foreign Ex�change Regulation and Foreign Exchange Con�trol, a measure that allowed the Bank of Russiato cut the size of its staff.

The change in the tax legislation regarding theBank of Russia (the law that allowed the Bank

I I . 9 . U P G R A D I N G T H E B A N K O F R U S S I A S Y S T E M A N D E N H A N C I N G I T S E F F I C I E N C Y

125

of Russia not to register with the tax authoritieswas repealed) confronted it with a number of newtasks, such as calculating the taxable base and theamounts of taxes and duties to be paid, submit�ting reports to the tax authorities, co�ordinatingthe activities of its units in this area, etc. To dealwith these matters, the Bank of Russia formedthe Tax Division within its Financial Departmentand increased the number of specialists in its re�gional branches. As a result, the Bank of Russiastaff increased by 200. Some other departmentsof the Bank of Russia central office underwentminor changes.

The Bank of Russia regional branches in 2002carried through a vast amount of work, supervis�ing banks, analysing the economic and financialsituation in their respective regions, overseeingforeign exchange operations, regulating bankingsector liquidity in their respective regions, intro�ducing advanced information technologies, ensur�ing the security of information and expanding thescope of statistical observations. A slight increasein the number of employees was necessary for thesuccessful implementation of these tasks. Staffwas expanded in the Bank of Russia branches inthe Murmansk, Samara, Saratov and ChelyabinskRegions, the national banks (Bank of Russia re�gional branches) of the Republic of Daghestan andUdmurt Republic and some other regionalbranches.

The development of the Russian payment sys�tem remains one of the priorities of the Bank ofRussia. Significant growth in the number of pay�ments, brought about by a rise in business activ�ity, increased the workload on the employees ofBank of Russia settlement divisions and hence theBank of Russia had to increase their numberslightly.

The Bank of Russia attached great importanceto issues relating to the organisation of cash cir�culation: some time ago it expanded the range ofstandard procedures designed to detect and with�draw from circulation counterfeit and wornbanknotes. At the same time, the use of advancedsoftware systems allowed the Bank of Russia notonly to meet the increased demand for settlement

services, but also cut the number of cash settle�ment centres. Three cash settlement centres wereclosed in 2002.

The Bank of Russia developed the infrastruc�ture of its settlement network not only to increaseits productivity and accelerate settlements, butalso to ensure their security. The protection ofthe settlement network and other elements of theBank of Russia information and telecommunica�tions system from unauthorised access remainedone of the Bank of Russia’s priorities. To improvethe methods of the cryptographic conversion ofdata, modernise software systems and replace theelectronic digital signature devices in the pay�ment, information, analysis, archive and othersystems, the Bank of Russia increased the staff ofits computer software and hardware divisions.

In fulfilling the function of providing bankingservices to military units and other national se�curity bodies and servicemen, conferred on it bythe law, the Bank of Russia in 2002 opened threefield institutions in areas where Russian troopswere deployed.

To cut costs involved in the safe keeping ofvaluables, the Bank of Russia reorganised the sys�tem of interregional depositories in Moscow andSt. Petersburg, creating one interregional deposi�tory in each of the two cities instead of severaldepository units. The merger made it possible tocut the managerial staff and the staff of auxiliaryservices.

The implementation of measures designed toincrease the security of Bank of Russia facilitiesalso required a slight increase in the number ofemployees.

As of January 1, 2003, the Bank of Russiasystem comprised the central office, 59 bran�ches, 19 national banks (regional branches), theoffice of the Bank of Russia representative in theChechen Republic, 1,165 cash settlement centres,five departments and one operations departmentof the Moscow branch, field institutions and cashmanagement divisions and divisions ensuring thefunctioning of the Bank of Russia. The averagenumber of Bank of Russia employees rose to82,712 in 2002 from 81,841 in 2001.

126


II.9.2. CO�ORDINATING THE ACTIVITIES OF BANK OF RUSSIA

REGIONAL BRANCHES

n the year under review, the Bank of Russiaco�ordinated the activities of its regionalbranches in order to improve banking super�

vision and enhance its efficiency, upgrade andstrengthen the Russian banking system, combatmoney laundering, ensure the efficient and unin�terrupted functioning of the payment system, ex�ercise foreign exchange control, organise and con�duct the monitoring of enterprises and participatein the implementation of the single state monetarypolicy.

The Bank of Russia co�ordinated the activi�ties of its regional branches by issuing regula�tions and recommendations on various aspectsof banking, holding seminars and conferences oncrucial issues relating to the activities of theBank of Russia and organised visits by centraloffice specialists to inspect regional branches andhelp them accomplish their tasks and fulfil theirfunctions.

In 2002, the Bank of Russia continued to co�ordinate the activities of its regional branches,while spreading the practice of extending loansto banks against collateral and guarantees. Itorganised meetings with specialists of its regionalbranches involved in effecting this refinancingprocedure, explaining to them its main principlesand practical implications.

In accordance with the decision of the Bankof Russia Board of Directors, the new refinanc�ing procedure was adopted in the fourth quarterof 2002 by the Bank of Russia branches in theMoscow Region, Krasnoyarsk Territory,Vladimir, Kursk, Nizhni Novgorod, Novosibirsk,Ryazan and Saratov Regions and the Republicsof Altai, Bashkortostan and Khakasia.

In the year under review, the Bank of Russiaand its regional branches continued to monitorenterprises. To co�ordinate these activities, theBank of Russia forwarded to its regional branchesProvision No. 186�P, dated March 19, 2002,“On Monitoring Enterprises by the Bank of Rus�sia.” Nearly 14,000 enterprises in virtually allRussian regions, except the Chechen Republic,

had been covered by the Bank of Russia monitor�ing programme by the end of 2002.

The monitoring conducted by the Bank ofRussia with the purpose of collecting informa�tion for analysis relating to the major aspectsof its activity includes monthly surveys of fac�tory and plant managers, who are asked to com�ment on the latest economic developments, andquarterly surveys of the investment activity ofenterprises.

In the second half of 2002, the Bank of Rus�sia launched a new stage of the enterprise moni�toring programme, approved by its OrderNo. R�442, dated September 20, 2002,“On Measures to Prepare for the Practical Ap�plication of the Bank of Russia Monitoring ofEnterprises in the Interests of the Banking Com�munity.” Its objective was to put into practicethe concept of building on the basis of a single,permanent and independent database of theBank of Russia a comprehensive information sys�tem to collect, process, analyse and provide tobanking services market participants data on thedemand for banking services, the economic situ�ation and investment activity. This system is tobe complemented by information provided bybanks on the services they offer.

The programme aims at giving the above sys�tem the form of a Bank of Russia information poolentitled “Monitoring of Enterprises and theirDemand for Banking Services.” The pool is to bebased on the current enterprise monitoringmechanism, which will be complemented by ad�vanced information technologies.

In 2002, the Bank of Russia co�ordinated theactivities of its regional branches from the view�point of building a system to monitor the activi�ties of the Bank of Russia regional branches. Theaim of such monitoring is to analyse and evaluatethe performance of the Bank of Russia regionalbranches in order to determine their currentstanding and trends in the development of eachbranch and the Bank of Russia regional branchnetwork as a whole. The Bank of Russia tested a

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127

system of indicators characterising the scale andefficiency of its regional branches.

In the year under review, the Bank of Russiacontinued to develop methodologies and instru�ments of analysis designed to enhance the effi�ciency of its regional branch network. It workedon methodologies of evaluating the amount ofwork carried out by regional branches in variousareas and determining whether the staffing lev�els of their divisions corresponded to the amountof work they performed.

In doing this work, the Bank of Russia took intoaccount the experience of some foreign centralbanks in promoting the development andoptimising their regional branch networks. It stud�ied the functions and organisational structure ofregional branches of different levels, relations be�tween the central office and regional branches, themanagement, co�ordination and control of theiractivities and staffing levels and their correspon�dence to the amounts of work performed by indi�vidual elements of the regional branch network.

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NUMBER OF EXECUTIVES AND SPECIALISTS

WITH PROFESSIONAL HIGHER EDUCATION

(as % of actual number)

68

64

66

62

602000 2001 2002

63.3

62.4

66.6

DYNAMICS OF CHANGE IN STRUCTURE

OF BANKING SECTOR PERSONNEL

IN TERMS OF LENGHT OF WORK

(as % of actual number)

25

15

20

10

5

Less than 3 years 15 years and more

2000 2001 2002

8.2

10.3

22.1

7.5

24.223.2

Charts 57, 58

II.9.3. STAFFING AND PERSONNEL TRAINING

he aim of personnel management in theBank of Russia in 2002 was to upgrade theprocedure for selecting, placing and profes�

sional training of specialists and the efforts it madeto this end led to the improvement of the qualityof Bank of Russia personnel.

In the year under review, the Bank of Russiastaffing level rose 1.7% to 99.7% of the re�quired number as of January 1, 2003. The num�ber of executives and specialists with a higherprofessional education increased 3.3% and theyaccounted for 66.6% of the total number ofBank of Russia employees. In 2002, more than1,500 specialists graduated from higher educa�tion establishments, where they studied withoutgiving up their work, mostly in professions of pri�mary importance for the Bank of Russia — fi�nance and credit, accounting, analysis and auditand law.

The number of executives and specialists whohad worked in the banking system for more thanthree years rose 0.7% and more than 15 years1%.

In 2002, the Bank of Russia introduced stan�dard forms of documents relating to personnelmanagement and revised its labour relations withemployees to bring them into compliance with theRussian Federation Labour Code, which cameinto effect on February 1, 2002. The Bank of

Russia elaborated a number of regulations aris�ing from the requirements of the Labour Code andissued methodological recommendations on howto apply them.

Raising the qualifications of Bank of Russiaemployees was a major element of personnel man�agement in the Bank of Russia. The Bank of Rus�sia upgraded the methods of organising person�nel training to ensure that the level of professionaltraining of specialists met the qualification re�quirements of the positions they held.

The main objective of personnel training in theBank of Russia in 2002, as in previous years, wasto implement supplementary vocational trainingprogrammes. In 2002, the Bank of Russia imple�mented on the basis of its banking schools (col�leges) and training centres 189 instructionprogrammes, including 125 thematic seminars,49 advanced training courses and 15 courses ofadvanced training for executives, which covered8,650 employees of the Bank of Russia regionalbranches and central office.

In addition, the Bank of Russia bankingschools (colleges) and instruction centres carriedout their own training programmes with theirown syllabuses.

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58.9

34.1

ADVANCED TRAINING OF SPECIALISTS

IN BANK OF RUSSIA BANKING SCHOOLS

AND INSTRUCTION CENTRES IN 2002

(as % of total number of trainees)

Foreign languages

Computer training

Banking

7.0

Chart 59

The total number of specialists who receivedadvanced training in Bank of Russia bankingschools and training centres amounted to 16,910in 2002.

A total of 3,917 specialists with the computer,telecommunications, security and data protectionservices received advanced training in specialisedinstitutions and instruction centres.

To facilitate the implementation of the Bank�ing Sector Development Strategy and create anentirely new staff of specialists capable ofmodernising the banking system, the Bank ofRussia drew up its first ever programme for re�training bank supervisors, which was launchedin 2002. The training programmes implementedin collaboration with the Russian Government’sEconomic Academy and the Higher School of Eco�nomics combine vocational and business trainingdesigned to fulfil the task of organising a contem�porary system of banking supervision.

In the year under review, the Bank of Russiawidely used the opportunities offered by co�opera�tion with foreign central banks and internationalorganisations, institutes and training centreswithin the framework of technical assistance forpersonnel training. Six hundred and seventy Bankof Russia specialists participated in 113 interna�tional training programmes in Russia and abroad.

Seminars designed to prepare the banking sys�tem for the implementation of the anti�launder�ing legislation, held by the US Financial ServicesVolunteer Corps, and devoted to Russian paymentsystem development (Banque de France andDeutsche Bank) and banking regulation and the

enhancement of the efficiency of banking super�vision (World Bank) were of great practical im�portance.

In the year under review, the Bank of Russiacontinued to strengthen professional ties with CISand EAEC central (national) banks in the field ofpersonnel training. It implemented 20 interna�tional training projects that involved 145 repre�sentatives of CIS central (national) banks.

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II.9.4. BANK OF RUSSIA ACTIVITIES AIMED AT IMPROVING BANKING

LEGISLATION. SUITS AND CLAIMS IN BANK OF RUSSIA INSTITUTIONS

he efforts made by the Bank of Russia toupgrade banking legislation were aimed atstrengthening the legislative framework for

the further development of the banking system.The most important law for the Bank of Rus�

sia passed last year was the new Federal Law onthe Central Bank of the Russian Federation (Bankof Russia) (hereinafter referred to as the Bankof Russia Law). It is the fundamental documentestablishing the status, purposes, functions andpowers of the Bank of Russia.

Of all the new points in this Federal Law,mention should be made, above all, of the changeit made in the structure of the Bank of Russia’smanagement by increasing the role of the NationalBanking Board.

Article 12 of the Bank of Russia Law stipu�lates that the National Banking Board is a colle�giate body of the Bank of Russia comprised of 12members, of whom two represent the FederationCouncil, three the State Duma, three the Presi�dent of the Russian Federation, three the Rus�sian Federation Government and one is the Bankof Russia Chairman.

The National Banking Board has a wide rangeof powers and it can exert considerable influenceon the activities of the Bank of Russia. The mostsignificant powers of the National Banking Boardare its right to approve on the basis of the Board ofDirectors’ proposals the level of personnel costs forthe next year and expenses on pension, life andmedical insurance of Bank of Russia employees,capital investments and other administrative andbusiness expenses. The National Banking Boardhas the right to decide on Bank of Russia partici�pation in the capital of credit institutions, appointthe chief auditor of the Bank of Russia and con�sider his reports, select an audit firm to audit Bankof Russia annual financial statements, approve atthe proposal of the Board of Directors accountingand reporting rules for the Bank of Russia and ap�prove at the proposal of the Board of Directors theprocedure for creating Bank of Russia provisionsand allocating Bank of Russia profit that remainsat the disposal of the Bank of Russia.

As for other new points, Article 7 of the Bankof Russia Law established the forms of regula�tions issued by the Bank of Russia on matterswithin its competence and stipulated the gen�eral rule that all Bank of Russia regulations, notjust those which immediately affect citizens’rights, freedoms and duties, as the old versionof the law stipulated, must be registered withthe Ministry of Justice in accordance with theprocedure established for the state registrationof bylaws issued by the federal bodies of execu�tive power.

In addition, the Bank of Russia Law specifiedthe functions fulfilled by the Bank of Russia andthe powers conferred on its managerial bodies,i.e., the Board of Directors and the Bank of Rus�sia Chairman, and established the procedure forcompiling and presenting the Bank of Russia an�nual report and guidelines for the single statemonetary policy. The Bank of Russia Law alsogranted to the Bank of Russia the right to estab�lish required ratios not only for credit institutions,but also banking groups.

In understanding that the upgrading of themechanism to prevent “dirty money” from pen�etrating the banking system and preventing theuse of the infrastructure of law�abiding credit in�stitutions for the financing of terrorism and ex�tremism are tasks of national importance, theBank of Russia in 2002 actively participated inupgrading the Federal Law on Countering theLegalisation (Laundering) of Criminally Ob�tained Incomes (hereinafter referred to as theAnti�Laundering Law). This work resulted in thepassing of two federal laws that amended the Anti�Laundering Law being adopted.

The Federal Law on Amending RussianFederation Laws in Connection with the Adop�tion of the Federal Law on Countering Extrem�ist Activities supplemented the list of operationssubject to mandatory control under Article 6 ofthe Anti�Laundering Law.

In addition, significant amendments to theAnti�Laundering Law were made by the FederalLaw on Amending the Federal Law on Counter�

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131

ing the Legalisation (Laundering) of CriminallyObtained Incomes, which came into force onJanuary 3, 2003.

These amendments to the Anti�LaunderingLaw included regulations designed to prevent thefinancing of terrorism, extended the range oforganisations conducting operations with moneyor other property that must provide informationon these operations to the FMC, reviewed andsupplemented the range of operations subject tomandatory control and established the groundsfor the inclusion of organisations and individualsin the list of legal entities and private individualsimplicated in extremist activities.

In addition, credit institutions were grantedthe right in the cases stipulated by the law torefuse to conclude a bank account (deposit)agreement with a private individual or legal en�tity and organisations conducting operations withmoney and other property were granted the rightto refuse to fulfil a client’s order to conduct op�erations (except for the operations to enter fundsto an account) on which no documents necessaryfor the recording of data were presented.

Special mention should be made of the newFederal Law on Insolvency (Bankruptcy), oneof the federal laws in the drafting of which theBank of Russia was actively involved in 2002.This law provided a basis for establishing a newprocedure and creating conditions for the imple�mentation of measures to prevent insolvency(bankruptcy) and a procedure and conditions forconducting bankruptcy proceedings and regulat�ing other relations arising from the debtor’s in�ability to meet all the creditors’ claims.

In addition, the Bank of Russia drafted in col�laboration with federal government agencies anew version of the Russian Federation Law onForeign Exchange Regulation and Foreign Ex�change Control, which is to become a fundamen�tal document designed to help significantlyliberalise the current foreign exchange regime.The corresponding draft federal law was submit�ted by the Government to the State Duma onDecember 31, 2002.

One of the key draft laws on which the Eco�nomic Development and Trade Ministry jointlyworked with the Bank of Russia, Ministry of Fi�nance and Ministry of Justice throughout 2002is the draft Federal Law on Household BankDeposit Insurance, which sets out the basic prin�

ciples of building and operating a system of man�datory household deposit insurance.

The fundamental objective of such a system,which also meets the interests of the banking sys�tem, is to develop a mechanism to protect house�hold savings deposited with Russian credit insti�tutions. The projected deposit insurance systemwill facilitate the formation of a sound resourcebase for long�term lending to the economy.

The following draft federal laws, written withthe participation of the Bank of Russia, were con�sidered by the State Duma in 2002: the draftFederal Law on Amending the Federal Law onInsolvency (Bankruptcy) of Credit Institutionsand the draft Federal Law on Amending Rus�sian Federation Laws in Connection with theAdoption of the Federal Law on Amending theFederal Law on Insolvency (Bankruptcy) ofCredit Institutions.

The first of the two draft laws is designed torevise and improve the following legal mecha�nisms:1) to enhance the efficiency of bank bankruptcy�

prevention measures and establish proceduresfor their instant implementation;

2) to upgrade bank bankruptcy procedures withthe purpose of building a comprehensive sys�tem of financial and legal protection of credi�tors’ interests.The draft law aims to establish additional dis�

ciplinary measures against bank managers andowners in the event of a threat of bankruptcy inorder to compel them to take immediate and ef�fective financial rehabilitation measures and pro�tect the interests of creditors and depositors.

The draft law also provides additional groundsfor the appointment of a provisional administra�tion to a credit institution.

In addition, experience in applying the Fed�eral Law on Insolvency (Bankruptcy) of CreditInstitutions showed that the institute of the re�ceiver (liquidator) as an individual entrepreneurin the banking sector was weak and inefficient.

The Banking Sector Development Strategyprovides for the establishment of the institute ofthe corporate liquidator of banks whose licenceshave been revoked. Hence the draft law confersthe function of liquidating banks that took house�hold savings on deposit on the Agency for the Re�structuring of Credit Organisations (ARCO).Other credit institutions will be liquidated by

132


specialised agencies accredited with the Bank ofRussia. The draft law establishes qualificationrequirements for such organisations.

The second draft law provides for makingamendments that conform with the first draft lawin the Federal Law on Banks and Banking Ac�tivities, the Federal Law on the Restructuring ofCredit Institutions and the Federal Law on theCentral Bank of the Russian Federation (Bankof Russia). It aims to ensure the comprehensiveimplementation of the concept of the corporateliquidator of credit institutions.

Special mention should be made of the workcarried out by the Bank of Russia in 2002 to draftamendments to the Federal Law on Banks andBanking Activities (hereinafter referred to as theBanking Law), which is the fundamental docu�ment establishing the structure of the Russianbanking system.

A major aspect of this work is the drafting ofamendments to the Banking Law that wouldguarantee the Bank of Russia as the bankingsupervisory authority the provision of the nec�essary information on the real owners of acredit institution.

That would allow the Bank of Russia, as thebanking supervisory authority, to receive cred�ible information on persons who exert direct in�fluence on the functioning and, consequently, fi�nancial state of a credit institution. At present theBank of Russia has limited powers in this area.

Another purpose of the efforts to amend theBanking Law is to reduce the minimum amountof shares (stakes) in a credit institution whoseacquisition requires notification of the Bank ofRussia or its permission.

At present Bank of Russia permission is re�quired for the purchase of more than 20% ofshares (stakes) in a credit institution and theBank of Russia must be notified about any pur�chase of more than 5% of shares (stakes) in acredit institution.

The draft federal law under consideration nowprovides for reducing the amount of shares(stakes) whose purchase requires Bank of Rus�sia permission from 20% to 10% and the amountof shares whose purchase requires notifying theBank of Russia from 5% to 1%.

In addition, the Bank of Russia in 2002 ac�tively participated in drafting amendments to theFederal Law on the Protection of Competition

on the Financial Services Market, designed toupgrade the legal framework for the developmentof competition on the banking services market,specifying definitions of such terms as “an unjus�tifiably high or low price of a financial service,”“the dominant position of a credit institution” and“a group of persons.” It also took part in the workconducted by the Finance Ministry to draft a newversion of the Federal Law on Accounting, whichprovides for creating legislative conditions con�ducive to Russia’s conversion to international ac�counting standards.

In 2002, the Bank of Russia issued more than170 regulations, some of which changed andamended its previous regulations. The Bank ofRussia also made consistent efforts to streamlineand harmonise its regulations and other docu�ments and issued the corresponding ordinancesto this effect.

In 2002, the Bank of Russia issued five offi�cial clarifications on various aspects of bankingregulations.

CLAIMS AND SUITS

IN BANK OF RUSSIA BRANCHES

A total of 769 property claims to the amount ofmore than 680 million rubles and over 10,000 USdollars were made against Bank of Russia regionalbranches in 2002, of which only 50 claims to theamount of 3.5 million rubles were met.

These figures show that most of the claims andsuits made against the Bank of Russia regardingthe servicing of credit institutions’ correspondentaccounts and the recovery of funds at the requestof depositors of credit institutions were unjusti�fied and could not be met.

In 2002, courts of common law considered66 claims against the Bank of Russia regardinglabour relations.

Some Bank of Russia decisions to penalise creditinstitutions were disputed and out of the 26 suchclaims to the total amount of 1,834,000 rubles nineclaims to the amount of 948,000 rubles were met.

Bank of Russia branches, for their part, madeclaims and suits in fulfilling their supervisory func�tions. They made 1,106 claims against banks tothe amount of 46.9 million rubles and initiated131 suits to the amount of 8.02 million rubles, ofwhich 1,077 claims and suits were satisfied to theamount of 40.3 million rubles.


133

II.9.5. BANK OF RUSSIA INTERNAL AUDIT

ank of Russia internal audit serviceswere guided in their activities by a planapproved by the Bank of Russia Chair�

man and ensured the conduct of comprehensiveinspections and thematic examinations of Bankof Russia institutions, organisations and mana�gerial structures.

In 2002, 99.7% of all Bank of Russia institu�tions and organisations that draw up their ownbalance sheets were subjected to some form ofcontrol; of these, 637 Bank of Russia institutions(44.2%) were subjected to comprehensive in�spections. Two centralised inspections of the en�tire Bank of Russia system were conducted in theyear under review: one was concerned with pen�sions and other benefits provided to former em�ployees of the Bank of Russia and life insuranceof some categories of Bank of Russia employees,and the other focused on the organisation of regu�lation and supervision of credit institutions’ ac�tivities on the securities market and settlementson operations with government securities andother papers.

Audits and inspections helped discover vari�ous shortcomings, many of which were eliminatedin the course of audits and inspections. Employ�ees of the Bank of Russia Chief Auditor’s divisionmade sure that the shortcomings discovered byinspections and audits were eliminated fully andon time.

All inspection and audit reports were exam�ined by management of the Bank of Russia or itsregional branches and appropriate action wastaken on them. Auditors and inspectors sent1,340 letters of complaint to Bank of Russia ex�ecutives, containing practical recommendationson what they should do to improve their perfor�mance and eliminate shortcomings; in 129 casesorders were issued to punish executives, of whom

five were dismissed, 13 demoted and 305 disci�plined in other ways; 1,485 employees had theirbonus payments cancelled or reduced.

The Bank of Russia management was in�formed about the results of the aforementionedcentralised inspections of the Bank of Russia sys�tem, consolidated reports were drafted for theheads of the corresponding divisions of the Bankof Russia central office and summary letters weresent to the managers of Bank of Russia regionalbranches.

The Bank of Russia Internal Audit Depart�ment in 2002 continued to make sure that theshortcomings discovered by the inspections of theBank of Russia system in the previous years wereeliminated: in 2000 such inspections concernedcapital investments and in 2001 the relations be�tween Bank of Russia regional branches andcredit institutions.

In 2002, the Bank of Russia continued to up�grade the organisation of the internal audit ser�vices and the methodologies used by it. The headsof the Bank of Russia regional branches were pro�vided with recommendations on ways to improvetheir work and adopt new approaches to theorganisation of internal audit. The Bank of Rus�sia drafted and sent to all its regional branches“Methodological Recommendations on Conduct�ing Inspections of Bank of Russia RegionalBranches with Regard to Control over the Activi�ties of Credit Institutions on the Securities Mar�ket and Settlements on Operations with Govern�ment Securities.”

In the year under review, the Bank of Russiapaid great attention to training employees of theBank of Russia Chief Auditor’s Division: 17% ofits staff took a course of advanced training,organised by the Bank of Russia Personnel Train�ing Centre and Internal Audit Department.

В

134


II.9.6. BANK OF RUSSIA PARTICIPATION IN CAPITAL OF RUSSIAN

AND FOREIGN CREDIT INSTITUTIONS AND OTHER ORGANISATIONS

n the year under review, the Bank of Russiaparticipated in the capital of the Savings Bank(Sberbank), which is an open�end joint�stock

company, and until October 2002 it had partici�pated in the capital of Vneshtorgbank (Bank forForeign Trade), also an open�end joint�stockcompany. These two banks are of strategic im�portance for the national economy.

The Bank of Russia participated in manag�ing and controlling these two banks through itsrepresentatives in their bodies of managementand control (supervisory boards and auditingcommissions) in proportion with its stakes inthese banks.

In 2002, the Bank of Russia stake in Sberbankremained unchanged at 60.57%. The dominantposition of government and Bank of Russia rep�resentatives in the Sberbank Supervisory Boardand Auditing Commission guaranteed the stateeffective control over Sberbank’s activities. Theduties and powers of the Sberbank SupervisoryBoard were considerably expanded in 2002 fromthe viewpoint of control over Sberbank’s currentactivities and that facilitated the implementationof the provisions of the Banking Sector Develop�ment Strategy requiring the enhancement of con�trol over the bank’s commercial policy.

Sberbank’s activities in the year under reviewwere conducted in compliance with the Conceptof Sberbank’s Development until the Year 2005,approved by the Supervisory Board.

Sberbank performed the socially importantfunction of ensuring the fulfilment of the state’sobligations to citizens (servicing Russia’s domes�tic government debt, transferring taxes, dutiesand utility payments and paying pensions, allow�ances, etc.). In fulfilling this socially importantmission, Sberbank retained a system of benefitsfor citizens of pension age, whose deposits accountfor more than 60% of the bank’s ruble deposits.Understanding the importance of the social as�pect of the rehabilitation programme for theChechen Republic, Sberbank resumed its opera�tions there in 2002.

A major element of Sberbank’s active opera�tions was extending loans to big corporate cli�ents, including enterprises in the fuel and en�ergy sector, the metallurgy sector, chemical in�dustry and other industries. In 2002, Sberbankdiversified the services it provided to corporateclients, expanding into new spheres such astrust management of securities and underwrit�ing. In the period under review, Sberbank at�tached great importance to lending to small andmedium�sized businesses within the frameworkof the programme for assistance to Russiansmall business and extending loans to privateindividuals.

The financial result of Sberbank’s activities in2002 was a balance sheet profit of 36 billionrubles, an increase of 70% on the previous year.The dividends for 2001 received by the Bank ofRussia from Sberbank amounted to 602.4 mil�lion rubles.

Pursuant to Article 8 of the Federal Law onthe Central Bank of the Russian Federation (Bankof Russia) and Article 1081 of the 2002 FederalBudget Law, the Bank of Russia passed its Vnesh�torgbank shares to the Government in exchangefor permanent coupon�income federal loan bonds(OFZ�PD) due in 2012.

Under the Federal Law on the Central Bankof the Russian Federation (Bank of Russia), theBank of Russia participates in the capital of otherorganisations of importance for its activities.

To be able to operate effectively on the domes�tic foreign exchange and organised securities mar�kets, the Bank of Russia holds interest in the capi�tal of the Moscow Interbank Currency Exchange(MICEX), a closed�end joint�stock company, andNational Depository Centre (NDC), a non�profitpartnership.

In the year under review, the Bank of Russiaincreased its stake in MICEX by 3.9 percentagepoints to 22.23% after acquiring MICEX sharesfrom credit institutions whose licences were re�voked. MICEX diversified its services in 2002 byenabling traders to conduct repo operations with

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135

corporate securities and transactions witheurobonds.

The Bank of Russia stake in the NDC re�mained unchanged in 2002 at 49% as of January1, 2003. In the period under review, the NDCupgraded its techniques of providing depositoryservices to professional securities market partici�pants regarding the safe keeping and registeringthe owners of GKO and OFZ bonds, regional andmunicipal government bonds and corporate se�curities.

Taking into consideration the importance ofthe city of St. Petersburg as the country’s secondlargest financial centre and the technical infra�structure of the St. Petersburg Currency Ex�change (SPCEX) and wishing to use it as a re�serve exchange trading floor, the Bank of RussiaBoard of Directors decided that the Bank of Rus�sia should participate in the capital of theSt. Petersburg Currency Exchange, a closed�endjoint�stock company. Therefore, in June 2002 theBank of Russia bought 151 SPCEX shares, or 10%of the exchange’s authorised capital.

The profits for 2001 made by MICEX, NDCand SPCEX went to promote the development andupgrade the technical infrastructure of theseorganisations.

The group of Russia’s overseas subsidiarybanks comprises the Moscow Narodny Bank(London), Ost�West Handelsbank (Frankfurtam Main), Banque Commercial pour l’Europe duNord — Eurobank (Paris), Donau�bank (Vien�na) and East�West United Bank (Luxembourg).These banks were founded and operate in com�pliance with their host country legislation andthey are supervised by the local supervisory au�thorities. The Bank of Russia participates inmanaging these banks through its representativeson their Supervisory Boards.

Under the applicable Russian legislation, theBank of Russia participates in the capital of theRussian overseas banks in accordance with Ar�ticle 8 of the Federal Law on the Central Bank ofthe Russian Federation (Bank of Russia), whichstipulates that any actions with regard to the

stakes in the capital of these banks should be un�dertaken by the Bank of Russia in agreement withthe Russian Government. Under Article 13 of theabove Federal Law, it is up to the National Bank�ing Board to take decisions regarding the Bank ofRussia participation in the capital of credit insti�tutions.

Guided by the objectives of the Banking Sec�tor Development Strategy and the new version ofthe Law on the Central Bank of the Russian Fed�eration, the Bank of Russia continues graduallyto withdraw from the capital of overseas banks.

The Bank of Russia has a 15% stake in theDonau�bank (Vienna) and East�West UnitedBank (Luxembourg). It has retained its blocks ofshares in these banks at the recommendation ofthe host country supervisory authorities. TheBank of Russia stake in Ost�West Handelsbank(Frankfurt am Main) is 51.62%, Eurobank(Paris) 87.03% and Moscow Narodny Bank(London) 88.89%.

In 2002, the Bank of Russia gradually createdconditions for its withdrawal from the capital ofoverseas banks. Specifically, it held meetings andconsultations with host country supervisory au�thorities, took steps to make these banks moreindependent financially and less dependent on theBank of Russia’s financial support, looked foracceptable Russian and foreign investors and con�sidered various share disposal options. In the pe�riod under review, the Bank of Russia continuedto legalise its right of ownership for the shares ofoverseas banks that were held by tradition by anumber of Soviet and Russian legal entities,known as “nominee shareholders.”

The Russian overseas banks were profitableby and large and have a sound financial standing.

The middle�term Banking Sector DevelopmentStrategy, elaborated by the Government andBank of Russia, provides for a gradual withdrawalby the Bank of Russia from the capital of over�seas banks by selling the remaining shares it holds.At the same time, the Bank of Russia believes thatits stakes should be sold without harming the eco�nomic interests of the country.

IIIBANK OF RUSSIA

FINANCIAL STATEMENTS

AS OF JANUARY 1, 2003

138


INTRODUCTION

T hese financial statements reflect the opera�tions conducted by the Bank of Russia infulfilling its principal tasks and functions

established by Federal Law No. 86�FZ, dated Ju�ly 10, 2002, “On the Central Bank of the Rus�sian Federation (Bank of Russia).”

The makeup of the Bank of Russia financialstatements (hereinafter referred to as the finan�cial statements) has been changed in compliancewith this Law.

The financial statements as of January 1,2003, presented below comprise:● Annual Balance Sheet;● Profit and Loss Account;● Statement of Profit Received and its Alloca�

tion;● Statement of Bank of Russia Reserves and

Funds;● Statement on the Management by Bank of

Russia of Securities and Stakes that Form Partof Bank of Russia Property;

● Statement of Bank of Russia Personnel Costs;● Statement of Capital Investment Budget Per�

formance;

The principal objectives of the Bank of Russiaare as follows:● to protect the ruble and ensure its stability;● to upgrade and strengthen the Russian bank�

ing system;● to ensure the effective and uninterrupted func�

tioning of the settlement system.The monetary policy pursued by the Bank of

Russia in 2002, designed to reduce the rate of in�flation and ensure smooth dynamics of the ruble’sexchange rate, facilitated the maintenance of eco�nomic growth, ensured monetary and financialstability and led to the expansion of Russia’s in�ternational reserves.

In the year under review, as economic growthcontinued, the amount of payments increased andthe share of monetary settlements expanded, theBank of Russia ensured the reliable, uninterruptedand safe functioning of the payment system.

The effect of the economic environment on theBank of Russia financial statements is describedin greater detail in Addendum 2 to the Bank ofRussia Financial Statements as of January 1,2003.

139

B A N K O F R U S S I A F I N A N C I A L S T A T E M E N T S A S O F J A N U A R Y 1 , 2 0 0 3

ANNUAL BALANCE SHEET

AS OF JANUARY 1, 2003

(million rubles)

Note 2002 2001

АSSETS

1. Precious metals 49,365 58,288

2. Foreign currency funds and securitiesplaced with non�residents 3 1,427,298 1,003,315

3. Loans and deposits, of which: 4 216,481 248,758

3.1. loans extended to resident organisations 1,924 10,712

3.2. loans intended for foreign debt service 197,063 192,224

4. Securities, of which: 5 379,931 328,782

4.1. Russian government securities 348,025 263,708

5. Other assets, of which: 6 71,260 74,097

5.1. fixed assets 55,896 50,711

Total assets 2,144,335 1,713,240

LIABILITIES

1. Cash in circulation 817,602 625,495

2. Funds in accounts with Bank of Russia, of which: 7 820,542 690,900

2.1. Russian government funds 271,301 121,746

2.2. funds of resident credit organisations 420,847 316,840

3. Float 8 8,390 4,211

4. Other liabilities 9 133,070 150,322

5. Capital, of which: 364,731 242,312

5.1. authorised capital 3,000 3

5.2. reserves and funds 370,713 263,752

5.3. losses for 1998 (8,982) (21,443)

Total liabilities 2,144,335 1,713,240

Bank of Russia Chairman Sergei М. Ignatiev

Bank of Russia Chief Accountant Lyudmila I. Gudenko

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PROFIT AND LOSS ACCOUNT

(million rubles)

Note 2002 2001

INCOME

Interest income 11 46,914 36,549

Income from operations with securities 12 17,780 20,358

Income from operations with precious metals 17,534 35,396

Dividend received from stakes and shares 1,249 1,028

Net income from recovery of provisions 13 24,046 —

Other income 14 5,253 3,407

Total income 112,776 96,738

EXPENSES

Interest expenses 15 8,189 8,124

Expenses on cash circulation management 16 2,767 2,597

Expenses on operations with precious metals 437 284

Net expenses on making provisions — 26,367

Other operating expenses 17 22,628 20,228

Personnel costs 28,870 21,055

Total expenses 62,891 78,655

Financial result: profit 49,885 18,083

141

BA

NK

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US

SI

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IN

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TA

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S A

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00

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CAPITAL, FUNDS AND PROFIT ALLOCATION

(million rubles)

desirohtuA desirohtuA desirohtuA desirohtuA desirohtuA

latipac latipac latipac latipac latipacsevreseR sevreseR sevreseR sevreseR sevreseR

deurccA deurccA deurccA deurccA deurccA

etaregnahcxe etaregnahcxe etaregnahcxe etaregnahcxe etaregnahcxe

secnereffid secnereffid secnereffid secnereffid secnereffid

dnuflaicoS dnuflaicoS dnuflaicoS dnuflaicoS dnuflaicoSnoitaicerpeD noitaicerpeD noitaicerpeD noitaicerpeD noitaicerpeD

stessadexiffo stessadexiffo stessadexiffo stessadexiffo stessadexiffosdnufrehtO sdnufrehtO sdnufrehtO sdnufrehtO sdnufrehtO

sessoL sessoL sessoL sessoL sessoL

8991rof 8991rof 8991rof 8991rof 8991rof

noitacollA noitacollA noitacollA noitacollA noitacollA

tiforpfo tiforpfo tiforpfo tiforpfo tiforpfo

2002rof 2002rof 2002rof 2002rof 2002rof

latoT latoT latoT latoT latoT

2002,1yraunaJfosaecnalaB 3 967,91 110,332 105,2 533,8 631 )344,12( — 213,242

raeyehtroftiforP 588,94 588,94

:2002roftiforpfonoitacollA

diapseituddnasexaT )04( )04(

tegdublaredefotderrefsnarteboT )329,42( )329,42(

sdnufotdetacollA )799,2( )164,21( )854,51(

8991rofsessolrevocotderrefsnarT 164,21 )164,21( —

secnereffidetaregnahcxedeurccA 549,79 549,79

sdnufotdetacollA 799,2 564,11 699 1 954,51

sdnuffoesnepxeehttadesU )803( )021( )12( )944(

3002,1yraunaJfosaecnalaB 000,3 732,82 659,033 981,3 512,8 611 )289,8( — 137,463

142


NOTES TO THE FINANCIAL STATEMENTS AS OF JANUARY 1, 2003

1. ACCOUNTING AND FINANCIAL REPORTING PRINCIPLES

Accounting and financial reporting is conducted by the Bank of Russia in compliance with the FederalLaw on the Central Bank of the Russian Federation (Bank of Russia), Federal Law on Accounting,Bank of Russia Accounting Rules No. 66, dated September 18, 1997 (with subsequent amendments)and other Bank of Russia regulations issued in pursuance of the above federal laws.

(a) Accounting principles

Accounting is conducted in accordance with the principle of making the accounting of balance�sheet items at their initial cost at the time of the assets’ acquisition or when liabilities arise. Theprinciples of revaluation of individual assets and liabilities are set out below.

(b) Financial reporting principles

These financial statements have been compiled on the basis of the balance sheet data of the Bank ofRussia, including its regional branches and institutions that make up the single Bank of Russia system.

These financial statements have been compiled without including data on Russia� and foreign�basedcredit and other institutions in whose authorised capital the Bank of Russia has a stake (see Note 5).

These financial statements have been compiled in millions of Russian rubles, abbreviated as Rbs m.Figures in brackets denote negative values.

(c) Precious metals

Precious metals are shown at their acquisition cost. Precious metals in deposits and unallocatedmetal accounts with non�resident credit institutions are recorded at their acquisition cost and in�cluded in the “Foreign currency funds and securities placed with non�residents” category.

d) Foreign currency assets and liabilities

Foreign currency assets and liabilities are shown in Russian rubles at the official rates of exchangeof foreign currencies against the Russian ruble set by the Bank of Russia (hereinafter referred to asthe official exchange rates) as of the date of compiling the balance sheet. Foreign currency assets andliabilities are revalued daily at the official rates of exchange. Incomes and expenses on Bank of Russiaforeign currency operations are shown on the balance sheet in rubles at the official exchange rate as ofthe date of their receipt or conduct.

Unrealised exchange rate differences arising in the course of revaluation of assets and liabilitiesare recorded in the balance�sheet account “Accrued Exchange Rate Differences” and are not includedin the Profit and Loss Account. Realised exchange rate differences are included in Bank of Russiaincomes or expenses.

The official rates of exchange used in recalculating foreign currency assets and liabilities on thelast business day, December 31, 2002, were as follows: 31.7844 rubles to the US dollar (2001:30.14 rubles to the dollar) and 33.1098 rubles to the euro (2001: 26.49 rubles to the euro).

(e) Securities

Under the Federal Law on the Central Bank of the Russian Federation (Bank of Russia), theBank of Russia has the right to buy and sell on the open market government securities issued by theMinistry of Finance. The following principles were used in accounting of government securities:● government securities in the investment portfolio are recorded at their acquisition (restructur�

ing) price;

143


● government securities in the trade portfolio are revalued at the average weighted price upon theresults of trading;

● Finance Ministry promissory notes are recorded at their acquisition price.In addition, the following accounting principles are used with regard to other securities in the

Bank of Russia portfolio:● foreign government securities are recorded at their acquisition price;● bank promissory notes are recorded at their acquisition price.

Promissory notes that have not been paid when due and have not been protested are recorded attheir acquisition price, taking into account the discount and interest.

(f) Investment

Bank of Russia investments in the authorised capital of credit and other institutions based in Rus�sia and abroad are recorded at their acquisition price.

(g) Loans extended to credit institutions

Loans extended to credit institutions are shown as part of the principal debt, while provisionsmade for credit risk are counted as part of other liabilities.

(h) Provisions for possible losses on Bank of Russia operations

To protect its assets against the risk of depreciation, the Bank of Russia, using generally acceptedbanking practice, makes provisions for possible losses on loans extended to credit institutions, fordevaluation of investments in securities and for other active operations it conducts in rubles and for�eign currency. Bank of Russia provisions are made from deductions referred to Bank of Russia ex�penses. When loans are repaid, deposits returned and promissory notes paid and the quality of assetsimproves or their risk becomes less, the provisions made for them earlier are recovered to the Bank ofRussia incomes.

(i) Fixed assets

Fixed assets are shown at their residual value (the purchase price plus revaluation minus theamounts of accumulated depreciation).

Bank of Russia fixed assets have been revalued pursuant to Russian government resolutions.Depreciation is charged at the official rates of depreciation on the basis of USSR Council of Minis�

ters Resolution No. 1072, dated October 22, 1990, “On Standard Rates of Depreciation Charges forthe Complete Restoration of Fixed Assets of the National Economy of the USSR:”

%

Buildings 1.2—3

Equipment (including computers, furniture, transport, etc.) 5—20

(j) Cash in circulation

The Bank of Russia is the sole issuer of cash and organiser of its circulation. The banknotes andcoins put into circulation are shown in the balance sheet at their face value.

(k) Capital

The capital of the Bank of Russia is composed of:— authorised capital. Under Article 10 of Federal Law No. 86�FZ, dated July 10, 2002, “On the

Central Bank of the Russian Federation (Bank of Russia),” the Bank of Russia has an authorisedcapital of 3 billion rubles;

144


— various reserves and funds created to enable the Bank of Russia to fulfil the functions conferred onit by Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank of the Russian Federa�tion (Bank of Russia).” The sources and uses of the reserves and funds are shown in the State�ment of Bank of Russia Reserves and Funds.After 1999 the “Capital” item has served to account for the amount of uncovered losses incurred

in 1998 owing to the devaluation of the Bank of Russia government securities portfolio.

(l) Recognition of Bank of Russia income and expenses

Income and expenses are presented in the Profit and Loss Account on a cash basis, i.e., afterincome has been actually received and expenses have been actually completed.

(m) Balance sheet profit

Balance sheet profit is presented in the Profit and Loss Account under the heading “financialresult: profit” as the difference between the sum of income received and expenses made on the mainand side activities of the Bank of Russia.

(n) Taxation of the Bank of Russia

Taxes and duties are paid by the Bank of Russia and its organisations in accordance with the TaxCode of the Russian Federation. The Bank of Russia elaborates the accounting policies for the pur�poses of taxation.

2. THE EFFECT OF THE ECONOMIC ENVIRONMENT

ON BANK OF RUSSIA FINANCIAL STATEMENTS

The overall favourable foreign trade situation for Russia in 2002, which brought about a massiveinflow of foreign exchange to the country and the efforts made by the Bank of Russia to further reduceinflation, facilitate economic growth and ensure monetary and financial stability, had a significanteffect on the Bank of Russia’s balance sheet and financial standing.

Taking into consideration the increased uncertainty about the state of the world economy andRussia’s considerable forthcoming foreign debt payments, the Bank of Russia continued to accumu�late gold and currency reserves in order to maintain a stable and balanced domestic financial marketin the year under review and in the near future. In the year under review, foreign currency fundsbecame the main asset in the Bank of Russia consolidated balance sheet. At the same time, owing tothe Bank of Russia’s purposeful efforts to contain money supply growth and hence reduce inflation,the share of cash put into circulation remained virtually unchanged in the consolidated balance sheetliabilities.

The need to tie up free banking sector liquidity, which expanded as the inflow of foreign currencyexport earnings to the country increased and the intrayear budget expenditure pattern remaineduneven during the year under review, required the Bank of Russia actively to use sterilisation mea�sures and that led to a rise in its expenses on these purposes.

Growth in Russian exporters’ earnings, facilitated by the exchange rate policy, was accompaniedin 2002 by the expansion of the balances of credit institutions’ funds in accounts in the Bank ofRussia. It should be noted that most of that growth was tied up in the required reserve accounts andcredit institutions’ deposits with the Bank of Russia. Thanks to a federal budget surplus, the balancesof funds in government accounts in the Bank of Russia more than doubled.

145


Owing to the decision by the Bank of Russia to withdraw from the capital of some banks, the valueof shares of subsidiary and dependent banks in the Bank of Russia portfolio declined by almost 40 bil�lion rubles. The value of government securities owned by the Bank of Russia rose significantly as aresult of the exchange of Vneshtorgbank shares for Russian government securities.

The settlement of the Finance Ministry’s debt to the Bank of Russia, conducted according to mar�ket principles, has not yet been completed, however. In 2002, the Finance Ministry failed to use theright granted to it by law to restructure the securities received by the Bank of Russia as a result of the1999—2000 restructuring into variable coupon�income federal loan bonds and that limited the possi�bilities of the Bank of Russia to effect monetary regulation by conducting open�market operationsbecause of a low level of liquidity of its securities portfolio. The losses of the past years incurred by theBank of Russia as a result of the financial crisis of 1998 on account of the government securities in itsportfolio have not been redressed and the Bank of Russia regularly covers them from its profit.

The profit made by the Bank of Russia in 2002 was more than in 2001, which was mainly theresult of incomes that arose from the recovery of the provisions that were earlier made by the Bank ofRussia owing to the repayment of debts owed to it. At the same time, incomes from the investment ofgold and currency reserves and sale of precious metals, which were the main sources of profit for theBank of Russia in 2001, significantly decreased in the year under review as a result of interest ratecuts and the deterioration of the situation on international financial markets.

3. FOREIGN CURRENCY FUNDS AND SECURITIES PLACED WITH NON�RESIDENTS

(million rubles)

2002 2001

Foreign government securities 802,528 593,954

Loans extended to and deposits made with Bank of Russiasubsidiaries abroad 39,756 38,711

Balances in correspondent accounts, loans extended toand deposits made with non�resident banks 585,014 370,650

Total 1,427,298 1,003,315

Debt instruments and bills issued by foreigners are mainly represented by US treasury bills, Ger�man, French, Belgian and Dutch government debt instruments and debt instruments of extrabudgetaryfunds and federal agencies of the above states. In 2002, the Bank of Russia also purchased debt secu�rities issued by the governments of Austria, Spain, Finland and Ireland and a number of internationalfinancial organisations, including the International Bank for Reconstruction and Development, Eu�ropean Investment Bank, International Finance Corporation and Inter�American Development Bank.

Loans extended to and deposits placed with Bank of Russia overseas banks are investments de�signed to maintain the financial stability of these banks.

Growth under the item “Balances in correspondent accounts, loans extended to and deposits placedwith non�resident banks” resulted from the expansion of currency reserves.

146


4. LOANS AND DEPOSITS

(million rubles)

2002 2001

Funds provided to government for foreign debt service 197,063 192,224

Loans and deposits in resident banks (in foreign currency) 10,807 44,140

Loans extended to resident banks (in rubles) 1,924 10,712

Other 6,687 1,682

Total 216,481 248,758

In pursuance of Federal Law No. 192�FZ, dated December 29, 1998, “On Budget and Tax PolicyPriorities” and Federal Law No. 36�FZ, dated February 22, 1999, “On the Federal Budget for 1999,”the Bank of Russia in 1998 and 1999 extended to the Finance Ministry through Vneshekonombankforeign�currency funds for foreign debt repayment and service. In 2002, the Finance Ministry repaid2,319 million rubles to the Bank of Russia in debt on the funds provided by the Bank of Russia to theFinance Ministry in Deutsche marks for urgent foreign debt payment and service, which was convertedinto a euro�denominated debt due on January 30, 2002. In pursuance of Federal Law No. 145�FZ,dated December 25, 2000, “On Amending the 2000 Federal Budget Law in Connection with theReceipt of Additional Revenues,” the term of repayment of the Finance Ministry’s debt to the Bank ofRussia on funds provided through Vneshekonombank in US dollars for urgent foreign debt repaymentand service was extended to December 1, 2007. Increment under this item was the result of therevaluation of foreign currency against the Russian ruble.

Foreign currency deposits were placed with some resident banks to back up their liquidity. De�crease under this item is mainly the result of the closing of some deposits.

The principal amount of the debt on ruble loans to resident banks is represented by the fundsextended to banks by the Bank of Russia in 1998—1999 in compliance with the corresponding deci�sions taken by the Bank of Russia Board of Directors with the aim of stabilising and rehabilitatingthese banks. The reduction of the debt on ruble loans extended to resident banks in rubles is mainlythe result of the restructuring of the 6,500�million�ruble debt into bank promissory notes and repay�ment of 2,289 million rubles of debt on loans.

Increment under the “Other” item is mainly the result of the disbursement of the second and thirdtranches of a loan extended to the National Bank of the Republic of Belarus along the credit lineopened in 2000.

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5. SECURITIES

(million rubles)

2002 2001

Russian government securities

Government securities (OFZ) 277,587 232,079

of which:

— investment portfolio (not traded on organised securities market) 237,183 232,079

— trade portfolio (traded on organised securities market) 40,404 —

Finance Ministry promissory notes 11,021 15,457

Other 59,417 16,172

Subtotal 348,025 263,708

Bank promissory notes acquired by Bank of Russia 12,390 5,623

12,390 5,623

Shares of banks and other organistions (Bank of Russia stakes) 19,516 59,451

Total 379,931 328,782

The federal loan bonds (OFZ) in the investment portfolio are Russian government debt instru�ments with terms to redemption from 2005 to 2029, most of which (85%) have terms to redemptionfrom 2018 to 2029.

Most of the OFZ bonds resulted from the restructuring of government securities and other debts in1999—2001 in accordance with the 1999, 2000 and 2001 federal budget laws. The characteristics ofthese securities, such as interest rates and terms to redemption of each issue, are established by law.The securities received from the Finance Ministry as a result of the restructuring have been accountedfor at the balance sheet value of the restructured papers.

The structure of the investment portfolio in terms of coupon income and maturity as of January 1,2003, is shown below:

148


Federal loan bonds (OFZ)Balance sheet value

(million rubles)

0% permanent coupon�income OFZ bonds

due in 2007—2008 458

due in 2015—2016 4,000

due in 2020—2021 4,508

Subtotal 8,966

1% permanent coupon�income OFZ

due in 2005 10

due in 2019—2023 3,843

Subtotal 3,853


due in 2005—2009 284

due in 2013—2019 39,643

due in 2020—2029 155,861

Subtotal 195,788


due in 2012 14,117

Subtotal 14,117

Variable coupon�income OFZ (with currnet interest rate of 12%)

due in 2014—2015 9,639

due in 2018 4,820

Subtotal 14,459

Total 237,183

To regulate banking sector liquidity, the Bank of Russia in 2002 began to conduct direct repooperations and sell government securities with an obligation to repurchase.

The Bank of Russia sold the following government securities with an obligation to repurchase:— OFZ with 6% permanent coupon income;— OFZ with 12% variable coupon income.

The structure of the Bank of Russia trade portfolio in terms of coupon income and maturity as ofJanuary 1, 2003, is shown below:

149


Types of GKO and OFZ bonds (OFZ)Balance sheet value

(million rubles)

OFZ bonds with 6% permanent coupon income due in 2012 27,481

OFZ bonds with variable coupon income (currently 12%) due in 2016—2017 9,640

GKO and OFZ bonds purchased in direct repo operations 3,283

Total 40,404

The debt accounted for in the item “Bank promissory notes acquired by Bank of Russia” com�prises the bank promissory notes acquired in 1998—2000 from Sberbank in accordance with thedecision of the Bank of Russia Board of Directors. Sberbank repaid deposits taken from individualsand promissory notes received by the Bank of Russia in 2001—2002 under amicable agreements. Thechange in the debt on the bank promissory notes acquired by the Bank of Russia is mainly the result ofthe restructuring under amicable agreements of the debt on bank loans and deposits into bank prom�issory notes to the amount of 6,975 million rubles and repayment of promissory notes to the amountof 208 million rubles.

Bank of Russia investments in the shares of Russian and foreign banks are shown below:

(million rubles)

% share

Name of bankSum of investment in authorised

(at acquisition price) capital(at par)

Sberbank 4,563 60.57

Moscow Narodny Bank, London 7,330 88.89

Eurobank, Paris 4,219 87.03

Ost�West Handelsbank, Frankfurt am Main 1,180 51.62

Donau�bank, Vienna 361 15.00

East�West United Bank, Luxembourg 152 15.00

Total 17,805 —

Letters of comfort were signed with regard to some overseas banks, pledging the Bank of Russia toassume responsibility for maintaining stability and liquidity of the above banks.

Pursuant to Article 1081 of Federal Law No. 194�FZ, dated December 30, 2001, “On the FederalBudget for 2002,” the Bank of Russia in 2002 exchanged the Vneshtorgbank shares in its portfoliofor permanent coupon�income federal loan bonds (OFZ�PD).

The increase in the sum of Bank of Russia investments in the capital of foreign banks is the resultof the revaluation of foreign currency against the Russian ruble.

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6. OTHER ASSETS

(million rubles)

2002 2001

Fixed assets

Buildings 28,537 27,662

Equipment (including computers, information and data processingsystems, furniture, transport, etc.) 27,359 23,049

55,896 50,711

Incomplete construction projects 3,148 2,260

Bank of Russia correspondent accounts 29 11

Bank of Russia interest claims 1,574 4,649

Settlements with suppliers, contractors and buyers 1,277 1,319

Settlements with CIS and Baltic states’ banks 1,297 1,623

Cash in vaults 3,141 2,483

Sundry settlements with Finance Ministry 352 352

Other 4,546 10,689

15,364 23,386

Total 71,260 74,097

The increase in the balance of “incomplete construction projects” resulted from the reconstruc�tion of Bank of Russia office buildings and the installation of security and software systems of theBank of Russia information and telecommunications system.

The decrease under the item “Bank of Russia interest claims” is mainly the result of the writing offof accrued interest on loans to credit institutions in connection with the restructuring under amicableagreements of the debt on loans and interest on them into the credit institutions’ promissory notes.

The item “Settlements with CIS and Baltic states’ banks” shows the balance of mutual claimsregarding interstate settlements for 1992—1993 between CIS and Baltic states. The decrease underthis item results from the writing off from the Bank of Russia balance sheet of the CIS and Balticstates’ debt on interstate settlements for the first half of 1992 at the expense of the provisions madefor this debt earlier.

151


FIXED ASSETS

Structure of fixed assetsBalance sheet value

(million rubles)

2002 2001

Buildings and other structures 31,047 29,813

Transport facilities 1,645 1,471

Computers, office equipment and furniture 14,385 10,361

Information and data processing systems 8,019 6,497

Equipment 10,495 9,655

Intangible assets 3,052 2,125

Other 1,634 1,623

Total 70,277 61,545

The increase in the amount shown under the item “Buildings and other structures” is mainly theresult of the reconstruction of Bank of Russia office buildings.

Transport facilities include the cost of special transport for carrying cash and bank documents.The increase in the value of “Computers, office equipment and furniture” resulted from the pur�

chase of computers and other systems and devices designed for the automatic transmission, storageand processing of data in the Bank of Russia payment, operations and information analysis systemsand facilities to protect banking information.

The increase in the amount shown under the item “Information and data processing systems”mainly results from the installation of the Bankir data transmission system.

“Equipment” includes the cost of cash�processing, security and other equipment of this kind.“Intangible assets” include the cost of software products used in effecting settlements and in ac�

counting and reporting.

Fixed capital movement(million rubles)

Fixed capital value

Balance as of January 1, 2002 61,545

Receipt 10,004

Retirement (1,272)


Accrued depreciation


Depreciation deductions 3,908

Depreciation deductions for retired fixed assets (361)


Residual value as of January 1, 2003 55,896

152


7. FUNDS IN ACCOUNTS WITH BANK OF RUSSIA

(million rubles)

2002 2001

Federal government funds 271,301 121,746

Credit institutions’ funds in correspondent accounts 172,311 156,507

Required reserves deposited with Bank of Russia 201,139 156,608

Bank deposits with Bank of Russia 47,398 3,725

Other 128,393 252,314

Total 820,542 690,900

8. FLOAT

(million rubles)

2002 2001

Float 8,390 4,211

Total 8,390 4,211

Float as of the end of the year mainly comprises the funds the Bank of Russia is to transfer to creditinstitutions and its clients. These funds are accumulated as a result of the time lags in settlementscompleted by the Bank of Russia in January 2003.

Under Article 23 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), the Bank of Russia conducts operations with federal budget funds and governmentextrabudgetary funds and regional and local budget funds without charging any commission.

Bank deposits with the Bank of Russia include the balances of funds drawn from resident creditinstitutions that have signed with the Bank of Russia a general agreement on ruble deposit opera�tions, conducted through the Reuters Dealing System, and credit institutions that participated indeposit auctions. Growth in the balances of borrowed funds resulted from the expansion of the vol�ume of operations to take funds from resident credit institutions on deposits with the Bank of Russiawith the aim of absorbing free banking sector liquidity.

“Other” funds include the balances of regional and local government accounts and accounts ofgovernment extrabudgetary funds and other customers of the Bank of Russia. The decrease in thevalue of “Other” funds was mainly caused by a contraction in the balances of Pension Fund accountsand a decrease in non�resident banks’ funds involved in transactions to sell securities with an obliga�tion of reverse repurchase.

153


9. OTHER LIABILITIES

(million rubles)

2002 2001

Bank of Russia provisions (see Note 1(h)) 65,137 89,816

Deferred income from lending operations 13,572 18,992

Deferred income from government securities 6,915 7,014

Additional pension provisions for Bank of Russia employees 18,176 10,508

Other 29,270 23,992

Total 133,070 150,322

“Bank of Russia provisions” include 1,841 million rubles set aside in 1998—2002 for loans tocredit institutions, 39,116 million rubles for foreign exchange operations, 12,597 million rubles forpromissory notes acquired from credit institutions, 1,446 million rubles for the debt owed by CIS andBaltic states, 7,297 million rubles for operations with OFZ and other debts, and 2,840 million rublesfor other active operations.

Deferred income from lending operations is mainly represented by the debt on interest charged onthe loans extended in 1992—1994 by the decision of the Government Commission on Fiscal and Mon�etary Policy to enterprises in some branches of the economy. This debt was subsequently included inthe domestic government debt in compliance with Federal Law No. 46�FZ, dated April 24, 1995,“On the Restructuring of the Debt on Centralised Loans to Agribusiness Enterprises and OrganisationsDelivering (Storing and Selling) Products (Goods) to Regions of the Far North and Similar Regions,and Interest Charged on Them,” Federal Law No. 39�FZ, dated March 31, 1995, “On the FederalBudget for 1995,” Federal Law No. 212�FZ, dated December 27, 1995, “On Amending the 1995Federal Budget Law” and Federal Law No. 227�FZ, dated December 31, 1999, “On the FederalBudget for 2000.” Under the agreements signed with the Finance Ministry, the Bank of Russia re�ceived Finance Ministry promissory notes, some of which were restructured into federal loan bonds.The decrease in funds accounted for in this item resulted from the writing off of interest in connectionwith the repayment of the Finance Ministry promissory notes and debt on permanent coupon�incomefederal loan bonds.

Deferred income from government securities mainly comprises 4,959 million rubles in accruedcoupon income that has not been paid by the Finance Ministry and 1,452 million rubles in interest onthe Finance Ministry promissory notes and securities restructured into OFZ�PD bonds.

The Federal Law on the Central Bank of the Russian Federation (Bank of Russia) allows theBank of Russia to create a pension fund for paying additional pensions to its employees. In implement�ing this pension scheme, the Bank of Russia complies with the applicable pension legislation. Noassets are allocated to cover obligations under this pension scheme. In so doing, it takes into consider�ation the fact that Bank of Russia employees are not civil servants and hence they are not covered bythe guarantees to which the latter are entitled. In addition, such pension schemes are acceptableinternational practice with central banks. The increase in the funds recorded under this item resultedfrom the creation of pension funds for Bank of Russia employees in accordance with the indicativeactuarial evaluation of Bank of Russia pension obligations, conducted by an independent actuary.

154


10. RELATIONS BETWEEN BANK OF RUSSIA AND MINISTRY OF FINANCE

In the period under review, the relations between the Bank of Russia and Ministry of Financewere regulated by the 2002 Federal Budget Law (with changes and amendments) and Russian Fed�eration Government Resolution No. 137, dated February 28, 2002, “On Measures to Implement the2002 Federal Budget Law” and their aim was to co�ordinate the budget and monetary policies andensure the fulfilment by the Finance Ministry of its obligations to the Bank of Russia.

The Finance Ministry’s ruble�denominated debt to the Bank of Russia increased by 38,271 millionrubles over the year to 288,960 million rubles as of January 1, 2003.

The Finance Ministry foreign currency debt to the Bank of Russia amounted to 256,480 millionrubles, an increase of 48,084 million rubles owing to the change in the ruble’s exchange rate againstthe US dollar and Bank of Russia operations to buy Russian government securities denominated inforeign currency.

The structure of the Finance Ministry’s debt to the Bank of Russia is shown below:

(million rubles)

2002 2001

Russian government debt obligations 344,742 263,708

Russian government debt obligations acquired by Bank of Russiathrough direct repo operations 3,283 —

Bank of Russia funds transferred to Vneshekonombank for extendingloans to Finance Ministry for foreign debt repayment and service 197,063 192,224

CIS and Baltic states’ debt on interest on overdraftsand interstate settlements — 2,801

Debt on overdrafts 352 352

Total 545,440 459,085

Russian government debt obligations

The Russian government debt obligations comprise:— permanent and variable coupon�income federal loan bonds received by the Bank of Russia as a

result of the restructuring, pursuant to the federal law, of government securities and other debtsowed by the Finance Ministry to the Bank of Russia, which began in 1999, and permanent cou�pon�income federal loan bonds acquired by the Bank of Russia in 1999 under Article 3 of the 1999Federal Budget Law, with a total balance sheet value of 232,706 million rubles. Compared toJanuary 1, 2002, the balance sheet value of the federal loan bonds increased by 627 million rubles.The change in the balance sheet value is the result of the restructuring of the Finance Ministry’sSeries IV�APK promissory notes into federal loan bonds;

— permanent coupon�income federal loan bonds received as a result of the exchange of Vneshtorgbankshares under Article 1081 of the 2002 Federal Budget Law with a balance sheet value of 41,598 mil�lion rubles;

— Finance Ministry promissory notes with a balance sheet value of 11,021 million rubles, repre�sented by the Finance Ministry promissory notes received by the Bank of Russia as a result of therestructuring into Russian government domestic debt in 1994—1996, pursuant to the RussianFederation legislation, of the debt on centralised loans and accrued interest on them due in 2002—

155


2006 and Finance Ministry APK Series notes due in 2003—2005. Compared to January 1, 2002,the balance sheet value of the Finance Ministry notes decreased by 4,436 million rubles as a resultof the redemption by the Finance Ministry, pursuant to the 2002 Federal Budget Law, of SeriesV�APK notes with a balance sheet value of 593 million rubles and notes due on December 25 and26, 2002, with a balance sheet value of 3,216 million rubles and the restructuring of the FinanceMinistry’s Series IV�APK notes into OFZ�PD bonds with a balance sheet value of 627 millionrubles;

— other debt obligations with a balance sheet value of 59,417 million rubles include the Russiangovernment’s domestic currency loan bonds and external currency loan bonds and RSFSR repub�lic domestic government loan bonds of 1991 bought by the Bank of Russia from investors in 2002.

Russian government debt obligations acquired by Bank of Russia through direct repo operations

To co�ordinate the budget and monetary policy and regulate banking sector liquidity, the Bank ofRussia in 2002 used as instruments of monetary policy direct and reverse repo operations with Rus�sian government debt obligations. As of January 1, 2003, the Bank of Russia had in its portfoliofederal loan bonds acquired through direct repo operations with a balance sheet value of 3,283 mil�lion rubles.

Bank of Russia funds transferred to Vneshekonombank for extending loans to Finance Ministry

for foreign debt repayment and service

The Finance Ministry’s debt to the Bank of Russia on foreign currency funds transferred toVneshekonombank in 1998—1999 pursuant to Federal Law No. 192�FZ, dated December 29, 1998,“On Budget and Tax Policy Priorities” and Federal Law No. 36�FZ, dated February 22, 1999, “Onthe Federal Budget for 1999,” for extending loans to the Finance Ministry for Russian governmentforeign debt service and repayment amounted to 197,063 million rubles as of January 1, 2003, anincrease of 4,839 million rubles over the year owing to the change in the ruble’s exchange rate againstthe US dollar from 30.14 as of January 1, 2002, to 31.7844 as of January 1, 2003.

Finance Ministry’s debt on overdrafts

The Finance Ministry’s debt on overdrafts of 352 million rubles arose as a result of the transfer byUkraine, the Republic of Moldova and Republic of Armenia in 1996—1998 of funds as repayment oftheir debt to the Bank of Russia to the Finance Ministry federal budget revenue account and it isaccounted for as “Other assets.”

The Bank of Russia in 2002 settled the CIS and Baltic states’ debt on interest charged on over�drafts to the amount of 2,475 million rubles and wrote off by the decision of its Board of Directors theCIS and Baltic states’ debt on interstate settlements for the first half of 1992, which arose as a resultof the verification of these settlements owing to the provisions made for this debt to the amount of326 million rubles.

The Ministry of Finance has fulfilled its obligations to the Bank of Russia and repaid the ruble andforeign currency debt and interest it owed the Bank of Russia on this debt, which was due in 2002.

In 2002, the Ministry of Finance, ignoring the repeated proposals made by the Bank of Russia, failedto use its right to restructure, pursuant to Article 108 of the 2002 Federal Budget Law, the governmentsecurities received by the Bank of Russia as a result of the 1999—2000 restructuring to the amount of15.0 billion rubles into variable coupon�income federal loan bonds with a coupon interest equal to therate of inflation envisaged in federal budget projections for the corresponding financial year, terms toredemption in 2005 through 2007 and coupon payments made once a year beginning from 2003. Thatlimited the possibilities of the Bank of Russia to regulate banking sector liquidity.

156


11. INTEREST INCOME

(million rubles)

2002 2001

Interest income from foreign currency loans and deposits 22,478 19,241

Interest income from ruble loans extended to credit institutions 405 337

Interest income from securities 23,985 16,958

Other 46 13

Total 46,914 36,549

“Interest income from foreign currency loans and deposits” includes interest received from fundsdeposited by the Bank of Russia with Vneshekonombank in 1998—1999 for the effectuation of pay�ments on Russian government foreign debt payment and service.

12. INCOME FROM OPERATIONS WITH SECURITIES

(million rubles)

2002 2001

Income from operations with foreign currency�denominated securities 13,182 20,294

Income from operations with ruble�denominated Russian governmentdebt instruments 21 —

Other 4,577 64

Total 17,780 20,358

“Income from operations with foreign currency�denominated securities” includes income from re�sale and redemption of foreign currency�denominated securities.

The increase in “Other” income is chiefly the result of the receipt of interest connected with theredemption of Finance Ministry promissory notes.

13. NET INCOME FROM RECOVERY OF PROVISIONS

(million rubles)

2002 2001

Provisions for loans extended to credit institutions 2,290 —

Provisions for operations with foreign exchange 19,644 —

Provisions for promissory notes acquired from credit institutions (45)

Provisions for operations with federal loan bonds and other debt 2,157 —

Total 24,046 —

157


Net income from the recovery of provisions for loans extended to credit institutions resulted fromthe reduction of the provisions made earlier and their recovery to Bank of Russia income owing to thetermination of credit institutions’ obligations to the Bank of Russia.

Net expenses on provisions to the amount of 26,367 million rubles were accounted for in 2001 inthe Profit and Loss Account.

“Provisions for promissory notes acquired from credit institutions” reflect the creation of addi�tional provisions for notes acquired from credit institutions during the restructuring of the debt onloans and deposits of credit institutions and promissory notes under amicable agreements.

14. OTHER INCOME

(million rubles)

2002 2001

Realised difference in rates of exchange 2,811 1,492

Payment for settlement services provided by Bank of Russia 597 442

Fines and penalties received 70 40

Compensation by customers of telegraph and other expenses 15 24

Incomes of previous years discovered in reporting year 534 217

Other 1,226 1,192

Total 5,253 3,407

15. INTEREST EXPENSES

(million rubles)

2002 2001

Interest expenses on IMF loan 18 3,604

Interest expenses on deposits taken from credit institutions 7,373 3,624

Interest expenses on repo operations in foreign currency 770 890

Other 28 6

Total 8,189 8,124

The decrease in “Interest expenses on IMF loan” in the year under review resulted from full re�payment of debt obligations to the IMF. The latest interest payment on the IMF loan was made by theBank of Russia according to schedule in February 2002.

The increase in “Interest expenses on deposits taken from credit institutions” in the year underreview resulted from the expansion of operations to take resident credit institutions’ funds on depos�its with the Bank of Russia with the aim of absorbing free banking sector liquidity.

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16. EXPENSES ON CASH CIRCULATION MANAGEMENT

(million rubles)

2002 2001

Expenses on cash circulation management 2,767 2,597

Total 2,767 2,597

This item includes the expenses involved in manufacturing and destroying banknotes and coins,protecting them against counterfeiting and purchasing and delivering packing and other expendablematerials necessary for the technical processing of cash.

17. OTHER OPERATING EXPENSES

(million rubles)

2002 2001

Expenses on operations with securities 713 858

Depreciation deductions 4,063 3,490

Expenses on operations with foreign exchange 304 4,397

Repairs of fixed assets and low�cost and quick�wearing articles 2,216 1,500

Postage, telegraph and telephone expenses and expenses on leaseof communication lines and channels 1,073 1,051

Security expenses 1,398 949

Expenses on maintenance of computer hardware and software systemsand related services 1,597 1,193

Expenses on delivery of bank documents and valuables 882 799

Expenses on maintenance of buildings and other structures 957 842

Expenses on legal services (stamp duty and legal costs) 6 8

Taxes and duties paid 559 2

Other 8,860 5,139

Total 22,628 20,228

“Other” operating expenses reflect an increase in pension provisions for Bank of Russia employ�ees in accordance with the indicative actuarial evaluation of Bank of Russia pension obligations, madeby an independent actuary, to the amount of 7,763 million rubles.

18. PERSONNEL COSTS

For the explanatory note to “Personnel costs,” see the Statement of Bank of Russia PersonnelCosts.

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STATEMENT OF PROFIT RECEIVED AND ITS ALLOCATIONS

(million rubles)

2002 2001

1. Actual profit for the year 49,885 18,083

2. Taxes and duties paid from Bank of Russia profitin compliance with Tax Code 40 —

3. To be transferred to federal budget under Article 26of the Federal Law on the Central Bank of the Russian Federation(Bank of Russia) 24,923 9,042

4. Profit at Bank of Russia disposal, total 24,922 9,041

Of this, transferred:

— to cover losses incurred by Bank of Russia in 1998 12,461 5,044

— to the Reserve Fund 11,465 2,997

— to the Social Fund 996 1,000

Under Article 11 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), profit of the Bank of Russia for the year is determined as the difference between the sum ofincome from banking operations and transactions conducted under Article 46 of the above FederalLaw and income from the participation in the capital of credit institutions and expenses involved inthe fulfilment by the Bank of Russia of its functions conferred on it by Article 4 of the same law.

The profit of the Bank of Russia for 2002 amounted to 49,885 million rubles. This represents aconsiderable increase on 2001, which is connected, above all, with the income received by the Bankof Russia as it recovered the provisions it made earlier in connection with repayment by banks of theirdebt obligations to the Bank of Russia. At the same time, incomes from the investment of gold andcurrency reserves and sale of precious metals, which were the principal sources of Bank of Russiaincome and profit in 2001, decreased significantly in the year under review as a result of the deterio�ration of the situation on international financial markets.

Pursuant to Article 26 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), the Bank of Russia transfers to the federal budget 50% of its actual profit for the year re�maining after the payment of taxes and duties in accordance with the Tax Code of the Russian Fed�eration. Profit that remained at the disposal of the Bank of Russia is transferred by the Board ofDirectors to reserves and various funds in accordance with the procedure established by the NationalBanking Board.

160


STATEMENT OF BANK OF RUSSIA RESERVES AND FUNDS

(million rubles)

FixedAccumulated assetsexchange rate revaluation Other

Reserve Social Fund differences fund funds

Balance as ofJanuary 1, 2002 19,769 2,501 233,011 8,335 136

Transferred toreserves and funds 11,465 996 97,945 — 1

Reserves andfunds used 2,997 308 — 120 21

Balance as ofJannuary 1, 2003 28,237 3,189 330,956 8,215 116

Pursuant to Article 26 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia), the Bank of Russia transfers profit that remains at its disposal after the payment of taxes andduties in accordance with the Tax Code of the Russian Federation and after the transfer of 50% of itsprofit to the federal budget, to reserves and various funds.

The procedure for allocating profit remaining at the disposal of the Bank of Russia is approved bythe National Banking Board.

The purpose of the Bank of Russia Reserve is to ensure the stable functioning of the Bank of Russiain fulfilling the functions conferred on it by law. The Reserve is created from Bank of Russia profit. Toreplenish the Reserve, the Bank of Russia may, by the decision of its Board of Directors, transfer to itmoney from other funds and reserves that are part of the Bank of Russia’s own assets (capital). Theprincipal uses of the Reserve are to cover losses from active operations connected with writing off baddebts from the Bank of Russia balance sheet and cover losses incurred in conducting settlement andcash operations.

Pursuant to Article 97 of Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank ofthe Russian Federation (Bank of Russia),” the Bank of Russia in 2002 transferred from the Reserve2,997 million rubles to increase its authorised capital, which had been reserved for this purpose bythe decision of the Board of Directors when Bank of Russia profit for 2001 was allocated. In accor�dance with the procedure for allocating profit at the Bank of Russia’s disposal, approved by the Na�tional Banking Board, and by the decision of the Board of Directors, 11,465 million rubles weretransferred to the Reserve from Bank of Russia profit for 2002.

The aim of the Social Fund is to meet the social needs of Bank of Russia employees and, in some cases,pensioners registered with the Bank of Russia. The Social Fund is created from Bank of Russia profit.

The procedure for creating and spending money from the Social Fund is regulated by the Bank ofRussia Provision on the Creation and Use of the Social Fund of the Central Bank of the RussianFederation.

Most of the money spent from the Social Fund in 2002 went to meet the financial and other per�sonal needs of Bank of Russia employees.

In accordance with the procedure of allocating profit at the Bank of Russia’s disposal, approved bythe National Banking Board, and by the decision of the Bank of Russia Board of Directors, 996 mil�lion rubles, or 4% of this profit, were transferred to the Social Fund from the Bank of Russia’s profitfor 2002.

161


The “Accumulated exchange rate differences” item reflects the movement of unrealised exchangerate differences in the revaluation of the balances of active and passive accounts of the Bank of Russiabalance sheet in foreign currency. As a result of the revaluation, the accumulated exchange rate dif�ferences amounted to 97,945 million rubles in 2002 (an excess of positive unrealised exchange ratedifferences over negative ones).

The Fixed Assets Revaluation Fund represents growth in the value of property as a result of therevaluation of fixed assets, made by the decision of the Russian Government in 1992, 1994, 1995,1996 and 1998.

In accordance with the procedure for writing off tangible assets and receivables, 120 million rubleswere used from the Fixed Assets Revaluation Funds in 2002 in writing off fixed assets from the bal�ance sheets of regional branches (national banks) and other Bank of Russia divisions.

“Other funds” comprise:— the Fixed Assets Fund, which includes the fixed assets of the banking schools and organisations

financed by the Bank of Russia, acquired and transferred before January 1, 1996. In 2002, 21 mil�lion rubles were spent from this Fund when writing off the balance sheet useless and morallyobsolete fixed assets acquired before January 1, 1996. As of the January 1, 2003, the balance ofthe Fund equalled 99 million rubles;

— the cost of property received free of charge. This item reflects the cost of property transferred toBank of Russia regional branches and organisations by other organisations and individuals free ofcharge. As of January 1, 2003, the balance of funds accounted for under this item amounted to17 million rubles.

162


STATEMENT ON THE MANAGEMENT BY BANK OF RUSSIA

OF SECURITIES AND STAKES THAT FORM PART

OF BANK OF RUSSIA PROPERTY

BANK OF RUSSIA INVESTMENTS IN DEBT INSTRUMENTS AND BILLS

(million rubles)

2002 2001

1. Debt instruments and bills of foreign issuers,of which: 802,528 593,954

1.1. denominated in US dollars 663,740 511,177

1.2. denominated in euros 138,788 82,777

2. Russian government debt instruments and promissory notes,of which: 348,025 263,708

2.1. ruble�denominated bonds traded on the organisedsecurities market (trade portfolio) 40,404 —

2.2. ruble�denominated bonds not traded on the organisedsecurities market (investment portfolio) 237,183 232,079

2.3. bonds denominated in foreign currency 59,417 16,172

2.4. other debt instruments and promissory notes 11,021 15,457

3. Debt instruments and promissory notes of credit institutions 12,390 5,623

Total 1,162,943 863,285

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BANK OF RUSSIA INVESTMENTS IN THE CAPITAL OF BANKS AND OTHER ORGANISATIONS

(million rubles)

January 1, 2003January 1, 2003January 1, 2003January 1, 2003January 1, 2003 January 1, 2002January 1, 2002January 1, 2002January 1, 2002January 1, 2002

% share% share% share% share% share % share% share% share% share% share

BalanceBalanceBalanceBalanceBalance in capitalin capitalin capitalin capitalin capital BalanceBalanceBalanceBalanceBalance in capitalin capitalin capitalin capitalin capital

InvestmentInvestmentInvestmentInvestmentInvestment sheet sumsheet sumsheet sumsheet sumsheet sum (at par)(at par)(at par)(at par)(at par) sheet sumsheet sumsheet sumsheet sumsheet sum (at par)(at par)(at par)(at par)(at par)

Investment in residents’ shares,of which: 4,715 — 46,966 —

Vneshtorgbank 0 0 42,321 99.95

Sberbank 4,563 60.57 4,563 60.57

Moscow Interbank Currency Exchange(MICEX) 149 22.23 82 18.33

St. Petersburg Currency Exchange(SPCEX) 3 10.0 0 0

Investment in non�residents’ shares,of which: 14,802 — 12,487 —

Moscow Narodny Bank, London 7,330 88.89 6,278 88.89

Eurobank, Paris 4,219 87.03 3,375 87.03

Ost�West Handelsbank, Frankfurt am Main 1,180 51.62 944 51.62

Donau�bank, Vienna 361 15.00 289 15.00

East�West United Bank, Luxembourg 152 15.00 122 15.00

Bank for International Settlements, Basel 1,233 0.57 1,169 0.57

Intelsat 327 0.53 310 0.51

Other investments in residents’ capital,of which: 25 — 25 —

National Depository Centre 25 49.00 25 49.00

Other investments in non�residents’ capital,of which: 10 — 10 —

Mezhgosbank 10 50.00 10 50.00

The Bank of Russia manages securities and its stakes in the capital of organisations in accordancewith the purposes, tasks and functions established by the Federal Law on the Central Bank of theRussian Federation (Bank of Russia).

Investing in foreign issuers’ securities denominated in foreign currency is part of the Bank ofRussia’s policy in managing gold and currency reserves pursuant to paragraph 7 of Article 4 of theabove Law.

The Bank of Russia conducts operations with Russian government securities denominated in theRussian currency pursuant to paragraphs 1 and 3 of Article 4, paragraph 3 of Article 35 and Ar�

164


ticle 39 of the above Law as part of the measures taken to implement monetary policy. The Bank ofRussia participates in the capital of organisations in cases stipulated by Article 8 of the above Law.

The principal objective of the management of foreign exchange reserves by the Bank of Russia is toensure an optimal combination of their security, liquidity and profitability. Hence, the Bank of Rus�sia invests in the most secure and liquid securities of foreign issuers, denominated in foreign currency.

Debt instruments and bills of foreign issuers are principally debt instruments of foreign states,extrabudgetary funds and federal agencies of the United States and European countries and interna�tional financial organisations.

The sum of Bank of Russia investments in debt instruments and bills of foreign issuers increased by208,574 million rubles in 2002. The main factor of growth is the significant expansion of foreignexchange reserves in the period under review. In addition, the change in the balance sheet value ofinvestments in foreign issuers’ debt instruments and bills is the result of revaluation of foreign cur�rency against the Russian ruble.

In 2002, Bank of Russia investments in US treasury bills increased by $1,431 million and invest�ments in debt instruments of member countries of the Economic and Monetary Union (Germany,France, Belgium, the Netherlands, Austria, Finland, Spain and Ireland) rose by 474 million euros. In2002, Bank of Russia investments in US federal agencies’ securities increased by 1,548 million USdollars and 61 million euros and investments in European non�government securities by 287 millioneuros. To further diversify its investments in securities, the Bank of Russia in 2002 purchased securi�ties of several international financial organisations, such as the International Bank for Reconstruc�tion and Development, European Investment Bank, International Finance Corporation and Inter�American Development Bank, to the amount of 697 million US dollars and 256 million euros.

Russian government debt instruments and promissory notes as of January 1, 2003, were com�prised of federal loan bonds that were not traded on the organised securities market (investmentportfolio), federal loan bonds that were traded on the organised securities market (trade portfolio),domestic and foreign government currency loan bonds, 1991 RSFSR domestic government loan bondsand Finance Ministry promissory notes.

The changes in the balances of the Bank of Russia investment portfolio in 2002 are shown below:

Balance sheet value(million rubles)Type of operation

OFZ balance as of January 1, 2002 232,079

Restructuring of Finance Ministry’s Series IV�APK promissory notesunder Article 87 of the 2001 Federal Budget Law 627

Exchange of Vneshtorgbank shares under Article 1081

of the 2002 Federal Budget Law 42,117

Transfer of securities to trade portfolio in connectionwith beginning of operations on organised securities market (37,640)


When the Bank of Russia began to conduct operations on the securities market, it made the deci�sion to transfer a part of federal loan bonds (OFZ) from its investment portfolio to its trade portfolio.

The changes in the balances of the Bank of Russia trade portfolio are shown below:

165


Balance sheet value(million rubles)Type of operation

OFZ balance as of January 1, 2002 —

Transfer of securities from investment portfolio in connectionwith beginning of operations on organised securities market 37,640

Purchase of GKO and OFZ bonds through direct repo operations 3,283

OFZ sale operations with obligation of reverse repurchase (437)

Revaluation of trade portfolio (82)


The value of investments in domestic and foreign government currency loan bonds increased in2002 as the Bank of Russia purchased them from Vneshtorgbank and received them from Donau�bank (Vienna) and East�West United Bank (Luxembourg) and foreign currency was revalued againstthe Russian ruble.

The sum of investments in credit institutions’ debt instruments and promissory notes increased by6,767 million rubles in 2002. The reasons for the increase are shown in Note 5 to the FinancialStatements.

The Bank of Russia participates in the capital of resident organisations in compliance with therequirements of Article 8 of the Federal Law on the Central Bank of the Russian Federation (Bank ofRussia).

The makeup of the resident organisations in whose capital the Bank of Russia participates changedin 2002 mainly as a result of the implementation of the Russian government and Bank of Russia plansto withdraw from the capital of credit institutions. Specifically, in 2002 the Bank of Russia withdrewfrom the capital of Vneshtorgbank.

To facilitate its activities on the domestic foreign exchange market and organised governmentsecurities market, the Bank of Russia participates in the capital of the Moscow Interbank CurrencyExchange (MICEX), a closed�end joint�stock company, and National Depository Centre (NDC), anon�profit partnership.

To increase its influence on MICEX, the Bank of Russia in 2002 purchased 4,510 MICEX shareswith a total value of 68 million rubles, alienated by MICEX shareholding credit institutions whosebanking licence was revoked. As a result, the Bank of Russia stake in MICEX rose 3.9% over the yearto 22.23% as of January 1, 2003.

The Bank of Russia stake in the NDC remained unchanged in the year under review.Taking into consideration the importance of St. Petersburg as Russia’s second largest financial

centre and understanding that the technical infrastructure of the St. Petersburg Currency Exchangeallowed it to be used as a reserve trading floor, the Bank of Russia Board of Directors decided that theBank of Russia should participate in the capital of the SPCEX. In accordance with that decision, theBank of Russia in June 2002 purchased 151 shares in the SPCEX, i.e. 10% of the bourse’s authorisedcapital.

Pursuant to Article 8 of Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank ofthe Russian Federation (Bank of Russia),” the Bank of Russia participates in the capital of the fol�lowing Russian overseas banks: Donau�bank AG (Vienna), East�West United Bank (Luxembourg),Banque Commercial de l’Europe du Nord�Eurobank (Paris), Moscow Narodny Bank (London) andOst�West Handelsbank AG (Frankfurt am Main).

166


The Bank of Russia participates in the capital of the Bank for International Settlements in Baselon the basis of Article 9 of Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank of theRussian Federation (Bank of Russia)” as the capital of an international organisation promoting mon�etary and banking co�operation, including co�operation between central banks.

There was no acquisition or alienation of Bank of Russia shares in the capital of Russian overseasbanks or the Bank for International Settlements in the year under review.

The Bank of Russia has been a shareholder in the Intelsat Company since July 18, 2001. An ex�traordinary meeting of Intelsat shareholders, held in June 2002, took the decision to convert everythree ordinary and/or preference shares with a nominal value of $1 into one ordinary share with anominal value of $3. As a result, 2,544,345 Intelsat ordinary shares with a nominal value of$2,544,345, owned by the Bank of Russia, were converted into 848,115 ordinary shares.

In September 2002, Intelsat bought from a shareholder 6,284,635 ordinary shares and the Bankof Russia stake in the company increased as a result.

The Bank of Russia owns 1 share in the Society for Worldwide Interbank Financial Telecommuni�cations (SWIFT), which it purchased in 1996 when it became a member of SWIFT.

The change in the balance sheet value of the Bank of Russia stake in the capital of non�residentorganisations in rubles resulted from the revaluation of foreign currency against the Russian ruble.

The Bank of Russia participates in the capital of the Interstate Bank, founded by CIS countries in1993 under the interstate agreement of January 22, 1993.

167


STATEMENT OF BANK OF RUSSIA PERSONNEL COSTS

(million rubles)

Items of expenditure 2002 2001

Wages and salaries 21,683 16,678

Other payments to employees 2,021 —

Additional compensation and other payments 5,166 4,258

Other — 119*

Total personnel costs 28,870 21,055

The average number (payroll) of Bank of Russia employees in 2002 was 82,712.The average monthly income of Bank of Russia employees in 2002 was 23,882 rubles.The increase in personnel costs resulted from the implementation in 2002 of measures to bring the

remuneration conditions of Bank of Russia employees into compliance with the requirements of theLabour Code and Tax Code of the Russian Federation: the Bank of Russia cancelled the so�calledmonthly compensation payments (MCP) and, at the same time, raised salaries and introduced se�niority pay.

Taking into consideration that the MCP amount directly depended on the length of work in theBank of Russia system, raises in salaries and seniority pay were calculated so that the total income ofa Bank of Russia employee with the longest work record remained unchanged. The structure of paywas also changed: before March 1, 2002, the share of lump�sum payments (end�year bonuses andholiday allowances) for employees with the longest record of work in the Bank of Russia accountedfor 49% of their salaries and monthly payments accounted for 51% of the employee’s full�year earn�ings, whereas in the new conditions monthly payments accounted for 80% and lump�sum payments20%.

Taking into consideration that these measures were implemented from March 1, 2002, when theend�year lump�sum payment for 2001 was made in January 2002, as was required by the Bank ofRussia Remuneration Regulation, the increase in monthly payments led to an increase in the Bank ofRussia’s personnel costs.

* The list of expenses included in this item has been approved by the National Banking Board. Therefore, the

methodology of compiling the Statement of Bank of Russia Personnel Costs has been changed: beginning from the

Statement for 2002, data shown as “Other” have been included in “Other operating expenses” (Note 17).

168


STATEMENT OF CAPITAL INVESTMENT BUDGET PERFORMANCE

(million rubles)

Actual ActualApproved amount amount

Capital investment for 2002 in 2002 in 2001

Fixed capital investment 10,496 9,115 7,226

Capital investment in intangible assets 1,105 1,005 515

Total 11,601 10,120 7,741

The following expenses have been included in “Fixed capital investment”:— expenses on the construction (reconstruction) of Bank of Russia facilities in accordance with the

capital construction plan approved by the Board of Directors and the purchase of large�size appli�ances and equipment for the maintenance of the life support systems of buildings and structures;in 2001 these expenses accounted for 51% and in 2002 for 34% of the total value of actual capitalinvestment;

— expenses on the management of cash turnover: the purchase of technical facilities to mechanisethe processing of cash (banknote counting and sorting machines and coin counters) and auxiliaryworkplace equipment for depositories and cash counting units and the purchase (modernisation)of special armoured vehicles; in 2001 these expenses accounted for 2% and in 2002 for 3% of thetotal value of capital investment;

— expenses to ensure the functioning of the Bank of Russia payment, operations and informationanalysis systems: the purchase of computers, information technology and information protectionfacilities and the development and upgrading of the Single Banking Telecommunications System;in 2001these expenses accounted for 30% and in 2002 for 46% of the total value of capital invest�ment;

— expenses on the security and protection of Bank of Russia facilities: the development andmodernisation and upgrading of security systems and expenses on the purchase of individual meansof protection; in 2001 these expenses accounted for 10% and in 2002 for 7% of the total value ofcapital investment.“Capital investment in intangible assets” represents expenses on the purchase of software prod�

ucts and copyright (for use in information technology and information protection systems and secu�rity facilities); in 2001 these expenses accounted for 7% and in 2002 for 10% of the total value ofcapital investment.

The increase in Bank of Russia capital investment compared with 2001 mainly resulted from anincrease in expenses on the purchase of equipment and hardware and software systems for the Bankof Russia payment, operations and information analysis systems. Capital investment in the manage�ment of cash turnover increased as a result of the modernisation of cash counting and sorting ma�chines.

A total of 1,481 million rubles of capital investment, or 12.8% of the total amount of capital in�vestment approved for the year, remained unused in 2002, of which 674.5 million rubles were to beinvested in the construction of money vaults and 214.1 million rubles in the construction (reconstruc�tion) of office buildings and structures. Overall, in 2002 the Bank of Russia financed the construction(reconstruction) of 84 projects as against 114 projects in 2001, of which 56 projects against 67 projectsrespectively were continued from the previous year.

169

A U D I T R E P O R T S

125 Varshavskoye shosse117545 MoscowRussian Federation

Telephone: (095) 319 6636(095) 797 5665

Fax: (095) 319 5909http://www.bdo.ru

BDO YuniconRufAuditors and consultants

AUDITOR’S REPORT

ON THE FINANCIAL STATEMENTS

OF THE CENTRAL BANK OF THE RUSSIAN FEDERATION

FOR THE YEAR ENDED DECEMBER 31, 2002

The Financial Statements of the Central Bank of the Russian Federation (Bank of Russia) for 2002have been audited by ZAO BDO YuniconRuf, the legal successor to ZAO Yunicon/MS ConsultancyGroup, under Agreement No. 10102�05�025/03, dated February 18, 2003, concluded with ZAOYunicon/MS Consultancy Group on the basis of the decision of the National Banking Board, datedDecember 30, 2002 (p. IV of Minutes No. 3 “On Appointing the Auditing Organisation to Audit theBank of Russia Financial Statements for 2002”).

ZAO BDO YuniconRuf has been registered by Inspectorate No. 26 of the Ministry of Taxes andDuties of the Russian Federation for the Southern Administrative District of Moscow (Certificate ofRegistration in the Single State Register of Legal Entities Serial No. 77 No. 006869528, dated Feb�ruary 27, 2003, Main State Registration Number 1037739271701).

The audit was conducted by ZAO BDO YuniconRuf in the period of Audit Licence No. E 000547,dated June 25, 2002, issued by the Ministry of Finance of the Russian Federation, effective untilJune 24, 2007.

The audit of the Financial Statements of the Central Bank of the Russian Federation for 2002 washeaded by auditor Vladimir M. Volkov, holder of Qualification Certificate No. 029070, issued in linewith the decision of the Central Audit Certification and Licensing Commission of the Central Bank ofthe Russian Federation, dated July 10, 1995 (Minutes No. 6), extended until July 27, 2004 inclusive(Minutes No. 3 of the CACLC of the Central Bank of the Russian Federation).

The audit was conducted from February 24, 2003, to April 30, 2003.

We have audited the enclosed Financial Statements of the Central Bank of the Russian Federationfor 2002, comprising:

Annual Balance Sheet as of January 1, 2003;

— Profit and Loss Account;

— Statement of Profit Received and its Allocation;

170


— Statement of Bank of Russia Reserves and Funds;

— Statement on the Management by Bank of Russia of Securities and Stakes that Form Part of Bankof Russia Property;

— Statement of Bank of Russia Personnel Costs;

— Statement of Capital Investment Budget Performance.

These statements have been prepared by management of the Central Bank of the Russian Federa�tion in compliance with the standards established by the Federal Law on the Central Bank of theRussian Federation (Bank of Russia) (as amended by Federal Law No. 65�FZ, dated April 26, 1995),Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank of the Russian Federation (Bankof Russia),” Federal Law No. 129�FZ, dated November 21, 1996, “On Accounting,” AccountingRules in the Central Bank of the Russian Federation (Bank of Russia) No. 66, dated September 18,1997, and other accounting and financial reporting regulations of the Russian Federation.

The auditor’s duty is to express an opinion about the veracity of all the material aspects of thefinancial statements presented and about the compliance of the accounting procedure with the Rus�sian Federation legislation. It was not the purpose of the audit to express an opinion about the fullcompliance of the activities of the Central Bank of the Russian Federation with the Russian Federa�tion legislation.

We planned and conducted the audit in such a way as to be able to say with a fair degree ofcertainty that there are no significant distortions in the financial statements presented.

The audit included an evaluation of the management system aimed at ascertaining its adequacyfrom the viewpoint of the fulfilment by the Central Bank of the Russian Federation of its objectivesand functions and an evaluation of the internal control system of the Central Bank of the RussianFederation aimed at making sure that the extent of its formalisation and its organisation correspondto the nature and volume of operations conducted by the Central Bank of the Russian Federation. Wehave examined on a sample basis documents confirming numeric data and explanatory notes con�tained in the annual financial statements of the Central Bank of the Russian Federation for 2002. Wehave not participated in the stocktaking of the assets of the Central Bank of the Russian Federation,but we have conducted control procedures to verify the results of the stocktaking.

The responsibility for correct accounting and for the preparation and truth and fairness of theannual financial statements and data on the basis of which we have formed our opinion and for thesafety of assets and the prevention of abuses and violations of the legislation is borne by managementof the Central Bank of the Russian Federation. We are responsible for forming an independent judge�ment, expressing our opinion on the veracity of the above financial statements in all their materialaspects, based on the results of the audit.

The audit was conducted pursuant to Federal Law No. 86�FZ, dated July 10, 2002, “On theCentral Bank of the Russian Federation (Bank of Russia),” Federal Law No. 119�FZ, dated August7, 2001, “On Auditing,” federal auditing rules (standards) approved by Russian Federation Govern�ment Resolution No. 696, dated September 23, 2002, and other audit regulations and also intracom�pany audit standards and methodologies.

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In 2002, before Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank of the Rus�sian Federation (Bank of Russia)” came into force, Bank of Russia accounting and reporting ruleswere set by the Bank of Russia Board of Directors. After the above law came into force (from July 13,2002), the changes in Bank of Russia accounting and reporting rules were approved by the NationalBanking Board at the proposal of the Bank of Russia Board of Directors. The main accounting andreporting principles of the Central Bank of the Russian Federation are historical cost accounting (ex�cept for the revaluation of foreign currency funds, investments in government securities and the re�valuation of fixed assets) and accounting for income and expenses as they are received or paid.

We believe that the work we have carried out is sufficient for expressing an opinion about theveracity of the annual financial statements of the Central Bank of the Russian Federation and formaking our report.

A major limitation on the scope of our work and the auditor’s report was that under RussianFederation Law No. 5485�1, dated July 21, 1993, “On State Secrecy,” we had limited access to somedata recorded in the annual financial statements of the Central Bank of the Russian Federation.These data include sums that are not subject to verification by independent auditors. Taking thiscircumstance into account, we cannot express an opinion on the veracity of the annual financial state�ments with regard to operations conducted by the Field Units Department and some other opera�tions, which have been examined by the Audit Chamber of the Russian Federation pursuant to Reso�lution No. 3536�III GD of the State Duma of the Federal Assembly of the Russian Federation, datedJanuary 15, 2003, “On the Instructions for the Audit Chamber of the Russian Federation.” In thisrespect, we rely on the opinion of the Audit Chamber of the Russian Federation, which has confirmedthe Annual Balance Sheet assets total of 55,226 million rubles and liabilities total of 2,427 millionrubles and the Profit and Loss Account income of 12,653 million rubles and expenses of 4,289 millionrubles.

We believe that if we leave aside any adjustments that might have been deemed necessary in theabsence of the above limitation on the scope of our work, the enclosed annual financial statements areaccurate, that is, prepared in such a way as to ensure the accounting in all their material aspects ofassets and liabilities of the Central Bank of the Russian Federation as of January 1, 2003, and thefinancial results of its activities in 2002 in compliance with the requirements of the applicable legisla�tion with respect to the activities of the Central Bank of the Russian Federation.

Director General A.Yu. Dubinsky

Auditor V.M. Volkov

April 30, 2003

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STATEMENT

on the Results of an Examination

of Bank of Russia Accounts and Operations for 2002

Covered by the Russian Federation State Secrecy Law

Pursuant to Article 25 of Federal Law No. 86�FZ, dated July 10, 2002, “On the Central Bank ofthe Russian Federation,” and in accordance with its work plan for 2003 (p. 1.5.5.2.4), the AuditChamber of the Russian Federation has examined the accounts and operations of the Central Bank ofthe Russian Federation covered by the Russian Federation State Secrecy Law, conducted within theframework of the audit of the Bank of Russia annual financial statements for 2002. The above ac�counts and operations are accounted for in the Consolidated Balance Sheet of the Central Bank of theRussian Federation as of January 1, 2003, Profit and Loss Account as of January 1, 2003, Statementof Bank of Russia Reserves and Funds as of January 1, 2003, Statement of Bank of Russia PersonnelCosts for 2002, Statement of Capital Investment Budget Performance for 2002 and Statement on theManagement by the Bank of Russia of Securities and Stakes that Form Part of Bank of Russia Prop�erty for 2002.

The Bank of Russia management is responsible for the preparation and presentation of the aboveforms of accounting documents, on the basis of which the Audit Chamber of the Russian Federationhas formed its judgement. The Audit Chamber is responsible for drawing up a statement based on theresults of an examination of Bank of Russia accounts and operations covered by the Russian Federa�tion State Secrecy Law.

To Sergei M. Ignatiev

Chairmanof the Central Bankof the Russian Federation

THE AUDIT CHAMBEROF THE RUSSIAN FEDERATION

A U D I T O R

119992 Moscow, GSP�2, ul. Zubovskaya 2

April 24, 2003 No. 06�80/06�3

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Responsibility for placing data in the category covered by the Russian Federation State SecrecyLaw and hence for delimiting the competence of the auditor of the Annual Report of the Central Bankof the Russian Federation for 2002 and the Audit Chamber of the Russian Federation rests with theBank of Russia.

This Statement is drawn up in compliance with Federal Law No. 119�FZ, dated August 7, 2001,“On Auditing.”

The Federal Law on the Central Bank of the Russian Federation (Bank of Russia) stipulates thatthe Bank of Russia is independent in elaborating an accounting policy and setting banking operations,accounting and reporting rules for the banking system. The main principles of the Bank of Russiaaccounting policy are historical cost accounting (taking into consideration the specifics of revaluationof foreign currency funds, investments in government securities and fixed assets accounting) and thecash method of accounting for income and expenses in the profit and loss account, i.e., after incomehas been actually received and expenses have been actually completed.

The annual financial statements of the Central Bank of the Russian Federation for 2002 are com�piled in all their material aspects in compliance with the requirements of the applicable legislationwith regard to the Bank of Russia and reflect the assets, liabilities, income and expenses of the Bankof Russia on accounts and operations covered by the Russian Federation State Secrecy Law and fall�ing within the competence of the Audit Chamber of the Russian Federation under Article 25 of theFederal Law on the Central Bank of the Russian Federation (Bank of Russia).

The Audit Chamber of the Russian Federation hereby confirms data from:

the Consolidated Balance Sheet of the Central Bank of the Russian Federation as of January 1,2003;

Profit and Loss Account as of January 1, 2003;

Statement of Bank of Russia Reserves and Funds as of January 1, 2003;

Statement of Bank of Russia Personnel Costs for 2002;

Statement of Capital Investment Budget Performance for 2002; and

Statement on the Management by the Bank of Russia of Securities and Stakes that Form Part ofBank of Russia Property for 2002.

S.O. Shokhin

IVADDENDA

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MAJOR STEPS TAKEN BY THE BANK OF RUSSIA IN 2002

TO IMPLEMENT THE SINGLE STATE MONETARY POLICY

1. REQUIRED RESERVES, REFINANCING OF BANKS

AND BANK OF RUSSIA DEPOSIT OPERATIONS

EQUIRED RESERVES. To eliminate dis�crepancies in the regulatory frameworksetting the required reserve depositing

procedures for credit institutions, the Bank ofRussia issued Ordinance No. 1143�U, dated Ap�ril 29, 2002, “On Amending Bank of Russia Pro�vision No. 37, dated March 30, 1996, ‘On the Re�quired Reserves Deposited by Credit Institutionswith the Central Bank of the Russian Federa�tion,’” and Ordinance No. 1144�U, dated April29, 2002, “On Amending Bank of Russia Provi�sion No. 51, dated November 4, 1996, ‘On theRequired Reserves of the Savings Bank of the Rus�sian Federation Deposited with the Central Bankof the Russian Federation,’” which amended theabove Provisions by including in them all thechanges and additions made to them earlier.

In addition, owing to the enforcement of Fed�eral Law No. 86�FZ, dated July 10, 2002,“On the Central Bank of the Russian Federation(Bank of Russia),” the Bank of Russia issuedLetter No. 107�T, dated July 31, 2002, “OnSome Issues Relating to the Application of Article38 of the Federal Law on the Central Bank of theRussian Federation (Bank of Russia),” whichexplained the Bank of Russia procedure for fin�ing credit institutions for violations of the requiredreserve deposit and calculation procedures.

DEPOSIT OPERATIONS. To eliminate discrepan�cies in regulations on Bank of Russia deposit op�

erations, the Bank of Russia issued OrdinanceNo. 1126�U, dated March 20, 2002, “On Amend�ing Bank of Russia Provision No. 67�P, datedJanuary 13, 1999, ‘On the Procedure for Con�ducting Deposit Operations by the Central Bankof the Russian Federation with Resident Banksin the Russian Federation Currency,’” whichamended the above Bank of Russia Provision byincluding all the changes and additions made to itearlier.

To upgrade the procedure for conducting de�posit operations, the Bank of Russia issued thefollowing regulations:— Bank of Russia Provision No. 203�P, dated

November 5, 2002, “On the Procedure forConducting Deposit Operations by the CentralBank of the Russian Federation with CreditInstitutions in the Russian Federation Cur�rency.” This document allowed non�bankcredit institutions conducting deposit and lend�ing operations and settlement non�bank creditinstitutions to deposit funds with the Bank ofRussia, specified the criteria applied to creditinstitutions wishing to get access to Bank ofRussia deposit operations and established theprocedure for conducting deposit auctions forcredit institutions, using the Reuters DealingSystem;

— Bank of Russia Ordinance No. 1211�U, datedNovember 27, 2002, “On Invalidating SomeBank of Russia Regulations,” such as Bank of

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Russia Provision No. 67�P, dated January 13,1999, “On the Procedure for Conducting De�posit Operations by the Central Bank of theRussian Federation with Credit Institutions inthe Russian Federation Currency” and Bankof Russia ordinances to amend this Bank ofRussia provision.

REFINANCING OF BANKS. To work out a singlepattern of co�operation between Bank of Russiadivisions and branches in extending intraday,overnight and Lombard loans to banks and estab�lish the procedure for setting intraday and over�night credit limits on a bank’s correspondent ac�count (subaccount), the Bank of Russia issuedthe following regulations:— Bank of Russia Ordinance No. 1132�U, dated

April 5, 2002, “On the Procedure for Co�op�eration between the Bank of Russia GeneralEconomic Department and Bank of RussiaRegional Branches in Extending and Repay�ing Bank of Russia Loans;”

— Bank of Russia Ordinance No. 1149�U, datedMay 8, 2002, “On the Procedure for Co�op�eration between Bank of Russia Branches andDivisions in Recovering Funds from a Corre�spondent Account(s)/Subaccount(s) of aCredit Institution Opened in a Division(s) ofthe Bank of Russia Settlement Network;”

— Bank of Russia Order No. OD�275, dated May8, 2002, “On Organising the Work of Bankof Russia Branches and Divisions in Connec�tion with the Enforcement of Bank of RussiaOrdinance No. 1149�U, dated May 8, 2002,‘On the Procedure for Co�operation betweenBank of Russia Branches and Divisions in Re�covering Funds from a Correspondent Ac�count(s)/Subaccount(s) of a Credit Institu�tion Opened in a Division(s) of the Bank ofRussia Settlement Network;’”

— Bank of Russia Ordinance No. 1167�U, datedJune 21, 2002, “On the Procedure for Co�operation between Bank of Russia Branchesand Divisions in Setting Intraday and Over�night Credit Limits;”

— Bank of Russia Order No. OD�413, datedJune 21, 2002, “On Organising the Work ofBank of Russia Branches and Divisions in Con�nection with the Enforcement of Bank of Rus�sia Ordinance No. 1167�U, dated June 21,

2002, ‘On the Procedure for Co�operationbetween Bank of Russia Branches and Divi�sions in Setting Intraday and Overnight CreditLimits.’”To upgrade the procedure for extending

intraday, overnight and Lombard loans, the Bankof Russia issued the following regulations:— Bank of Russia Ordinance No. 1168�U, dated

June 24, 2002, “On Amending Bank of Rus�sia Provision No. 36, dated March 13, 1996,‘On the Procedure for Extending LombardLoans to Banks by the Bank of Russia;’”

— Bank of Russia Ordinance No. 1169�U, datedJune 24, 2002, “On Amending Bank of Rus�sia Provision No. 19�P, dated March 6, 1998,‘On the Procedure for Extending Bank ofRussia Loans to Banks against GovernmentSecurities;’”

— Bank of Russia Ordinance No. 1170�U, datedJune 24, 2002, “On Terms and Conditions ofExtending Intraday and Overnight Loans.”In connection with the decisions of the Bank

of Russia Board of Directors to raise the ad�justment ratio for federal loan bonds and ex�tend the Bank of Russia Lombard list, the Bankof Russia drafted and issued the following regu�lations:— Bank of Russia Ordinance No. 1171�U, dated

June 21, 2002, “On Amending Bank of Rus�sia Ordinance No. 1001�U, dated July 17,2001, ‘On Bank of Russia Adjustment RatiosUsed to Correct the Market Value of Securi�ties Accepted as Security against Bank of Rus�sia Loans;’”

— Bank of Russia Ordinance No. 1208�U,dated November 18, 2002, “On Acceptingas Security against Bank of Russia LoansDebt�Depreciation Federal Loan Bonds andVariable Coupon�Income Federal LoanBonds Sold by the Bank of Russia from itsPortfolio with an Obligation of Reverse Re�purchase.”To promote the practice of extending Bank of

Russia loans against promissory notes and rightsof claim on loan agreements with production com�panies and bank guarantees, the Bank of Russiaissued Order No. OD�786, dated December 4,2002, “On Disseminating the Procedure for Ex�tending Bank of Russia Loans to Banks AgainstCollateral and Guarantees.”

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2. RELATIONS WITH THE FEDERAL BUDGET

orking together with the FinanceMinistry to implement the Conceptof a Single Federal Treasury Budget

Account and hence centralise operations with fed�eral budget and Federal Treasury accounts, theBank of Russia issued Ordinance No. 1100�U,dated January 21, 2002, “On the Procedure forHandling Settlement Documents after the Detailsof Payees and Payee Banks Have Changed in Con�nection with the Closing of the Accounts to RecordIncomes Distributed by Federal Treasury Bodiesbetween Different Budget Levels and the Ac�counts to Record Federal Budget Revenues andCustoms and Other Payments Effected in theSphere of Foreign Trade.” This document madeit possible to ensure the safety of budget fundswhen Federal Treasury accounts were closed. Inaddition, the Bank of Russia drafted and issuedjointly with the Finance Ministry Provisions Nos.130n/208�P, 131n/209�P and 132n/210�P,dated December 20, 2002, on the procedure tocomplete operations on 2002 federal budget ac�counts opened respectively in credit institutions,various divisions of the Bank of Russia settlementnetwork and Bank of Russia First Operations De�partment (OPERU�1). In accordance with thesedocuments, the Federal Treasury closed federalbudget revenues and other federal budget ac�counts and federal budget revenues and other fed�eral budget accounts used in effecting paymentsfrom the federal budget.

To improve the automated processing by taxand customs bodies of information contained insettlement documents and raise the quality andenhance the efficiency of tax and customs con�trols over tax and duty payments and the trans�fer of funds to the budget accounts of all levelsof the Russian budget system, the Bank of Rus�sia issued Letter No. 111�T, dated August 12,2002, “On Indicating the Budget ClassificationCode and the Code of the National Classifier ofthe Constituent Territories (OKATO) of theRussian Federation,” in which it recommendedits branches and divisions and credit institu�tions to explain to their clients how they shouldfill in the settlement documents for the trans�

fer or recovery of funds from budget accountsat all levels of the Russian budget system. TheBank of Russia also drafted in collaborationwith the Ministry of Taxes and Duties and Min�istry of Finance regulations on filling in payerand payee identification data in the settlementdocuments for the transfer of taxes, duties andother mandatory payments to the Russian bud�get system.

Taking into consideration the change in theprocedure for transferring federal budget fundsfor expenditure financing, the Bank of Russia is�sued Operating Instruction No. 187�T, datedDecember 31, 2002, in which it notified its re�gional branches about the Finance Ministry’sOrder No. 116n, dated November 20, 2002,“On Approving the Procedure for the Transfer bythe Finance Ministry’s Federal Treasury Bodiesof Funds to the Federal Budget from Account40101 ‘Revenues Distributed by Federal TreasuryBodies among the Various Levels of the RussianFederation Budget System’ to Account 40105‘Federal Budget Funds.’”

To improve the provision of information forurgent decisions taken with regard to conductingoperations and using the instruments of monetarypolicy and compiling consolidated banking sectorliquidity forecasts, the Bank of Russia upgradedthe procedure for making a forecast on the basisof the balances of accounts of budgets of all levelsand made the necessary corrections in the com�piling of statements on the balances of federalbudget revenue and other federal budget ac�counts, submitted to the Finance Ministry andMinistry of Taxes and Duties.

In addition, the Bank of Russia issued a num�ber of specific instructions and regulations, suchas the instructions establishing the procedure forclosing personal federal budget accounts allocatedon a returnable and chargeable basis in the eventof the liquidation of the credit institution and us�ing these funds for financing and the procedurefor numbering personal accounts opened in thebalance sheet accounts of the Federal CompulsoryMedical Insurance Fund and regional compulsorymedical insurance funds.

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3. FOREIGN EXCHANGE REGULATION AND FOREIGN EXCHANGE CONTROL

o upgrade the system of foreign exchangeregulation and foreign exchange control,the Bank of Russia carried out the follow�

ing measures in the year under review:a) to promote the market principles of the func�

tioning of the domestic foreign exchange mar�ket and create more comfortable conditions forits participants, the Bank of Russia:

● expanded the segment of the market designedfor compulsory sale by exporters of their for�eign currency earnings (Bank of Russia Ordi�nance No. 1192�U, dated September 5, 2002,“On the Procedure for Selling Foreign Cur�rency on the Domestic Foreign Exchange Mar�ket of the Russian Federation”);

● reduced the amount of the ruble deposits resi�dent legal entities are required to make in buy�ing foreign exchange for advance paymentsunder import contracts (Bank of Russia Ordi�nance No. 1223�U, dated December 17, 2002,“On the Specifics of the Purchase by ResidentLegal Entities of Foreign Exchange with theRussian Federation Currency for the Effectua�tion of Payments under Import Contracts”);

b) to create more comfortable conditions for andpromote Russian business interests abroad,the requirement for resident legal entities toobtain permission for opening accounts in for�eign banks for servicing their representativeoffices and branches outside Russia was re�placed by the notification requirement (Bankof Russia Provision No. 201�P, dated Octo�ber 16, 2002, “On the Procedure for Open�ing and Managing Foreign Currency Accountsby Resident Legal Entities Abroad with thePurpose of Servicing their Representative Of�fices”);

c) to counter illegal capital flight in foreigntrade, the Bank of Russia jointly with theState Customs Committee upgraded theregulatory framework of foreign exchangecontrol over export operations, extendingfrom January 1, 2002, customs and bank�ing foreign exchange controls to settlementseffected in the following customs export re�gimes: re�export, temporary export and theprocessing of goods outside the customs ter�ritory.

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4. GKO—OFZ MARKET AND OPEN�MARKET OPERATIONS

o facilitate the implementation of the policyof upgrading the system of monetary regu�lation, the Bank of Russia issued the fol�

lowing regulations:— Provision No. 176�P, dated January 11, 2002,

“On the Procedure for Selling GovernmentSecurities by the Bank of Russia with an Ob�ligation of Reverse Repurchase.” Four OFZauctions were held by the Bank of Russia in2002 and in February and March 2002 theBank of Russia sold federal loan bonds on thesecondary market. The total value of fundsraised through reverse repurchase operationsamounted to 2.8 billion rubles;

— Order No. OD�740, dated November 10,2002, “On Direct Repo Transactions betweenthe Bank of Russia and Credit Institutions.”

Auctions where GKO—OFZ market dealersbuy funds have been held since November 18,2002. By the end of the year, the total valueof refinancing through direct repo operationshad totalled 26.1 billion rubles.To upgrade the mechanism of open�market

operations, the Bank of Russia carried out the fol�lowing measures:● pursuant to Article 121 of the 2003 Federal

Budget Law, the Bank of Russia approved andsubmitted to the Finance Ministry for approvala plan for refinancing up to 300 billion rublesof OFZ bonds in its portfolio without chang�ing the overall bond redemption schedule;

● transactions with Bank of Russia bonds(OBR) were added to the list of open�marketoperations (Article 39 of the Federal Law on

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the Central Bank of the Russian Federation(Bank of Russia);

● the Bank of Russia submitted to the FinanceMinistry draft amendments to the SecuritiesMarket Law and Law on the Protection of theLegitimate Interests of Investors, which liftedall restrictions on the issue of OBR bonds.The following regulations were issued to ease

controls over non�resident operations on theGKO—OFZ market:— Ordinance No. 1139, dated April 16, 2002,

“On the Transfer of Securities Accounted forin Special Non�resident C�type Accounts.”The document allowed the transfer of secu�rities between “depo” accounts of differentholders without effecting purchase/saletransactions.

— Ordinance No. 1155, dated June 3, 2002,“On Establishing the Procedure for Transfer�ring Securities Accounted for in Non�residentC�type Accounts to the Main Sections of theNon�resident Deposit Account.” The regula�tion permitted the transfer of corporate secu�rities and regional government bonds to themain sections of “depo” accounts.

— Ordinance No. 1156, dated June 3, 2002,“On Establishing the Procedure for Deposit�ing GKO and OFZ Bonds Kept in C�type Ac�counts and Subsequently Transferring Re�ceipts from their Sale (Redemption) to Spe�cial Non�resident C�type (Conversion) Ac�counts.” The document allowed non�residentsto repatriate each month their receipts fromthe sale (redemption) of one�twelfth of thevalue of government bonds transferred to thetransit section.

— Ordinance No. 1157, dated June 3, 2002,“On Amending Bank of Russia OrdinanceNo. 987�U, Dated June 27, 2001, ‘On theTransfer of Funds on Special Non�residentC�type (Investment) Accounts and the Periodof Time During Which Non�resident FundsShould Be Kept in Transit Accounts.’” Theregulation reduced to four months the timeperiod during which non�residents were re�quired to keep funds in transit accounts.To increase the liquidity of the GKO—OFZ

market, the Bank of Russia in 2002 decided toextend the duration of the government securitiestrading session by 30 minutes.

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MAJOR ACTIONS UNDERTAKEN IN 2002

TO UPGRADE BANKING REGULATION AND SUPERVISION

MEASURES TAKEN TO UPGRADE OFF�SITE SUPERVISION

AND INSPECTION OF CREDIT INSTITUTIONS

o establish the procedure for compiling con�solidated statements by credit and non�credit institutions, presenting them to the

Bank of Russia and using data from consolidatedstatements for the purposes of banking supervision,the Bank of Russia issued Provision No. 191�P,dated July 30, 2002, “On Consolidated State�ments” and Ordinance No. 1114�U, dated Febru�ary 21, 2002, “On Amending Bank of Russia Pro�vision No. 85�P, dated August 5, 1999, ‘On theProcedure for Using Data Reported by Non�creditInstitution Members of a Group in Compiling Con�solidated Statements by Credit Institutions.’”

In connection with the change in the proce�dure for accounting for securities, which requiredall securities to be divided into listed and unlisted(Bank of Russia Ordinance No. 1054�U, datedNovember 20, 2001, “On Amending AccountingRules for Credit Institutions in the Russian Fed�eration No. 61, Dated June 18, 1997”), the Bankof Russia issued the following documents:— Ordinance No. 1127�U, dated March 20,

2002, “On Amending Bank of Russia Provi�sion No. 159�P, Dated November 26, 2001,‘On the Methodology of Calculating OwnFunds (Capital) of Credit Institutions;’”

— Ordinance No. 1128�U, dated March 20,2002, “On Amending Bank of Russia Instruc�tion No. 1, Dated October 1, 1997, ‘On theProcedure for Regulating the Activities ofBanks.’”

The Bank of Russia also issued OrdinanceNo. 1141�U, dated April 18, 2002, “On Elimi�nating Discrepancies in Bank of Russia Regula�tions,” which stipulated that Bank of Russia Pro�vision No. 137�P, dated April 12, 2001, shouldnot apply to doubtful and (or) bad debts recog�nised as such for the purposes of tax accountingin connection with the coming into force of Sec�tion 25 of Part Two of the Tax Code of the Rus�sian Federation.

The Bank of Russia revised some of the prin�ciples of regulating currency risk of credit insti�tutions, setting a single limit on balance sheet andoff�balance sheet instruments as the foreign ex�change market stabilised and amended the pro�cedure for regulating the open currency positionlimits by authorised banks by using the currencyposition of capital. These changes were put intoeffect by Bank of Russia Ordinance No. 1142�U,dated April 19, 2002, “On Amending Bank ofRussia Instruction No. 41, Dated May 22, 1996,‘On Setting Open Currency Position Limits andMonitoring Compliance by Authorised Banks.’”

The Bank of Russia issued OrdinanceNo. 1147�U, dated May 6, 2002, “On AmendingBank of Russia Instruction No. 1, Dated Octo�ber 1, 1997, ‘On the Procedure for Regulating theActivities of Banks,’” in connection with the is�sue of Bank of Russia Ordinance No. 1118�U,dated March 13, 2002, “On Amending Account�ing Rules for Credit Institutions in the Russian

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Federation No. 61, Dated June 18, 1997,” whichintroduced some changes in the accounting pro�cedures used by credit institutions with regard tofederal budget funds.

In connection with the changes made in theFederal Law on Joint�Stock Companies, the Bankof Russia issued Ordinance No. 1181�U, datedJuly 25, 2002, “On Invalidating Bank of RussiaProvision No. 112�P, Dated April 24, 2000,‘On the Procedure for Creating and Using a Re�serve Fund by a Credit Institution.’”

After the Russian President approved a newapproach to the development of economic rela�tions with the Latvian Republic, the Bank of Rus�sia issued Ordinance No. 1196�U, dated October1, 2002, “On Invalidating Bank of Russia Ordi�nance No. 240�U, Dated May 27, 1998, ‘On theProcedure for Creating a Reserve for OperationsConducted by Resident Credit Institutions of theRussian Federation with Resident Legal Entitiesand Private Individuals of Latvia.’”

Drafting amendments to its foreign exchangeregulation and foreign exchange control envisag�ing the division of offshore zones into threegroups, depending on the extent of their reliabil�ity and compliance with international bankingregulation and supervision standards, the Bankof Russia drafted an ordinance “On Creating aReserve for Operations Conducted by Credit In�stitutions with Offshore Zone Residents.” Thisdraft regulation provided for building a more ef�fective system of requirements to reserve opera�tions conducted by Russian credit institutionswith offshore�based commercial representationsof resident banks of industrialised nations. It alsoestablished a procedure for creating a reserve foroperations with letters of credit and syndicatedloans, reworded the definition of forward trans�actions and operations involving the issue of guar�antees and included in the reserve calculation thecorresponding assets revalued owing to the changein the ruble’s exchange rate against foreign cur�rencies.

The Bank of Russia drafted the Official Clari�fication “On the Application of Bank of RussiaOrdinance No. 606�U, dated July 13, 1999,‘On Creating a Reserve for Operations Conductedby Russian Credit Institutions with Offshore ZoneResidents,’” explaining that Russian credit insti�tutions need not make a reserve for operations

conducted through correspondent accountsopened in the clearing centres of Ireland and theGrand Duchy of Luxembourg.

In 2002, the Bank of Russia carried out mea�sures aimed at implementing the provisions of theFederal Law on Countering the Legalisation(Laundering) of Criminally Obtained Incomesand the Financing of Terrorism. Specifically, itsupplied credit institutions with recommendationson how they should work out internal controlrules directed against money laundering and ter�rorist financing and established the procedure forpresenting data to the Financial Monitoring Com�mittee (FMC) and for exercising control over theobservance of the anti�laundering legislation bycredit institutions.

The measures taken by the Bank of Russia inthis area are as follows:● the Bank of Russia worked out methodologi�

cal recommendations for inspecting credit in�stitutions from the viewpoint of their obser�vance of the legislation designed to countermoney laundering and terrorist financing(Bank of Russia Operating InstructionNo. 27�T, dated March 6, 2002, “On Con�ducting Inspections of Credit Institutions”);

● taking into consideration the changes made inlegislation and the experience gained in 2002,the Bank of Russia upgraded the procedurefor reporting to the FMC operations conductedby credit institutions with money and otherproperty subject to mandatory control andother operations that may involve money laun�dering (Bank of Russia Provision No. 207�P,dated December 20, 2002, “On the Procedurefor Presenting Data by Credit Institutions tothe Authorised Body, Stipulated by the Fed�eral Law on Countering the Legalisation(Laundering) of Criminally Obtained Incomesand the Financing of Terrorism”);

● the Bank of Russia determined the specifics ofexercising control over the organisation andfunctioning in credit institutions of specialisedinternal control systems designed to countermoney laundering and terrorist financing(Bank of Russia Operating InstructionNo. 177�T, dated December 24, 2002,“On Bank of Russia Control over the Obser�vance by Credit Institutions of the Federal Lawon Countering the Legalisation (Laundering)

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of Criminally Obtained Incomes and the Fi�nancing of Terrorism”);

● taking into consideration that additional pro�visions for the revocation and cancellation ofbanking licences were included in the FederalLaw on Banks and Banking Activities, suchas repeated violations within one year of Ar�ticles 6 and 7 of the Federal Law on Counter�ing the Legalisation (Laundering) of Crimi�nally Obtained Incomes and the Financing ofTerrorism, the Bank of Russia amended itsOrdinance No. 1152�U, dated May 24, 2002,

“On Amending Bank of Russia OrdinanceNo. 1025�U, dated August 27, 2001, ‘On theProcedure for Initiating the Revocation ofBanking Licences from Credit Institutions inAccordance with Part 1 and Part 2 of Article20 of the Federal Law on Banks and BankingActivities’” and Ordinance No. 1154�U, datedMay 28, 2002, “On Amending Bank of Rus�sia Provision No. 264, dated April 2, 1996,‘On the Revocation of Banking Licences fromCredit Institutions in the Russian Federa�tion’”).

MEASURES TAKEN TO UPGRADE THE PROCEDURE FOR REGISTERING

CREDIT INSTITUTIONS AND LICENSING BANKING ACTIVITIES AND REGISTERING

SECURITY ISSUES OF CREDIT INSTITUTIONS

o ensure the transparency of the structureof ownership of stakes (shares) in creditinstitutions, the Bank of Russia issued Pro�

vision No. 184�P, dated March 19, 2002, “On theProcedure for Registering and Providing Infor�mation on the Affiliated Persons in Credit Insti�tutions,” which provided for collecting andanalysing information on persons capable of ex�erting significant influence on the activities ofcredit institutions. The Bank of Russia also is�sued Ordinance No. 1135�U, dated April 11,2002, “On Amending Bank of Russia OrdinanceNo. 7�U, Dated October 24, 1997, ‘On the Pro�cedure for Compiling and Presenting Reports byCredit Institutions to the Central Bank of theRussian Federation,’” which established theform of the report on a credit institution’s affili�ated persons.

In pursuance of Article 4 of the Federal Lawon Banks and Banking Activities, the Bank ofRussia issued Provision No. 197�P, dated Septem�ber 19, 2002, “On the Procedure for ProvidingInformation on the Bank Holding Companies,”which established the procedure for presentinginformation to the Bank of Russia by the parentorganisation (managing company) of a bank hold�ing company on the makeup of the bank holdingcompany and the nature of the relationship be�tween its members.

In 2002, the Bank of Russia issued a new ver�sion of its Instruction No. 102�I, dated July 22,2002, “On the Procedure for Issuing and Regis�tering Securities by Credit Institutions in theRussian Federation.” In connection with theamendments made to the Federal Law on Joint�Stock Companies (No. 134�FZ, dated October 31,2002), the Instruction changed the procedureused by the management of a credit institution inmaking the decision to place securities and in con�nection with the requirements of the Federal Lawon the Securities Market, it specified the provi�sions on the range of issuers who are required todisclose information in the form of quarterly re�ports on securities and material facts (develop�ments and actions) in their financial and busi�ness activities. In addition, the Bank of Russiaspecified the provisions regarding control over theobservance of banking legislation and Bank ofRussia regulations by purchasers in determiningthe grounds for the refusal to register, suspendor invalidate a securities issue.

In continuing to take steps to create equal con�ditions for the participation of residents and non�residents in the Russian banking system, the Bankof Russia issued Ordinance No. 1129�U, datedMarch 20, 2002, “On Amending Bank of RussiaProvision No. 437, dated April 23, 1997, ‘On theSpecifics of the Registration of Credit Institutions

T

184


with Foreign Stakes and on the Procedure for Ob�taining Bank of Russia Prior Permission to In�crease the Authorised Capital of a RegisteredCredit Institution with Non�resident Funds,’”which stipulated that the same requirementsshould be made to the minimum amount of theauthorised capital of a subsidiary credit institu�tion set up by a foreign bank as for the subsidiar�ies opened by Russian credit institutions.

To optimise the flows of information, the Bankof Russia issued Ordinance No. 1153�U, datedMay 24, 2002, “On Keeping Registers of PaperDocuments by Credit Institutions and TheirBranches and Divisions,” which cancelled therequirement for Bank of Russia regional branchesto keep registers of paper documents of credit in�stitutions and their branches and divisions.

Pursuant to subparagraph 4 of Article 14 ofthe Federal Law on Banks and Banking Activi�ties, the Bank of Russia issued OrdinanceNo. 1176�U, dated July 5, 2002, “On BusinessPlans of Credit Institutions,” which stipulated thecontents of credit institutions’ business plans andestablished the procedure for presenting them tothe Bank of Russia. The Ordinance was draftedto enable the Bank of Russia to evaluate:● the ability of a credit institution to ensure its

financial stability, meet prudential standardsand reserve requirements and comply with therequirements of the law with regard to theinterests of creditors and depositors;

● the ability of a credit institution to functionfor a long period of time as a profitable com�mercial enterprise;

● the efficiency of the risk management systemof a credit institution.Bank of Russia Ordinance No. 1177�U, dated

July 5, 2002, “On Amending Bank of Russia In�struction No. 75�I, dated July 23, 1998, ‘On theProcedure for Applying Federal Laws Regulat�ing the Procedure for Registering Credit Insti�tutions and Licensing Banking Activities’”brought these procedures into compliance withthe amended federal legislation (in respect to co�operation with the Ministry of Taxes and Du�ties on matters relating to the state registrationof credit institutions). In addition, new, morestringent requirements were imposed on creditinstitutions from the viewpoint of a creditinstitution’s financial stability and openness of

the structure of ownership of stakes (shares) ina credit institution.

In its Ordinance No. 1186�U, dated August14, 2002, “On Paying up the Authorised Capitalof Credit Institutions with Funds from Budgetsof All Levels, Government Extrabudgetary Fundsand Free Funds and Other Property Owned byFederal and Local Government Bodies,” the Bankof Russia drew up a list of documents that a creditinstitution must present to the correspondingBank of Russia regional branch for the latter toexamine the propriety of the participation in andpayment of the credit institution’s authorisedcapital and revised the procedure for monitoringcompliance with banking legislation in the casewhen shares (stakes) in a credit institution havebeen purchased by the federal, regional and localgovernments.

With its Operating Instruction No. 82�T,dated June 27, 2002, “On the Procedure for Co�operation between the Ministry of Taxes andDuties and Bank of Russia on Matters Pertainingto the State Registration of Credit Institutions,”the Bank of Russia notified its regional branchesabout the above procedure jointly established bythe Bank of Russia and the Ministry of Taxes andDuties (No. BG�16�09/86 and No. 01�33/2202,dated June 26, 2002) for the purpose of efficientdocument exchange.

In connection with Russian Federation Gov�ernment Resolution No. 454�r, dated April 2,2002, on the cessation of the participation ofstate enterprises and government organisationsin the authorised capital of credit institutions,the Bank of Russia drafted Operating Instruc�tion No. 102�T, dated June 23, 2002, “On Pass�ing Information to the Property Ministry,” whichestablished the procedure which the Bank of Rus�sia regional branches should use in reporting thediscovered instances of such participation to theProperty Ministry.

By its Operating Instruction No. 171�T, datedDecember 10, 2002, “On the Procedure for Co�operation between the Ministry of Taxes andDuties and Bank of Russia on Matters Pertainingto the Passing of Registration Cases of Credit In�stitutions,” the Bank of Russia notified its re�gional branches about the above procedure jointlyestablished by the Bank of Russia and the Minis�try of Taxes and Duties (No. BG�16�09/145 and

185


No. 01�33�2/4393, dated December 9, 2002).The new registration procedure for legal entitiesrequires the transfer of their registration cases tothe Ministry of Taxes and Duties from the Bankof Russia and other bodies which previously reg�istered legal entities. The new regulation containsthe list of documents that must be passed on andthe procedure for doing so.

Bank of Russia Operating InstructionNo. 180�T, dated December 27, 2002, “On SomeIssues Relating to the Application of the Legisla�tion on the Notification of the Bank of Russiaabout the Election of Members of the Boards ofDirectors (Supervisory Boards) of Credit Insti�tutions,” drafted in connection with the changesmade in the applicable federal legislation, con�tained recommendations on the procedure forusing the criteria established by law for evaluat�ing the business reputation of candidates for theposition of members of the boards of directors (su�pervisory boards) of credit institutions pursuantto Articles 11.1 and 16 of the Federal Law onBanks and Banking Activities and clarified theprocedure for notifying the Bank of Russia re�gional branches about the election of members ofthe boards of directors (supervisory boards) ofcredit institutions and the procedure for pena�

lising credit institutions for electing persons whosebusiness reputation does not meet the qualifica�tion requirements and for failing to obey a Bankof Russia order to replace a member of the boardof directors (supervisory board) within the re�quired period of time.

In compliance with the requirements of Bankof Russia Ordinance No. 586�U, dated June 24,1999, “On the Minimum Amount of the Autho�rised Capital of the Newly�Created Credit Insti�tutions and the Amount of Own Funds (Capital)of the Banks Applying for a General Banking Li�cence and Credit Institutions Applying for theChange of Status from that of a Non�Bank CreditInstitution to that of a Bank,” the Bank of Rus�sia issued Operating Instructions No. 1�T, datedJanuary 3, 2002, No. 40�T, dated April 5, 2002,No. 86�T, dated July 3, 2002, No. 133�T, datedOctober 2, 2002, and No 186�T, dated Decem�ber 31, 2002, which established on a quarterlybasis the ruble equivalents of the minimumamount of authorised capital for the newly�cre�ated credit institutions and the amount of ownfunds (capital) of the banks applying for a gen�eral banking licence and credit institutions apply�ing for the change of status from that of a non�bank credit institution to that of a bank.

MEASURES TAKEN TO IMPROVE THE METHODS OF PREVENTING BANKRUPTCIES

OF CREDIT INSTITUTIONS, REVOKING BANKING LICENCES AND CONTROLLING

LIQUIDATION PROCEDURES IN CREDIT INSTITUTIONS

ank of Russia Ordinance No. 1154�U,dated May 28, 2002, “On AmendingBank of Russia Provision No. 264, dated

April 2, 1996, ‘On the Revocation of Banking Li�cences from Credit Institutions in the Russian Fed�eration’” brought the licence revocation procedureinto compliance with the amended Federal Law onBanks and Banking Activities, which stipulated thatthe Bank of Russia must revoke the banking licencefrom a credit institution in the following cases:● if the credit institution’s capital adequacy ra�

tio is less than 2%;● if the credit institution fails to comply with the

Bank of Russia requirement to match the size

of its authorised capital with its own funds(capital);

● if the credit institution is unable to meet credi�tors’ claims under pecuniary obligations.It was stipulated that the Bank of Russia must

appoint a provisional administration to a creditinstitution no later than on the day following thelicence revocation date.

In connection with the amendments made inArticle 20 of the Federal Law on Banks and Bank�ing Activities, the Bank of Russia amended itsOrdinance No. 1025�U, dated August 27, 2001,“On the Procedure for Initiating the Revocationof Banking Licence from Credit Institutions in

В

186


Accordance with Part 1 and Part 2 of Article 20of the Federal Law on Banks and Banking Activi�ties,” which stipulated that banking licenceshould be revoked from a credit institution if ithas repeatedly violated within one year the pro�visions of Articles 6 and 7 (except for point 3 ofArticle 7) of the Federal Law on Countering theLegalisation (Laundering) of Criminally ObtainedIncomes (Bank of Russia Ordinance No. 1152�U,dated May 24, 2002).

In compliance with the requirements of theFederal Law on Insolvency (Bankruptcy) ofCredit Institutions, which stipulates that a Bankof Russia employee may perform the functions ofthe receiver in the absence of the bankrupt creditinstitution, the Bank of Russia issued OrdinanceNo. 1108�U, dated February 12, 2002, “On theProcedure for Appointing a Bank of Russia Em�ployee as a Receiver in the Absence of a Bank�rupt Credit Institution and his Functions,” whichestablished:● the procedure for submitting to an arbitration

court the proposal for nominating a candidatefor the appointment as a receiver;

● the powers and responsibility of the receiver;● the procedure for creating from the staff of the

supervisory division a reserve of candidates forthe appointment as receivers in the absenceof a bankrupt credit institution;

● the procedure for drawing up a budget of ex�penditure;

● the reporting procedure for the receiver.

Bank of Russia Provision No. 175�P, datedJanuary 11, 2002, “On Amending Bank of Rus�sia Provision No. 132�P, Dated January 17,2001, ‘On Conducting Bank of Russia Inspectionsof the Activities of Receivers in Bankrupt CreditInstitutions’” stipulated that the Bank of Russiashould inspect the liquidators of credit institutionsand established the duties of receivers and liqui�dators in assisting inspections.

Bank of Russia Ordinance No. 1162�U, datedJune 13, 2002, “On Amending Bank of RussiaProvision No. 125�P, Dated October 4, 2000,‘On the Procedure for Compiling an Interim Liq�uidation Balance Sheet and Liquidation BalanceSheet of a Credit Institution and Their Approvalby Bank of Russia Regional Branches’” providedfor tightening controls over the liquidation ofcredit institutions that had their licences revoked.Specifically, it stipulated that the liquidatororganisation should take stock of the property andliabilities of the credit institution being liquidated,examining and confirming in writing their pres�ence and condition and evaluate the property ofthe credit institution. In addition, the Ordinancespelled out the details of the voluntary liquida�tion of a credit institution.

Overall, in 2002 the Bank of Russia issued 58regulations and operating instructions pertainingto the licensing and financial rehabilitation ofcredit institutions, including three Provisions, oneInstruction, 18 Ordinances and 36 Operating In�structions.

S T A T I S T I C A L T A B L E S

187

1. Dynamics of major macroeconomic indicators ........................................................... 189

2. Inflation structure .............................................................................................. 190

3. GDP production structure in basic prices ................................................................. 190

4. Structure of GDP calculated by income use method in current market prices .................. 191

5. Dynamics of GDP consumption elements in comparable prices ..................................... 191

6. Structure of GDP formation by source of income ....................................................... 191

7. Balance of household money income and expenditure in Russia .................................... 192

8. Income differentiation of population ....................................................................... 193

9. Dynamics of major corporate financial performance indicators in 2002 .......................... 193

10. State of payments for products shipped by major taxpayers and industrial monopolies ....... 194

11. Russia’s foreign trade .......................................................................................... 195

12. Commodity structure of Russian exports ................................................................. 196

13. Commodity structure of Russian imports ................................................................. 197

14. Russia’s foreign trade turnover with major trading partners ........................................ 198

15. Russian exports to major trading partners ............................................................... 199

16. Russian imports from major trading partners ........................................................... 200

17. Structure of Russian government domestic debt as of January 1, 2003 .......................... 201

18. Finance Ministry debt to Bank of Russia as of January 1, 2003 .................................... 201

19. Institutes of financial intermediation ...................................................................... 202

20. Outstanding Russian government foreign currency bonded loans as of January 1, 2003 .... 203

21. Russia’s balance of payments for 2002 .................................................................... 204

22. Structure of foreign investment in Russia in 2002 ..................................................... 207

STATISTICAL TABLES

List of Tables

188


23. Structure of Russian resident investment in foreign assets in 2002 ................................ 207

24. International investment position of Russian banking system ....................................... 208

25. Dynamics of Russian debt to international financial organisations in 2002 ..................... 211

26. Dynamics of Russia’s international reserves in 2002 .................................................. 211

27. Russia’s foreign debt in 2002 ................................................................................ 212

28. Major economic development indicators for CIS countries in 2002 ................................ 214

29. Major economic development indicators for non�CIS countries in 2000—2002 ................ 216

30. Money supply (national definition) ........................................................................ 218

31. Average monthly rates of money supply growth in 2002 ............................................. 218

32. M2 structure ..................................................................................................... 218

33. Monetary base and its structure ............................................................................. 219

34. Credit institutions’ analytical accounts .................................................................... 220

35. Monetary survey ................................................................................................ 220

36. Major indicators of Russian payment system ............................................................ 221

37. Sanctions applied to credit institutions in 2002 ......................................................... 224

38. Monitoring liquidation of credit institutions ............................................................. 225

39. Note structure of 1997 Bank of Russia banknotes in circulation ................................... 229

40. Structure of 1997 Bank of Russia coins in circulation ................................................. 229

41. Comprehensive internal audit inspections of Bank of Russiabranches and divisions in 2002 .............................................................................. 230

42. Bank of Russia stakes in Russian and foreign credit institutionsand other organisations........................................................................................ 231


189

Table 1

Note. Tables 1 to 11 are based on data compiled by State Statistics Committee (Goskomstat) and Bank of Russia

calculations (as of April 25, 2003); Tables 12 to 16 are based on data reported by the State Customs Committee and

Goskomstat (as of April 25, 2003), which are methodologically somewhat different from balance of payments

statistics. Balance of payments statistics contain, in addition to foreign trade data based on customs declarations,

information on individual and corporate foreign trade operations that have not been registered by the State Customs

Committee, export and import volumes of goods that have not crossed the Russian border and some other ele�

ments. State Customs Committee data are necessary for analysis of commodity and geographical structure of Russia’s

foreign trade.

)raeysuoiverpfo%sa(SROTACIDNICIMONOCEORCAMROJAMFOSCIMANYD )raeysuoiverpfo%sa(SROTACIDNICIMONOCEORCAMROJAMFOSCIMANYD )raeysuoiverpfo%sa(SROTACIDNICIMONOCEORCAMROJAMFOSCIMANYD )raeysuoiverpfo%sa(SROTACIDNICIMONOCEORCAMROJAMFOSCIMANYD )raeysuoiverpfo%sa(SROTACIDNICIMONOCEORCAMROJAMFOSCIMANYD

0002 1002 2002

tcudorpcitsemodssorG 0.901 0.501 3.401

:hcihwfo

sdoogfonoitcudorP 0.111 5.601 2.301

:hcihwfo

yrtsudni— 5.901 9.401 7.301

erutlucirga— 7.211 4.111 5.101

noitcurtsnoc— 9.511 9.901 7.201

secivresfonoitcudorP 5.701 5.301 4.501

secivrestekraM 8.801 2.401 9.501

:hcihwfo

snoitacinummocdnatropsnart— 0.601 3.501 6.501

stnemerucorpdnagniretaccilbup,edart— 0.311 9.301 1.801

secivrestekram�noN 3.101 4.99 4.201

semit,xednirotalfedPDG 504.1 871.1 251.1

,)raeysuoiverpforebmeceDotrebmeceD(xedniecirpremusnoCsemit 202.1 681.1 151.1

ytivitcudorpruobaL 9.501 7.401 8.101

tnemtsevnilatipacdexiF 4.711 0.011 6.201

revonrutedartliateR 8.801 7.011 2.901

,ygolodohtemOLIotgnidroccaetartnemyolpmenUegarevadesilaunna,noitalupopevitcayllacimonocefo%sa 5.01 0.9 0.8

190


Table 2

Table 3

* Calculated according to Goskomstat methodology.

* Unlike GDP in market prices, GDP in basic prices does not include food taxes but includes food subsidies.

Data in basic prices are shown without excluding indirectly measured financial intermediation services.

ERUTCURTSNOITALFNI ERUTCURTSNOITALFNI ERUTCURTSNOITALFNI ERUTCURTSNOITALFNI ERUTCURTSNOITALFNI

1002 2002

nihtworGegatnecrep

stniop

noitubirtnoc%htworgot

nihtworGegatnecrep

stniop

noitubirtnoc%htworgot

)rebmeceDotrebmeceD(noitalfnifoetarlareneG 6.81 001 1.51 001

:oteudhtworgnoitalfnI

*noitalfnieroc— 2.31 8.07 4.8 6.55

secivresdnasdoogfosecirpnihtworg—noitaluclac*noitalfnierocnidedulcniton 4.5 2.92 7.6 4.44

:hcihwfo

secirptiurfdnaelbategevnihtworg— 4.1 4.7 8.1 7.11

secirpleufdnaecivresdetalugernihtworg— 1.4 8.12 9.4 7.23

*)%(SECIRPCISABNIERUTCURTSNOITCUDORPPDG *)%(SECIRPCISABNIERUTCURTSNOITCUDORPPDG *)%(SECIRPCISABNIERUTCURTSNOITCUDORPPDG *)%(SECIRPCISABNIERUTCURTSNOITCUDORPPDG *)%(SECIRPCISABNIERUTCURTSNOITCUDORPPDG

0002 1002 2002

tcudorpcitsemodssorG 001 001 001

:hcihwfO

sdoogfonoitcudorP 0.54 9.24 4.04

:hcihwfo

yrtsudni— 4.13 1.82 5.62

erutlucirga— 4.6 5.6 8.5

noitcurtsnoc— 6.6 5.7 3.7

secivresfonoitcudorP 0.55 1.75 6.95

secivrestekraM 6.64 0.84 9.94

:hcihwfo

snoitacinummocdnatropsnart— 0.9 3.9 9.9

stnemerucorpdnagniretaccilbup,edart— 7.32 5.22 7.22

secivrestekram�noN 4.8 1.9 7.9


191

Table 5

Table 4

Table 6

)%(SECIRPTEKRAMTNERRUCNIDOHTEMESUEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMESUEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMESUEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMESUEMOCNIYBDETALUCLACPDGFOERUTCURTS )%(SECIRPTEKRAMTNERRUCNIDOHTEMESUEMOCNIYBDETALUCLACPDGFOERUTCURTS

0002 1002 2002

dohtemesuemocniybdetaluclacPDG 001 001 001

noitpmusnoclanifnoerutidnepxE 3.16 2.56 3.86

:hcihwfo

sdlohesuoh— 1.54 8.74 0.05

gnidivorpsnoitasinagrotiforp�nondnaseicnegatnemnrevog—sdlohesuohotsecivres 2.61 4.71 3.81

noitalumuccassorG 6.81 1.22 1.12

:hcihwfo

noitamroflatipacdexifssorg—)selbaulavfoesahcruptengnidulcni( 9.61 7.81 9.71

seirotnevniniegnahc— 7.1 4.3 2.3

secivresdnasdoogfostropxeteN 1.02 7.21 6.01

)raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDGFOSCIMANYD )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDGFOSCIMANYD )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDGFOSCIMANYD )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDGFOSCIMANYD )raeysuoiverpfo%sa(SECIRPELBARAPMOCNISTNEMELENOITPMUSNOCPDGFOSCIMANYD

0002 1002 2002

PDG 0.901 0.501 3.401

:hcihwfo

noitpmusnoclanifnoerutidnepxE 4.701 2.701 9.601

rotcesdlohesuoh— 3.901 9.901 5.801

seicnegatnemnrevog— 4.101 2.99 4.201

snoitasinagrotiforp�non— 2.001 9.101 6.401

)selbaulavfoesahcruptengnidulcni(noitalumuccassorG 9.131 3.911 6.101

secivresdnasdoogfostropxeteN 8.39 0.58 6.59

)%(EMOCNIFOECRUOSYBNOITAMROFPDGFOERUTCURTS )%(EMOCNIFOECRUOSYBNOITAMROFPDGFOERUTCURTS )%(EMOCNIFOECRUOSYBNOITAMROFPDGFOERUTCURTS )%(EMOCNIFOECRUOSYBNOITAMROFPDGFOERUTCURTS )%(EMOCNIFOECRUOSYBNOITAMROFPDGFOERUTCURTS

0002 1002 2002

tcudorpcitsemodssorG 001 001 001

:hcihwfo

seeyolpmednasrekrowderihfoseiralasdnasegaw—)seiralasdnasegawneddihgnidulcni( 2.04 7.24 4.64

stropmidnatuptuonosexatten— 1.71 5.51 6.31

emocnideximssorgdnatiforpssorg— 7.24 8.14 0.04

192


Table 7

* Savings include increase (decrease) in deposits, purchase of securities, change in accounts of self�employed

entrepreneurs, change in debt on loans and purchase of real estate.

)selburnoillim(AISSURNIERUTIDNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNIERUTIDNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNIERUTIDNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNIERUTIDNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB )selburnoillim(AISSURNIERUTIDNEPXEDNAEMOCNIYENOMDLOHESUOHFOECNALAB

1002 2002%sa2002

1002fo

emocniyenoM 8.253,813,5 9.407,097,6 7.721

seiralasdnasegaW 0.357,734,3 0.834,394,4 7.031

erahs% 6.46 2.66

srefsnartlaicoS 0.430,218 0.058,310,1 9.421

erahs% 3.51 9.41

seitivitcalairuenerpertnemorfemocnI 0.987,166 0.711,028 9.321

erahs% 4.21 1.21

ytreporpmorfemocnI 0.715,703 0.730,233 0.801

erahs% 8.5 9.4

emocnirehtO 8.952,99 9.262,131 2.231

erahs% 9.1 9.1

erutidnepxeyenoM 8.163,834,4 5.370,295,5 0.621

erutidnepxeremusnoc— 8.363,569,3 2.885,869,4 3.521

snoitubirtnocdnastnemyapyroslupmoc— 0.899,274 3.584,326 8.131

esahcrupdnadnahnihsacdnasgnivasnihtworGegnahcxengieroffo 0.199,978 4.136,891,1 2.631

*sgnivas— 4.691,574 9.157,707 9.841

:hcihwfo

seitirucesdnastisoped— 0.477,591 0.900,942 2.721

egnahcxengieroffoesahcrup— 6.528,003 0.546,173 5.321

dnahnihsac— 0.969,301 5.432,911 7.411

:drocerehtroF

foemocniyenomnierahs%

erutidnepxeremusnoc— 6.47 2.37

snoituburtnocdnastnemyapyroslupmoc— 9.8 2.9

sgnivas— 9.8 4.01

:hcihwfo

seitirucesdnastisoped— 7.3 7.3

egnahcxengieroffoesahcrup— 7.5 5.5

dnahnihsac— 0.2 8.1

emocniyenomelbasopsiD 1.486,648,4 6.969,961,6 3.721

fomehtnierahs%

erutidnepxeremusnoc— 8.18 5.08

sgnivas— 8.9 5.11

:hcihwfo

seitirucesdnastisoped— 0.4 0.4

egnahcxengieroffoesahcrup— 2.6 0.6

dnahnihsac— 1.2 9.1


193

Table 8

Table 9

* 2002 — loss, 2001 — profit.

** Losses.

NOITALUPOPFONOITAITNEREFFIDEMOCNI NOITALUPOPFONOITAITNEREFFIDEMOCNI NOITALUPOPFONOITAITNEREFFIDEMOCNI NOITALUPOPFONOITAITNEREFFIDEMOCNI NOITALUPOPFONOITAITNEREFFIDEMOCNI

0002 1002 2002

*semit,oitarsdnuF 8,31 41 41

**stinu,tneiciffeociniG 993.0 893.0 893.0

riehtneewtebroderapmocspuorgnoitalupopehtnihtiwsegarevaemocnineewteboitarehtsioitarsdnufehT*

.emocnilatotniserahs

dlohesuohfonoitubirtsidlautcaehthcihwottnetxeehtswohs)xedninoitartnecnocemocni(tneiciffeociniGehT**

sdrawotsdnettneiciffeociniGehtemocnifonoitubirtsidneveehtnI.enilnoitubirtsidneveehtmorfsetaivedemocni

.1ottneiciffeociniGehtresolceht,noitalupopehtfonoitaitnereffidemocniehtretaergeht;orez

)1002fo%sa(2002NISROTACIDNIECNAMROFREPLAICNANIFETAROPROCROJAMFOSCIMANYD )1002fo%sa(2002NISROTACIDNIECNAMROFREPLAICNANIFETAROPROCROJAMFOSCIMANYD )1002fo%sa(2002NISROTACIDNIECNAMROFREPLAICNANIFETAROPROCROJAMFOSCIMANYD )1002fo%sa(2002NISROTACIDNIECNAMROFREPLAICNANIFETAROPROCROJAMFOSCIMANYD )1002fo%sa(2002NISROTACIDNIECNAMROFREPLAICNANIFETAROPROCROJAMFOSCIMANYD

)ssol(tiforP

stessagnikroW selbayaP selbavieceR

latot:hcihwfoyratenom

sdnuflatot

:hcihwfoeudrevo

tbedlatot

:hcihwfoeudrevo

tbed

latoT 1.18 0.321 2.931 2.411 8.19 1.411 4.09

yrtsudnI 7.37 8.811 7.161 4.901 5.78 5.801 2.59

:hcihwfo

yrtsudnirewop�cirtcele— 3.54 9.501 4.911 7.38 4.07 9.88 7.48

rotcesleuf— 4.57 5.721 7.262 2.521 7.19 0.121 5.501

ygrullatemsuorref— 1.721 2.321 7.512 0.011 9.28 3.301 4.77

ygrullatemsuorref�non— 1.16 7.59 3.29 4.201 4.29 6.69 9.98

lacimehcortepdnalacimehc—yrtsudni 5.24 3.711 0.811 1.201 6.001 8.511 8.021

gnidliub�enihcam—gnikrowlatemdna 7.76 7.121 4.231 8.011 9.98 5.901 5.59

gnikrowdoow,rebmit—yrtsudnirepap�dna�plupdna 7.56 2.421 8.231 7.301 7.49 2.631 1.011

slairetamgnidliub— 4.78 2.721 5.031 2.211 0.49 1.121 8.901

yrtsudnithgil— *— 9.321 8.821 9.801 8.401 1.111 7.89

yrtsudnidoof— 4.89 6.131 5.911 4.311 5.98 3.611 7.58

erutlucirgA 2.7 6.511 0.521 0.011 6.99 5.811 0.901

tropsnarT 7.47 6.321 4.451 3.501 6.17 5.201 4.99

snoitacinummoC 3.531 6.711 6.49 6.321 0.39 8.931 8.98

noitcurtsnoC 0.27 3.321 3.541 6.511 8.59 9.011 0.09

gniretaccilbupdnaedarT 6.08 9.521 4.721 3.011 2.901 0.801 4.66

rotcessecivreslanummocdnagnisuoH **semit4yb 3.321 5.601 6.901 6.101 6.211 3.99

194


Table 10

* 2002 structure and methodology.

)DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSSTCUDORPROFSTNEMYAPFOETATS )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSSTCUDORPROFSTNEMYAPFOETATS )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSSTCUDORPROFSTNEMYAPFOETATS )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSSTCUDORPROFSTNEMYAPFOETATS )DEDIVORPSECIVRESDNADEMROFREPKROW(DEPPIHSSTCUDORPROFSTNEMYAPFOETATS

SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB SEILOPONOMLAIRTSUDNIDNASREYAPXATROJAMYB

*1002 2002

noillibselbur

foerutcurts%,stnemyap

noillibselbur

foerutcurts%,stnemyap

deppihsstcudorpfoemuloV 2.179,4 7.147,5

hcihwfo

stcudorprof�diap— 8.984,4 0.001 2.091,5 0.001

:htiwrofdiapstcudorphcihwfo

yenom— 5.674,3 4.77 2.552,4 0.28

setonyrossimorp— 8.743 7.7 6.723 3.6

seitiruces— 6.3 1.0 4.1 0.0

snoitagilboyrainucepnosmialcfotnemngissa— 0.71 4.0 5.71 3.0

smialcfognitten— 5.524 5.9 9.173 2.7

stnemegnarraretrab— 9.301 3.2 4.87 5.1

stnemelttesfosdnikrehto— 7.611 6.2 2.831 7.2

ST

AT

IS

TI

CA

L T

AB

LE

S

195

Table 11

EDARTNGIEROFS’AISSUR EDARTNGIEROFS’AISSUR EDARTNGIEROFS’AISSUR EDARTNGIEROFS’AISSUR EDARTNGIEROFS’AISSUR

)ygolodohtemstnemyapfoecnalabybdetaluclac( )ygolodohtemstnemyapfoecnalabybdetaluclac( )ygolodohtemstnemyapfoecnalabybdetaluclac( )ygolodohtemstnemyapfoecnalabybdetaluclac( )ygolodohtemstnemyapfoecnalabybdetaluclac(

srallodSUnoilliB raeysuoiverpfo%saetarhtworG

7991 8991 9991 0002 1002 2002 7991 8991 9991 0002 1002 2002

seirtnuocllahtiW

revonruT 9.851 5.231 1.511 9.941 6.551 2.861 7.001 4.38 9.68 2.031 8.301 1.801

stropxE 9.68 4.47 6.57 0.501 9.101 2.701 9.69 7.58 5.101 0.931 0.79 3.501

stropmI 0.27 0.85 5.93 9.44 8.35 0.16 7.501 6.08 1.86 5.311 8.911 4.311

ecnalaB 9.41 4.61 0.63 2.06 1.84 3.64 1.96 2.011 2.912 1.761 0.08 2.69

seirtnuocSIC�nonhtiW

revonruT 2.121 4.201 7.29 2.221 3.721 8.931 4.201 4.48 6.09 8.131 2.401 8.901

stropxE 8.76 7.85 6.36 8.09 6.68 0.19 4.59 5.68 4.801 8.241 4.59 0.501

stropmI 4.35 7.34 2.92 4.13 7.04 8.84 9.211 9.18 7.66 8.701 6.921 9.911

ecnalaB 4.41 9.41 4.43 3.95 9.54 2.24 5.06 6.301 3.032 5.271 3.77 9.19

seirtnuocSIChtiW

revonruT 7.73 1.03 4.22 7.72 3.82 4.82 6.59 9.97 3.47 7.321 3.201 4.001

stropxE 1.91 8.51 0.21 2.41 3.51 3.61 7.201 8.28 0.67 8.811 2.701 6.601

stropmI 6.81 3.41 4.01 4.31 0.31 2.21 3.98 9.67 6.27 4.921 1.79 2.39

ecnalaB 5.0 5.1 6.1 8.0 2.2 1.4 — 9.503 3.801 9.05 1.172 2.581

196

BA

NK

O

F R

US

SI

A2

00

2A

NN

UA

L R

EP

OR

T

Table 12

STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC STROPXENAISSURFOERUTCURTSYTIDOMMOC

%,erutcurtS raeysuoiverpfo%sasetarhtworG

7991 8991 9991 0002 1002 2002 7991 8991 9991 0002 1002 2002

latoT 001 001 001 001 001 001 001 48 201 141 79 601

,stcudorplareniM 3.84 8.24 8.44 8.35 7.45 0.55 001 47 701 071 89 701

:hcihwfo

ygrenednaleuf— 4.74 6.14 0.44 1.35 1.45 4.45 001 47 801 171 99 701

:hcihwfo

lio— 4.71 4.41 4.91 5.42 6.42 1.72 39 96 831 971 79 711

saglarutan— 3.91 8.81 6.51 1.61 8.71 0.51 211 28 58 741 701 98

stcudorplatemdnaslateM 3.02 6.12 1.02 9.61 7.41 1.41 401 98 59 911 48 201

selcihevtropsnartdnatnempiuqe,yrenihcaM 5.01 5.11 8.01 8.8 4.01 4.9 901 29 69 511 511 69

rebburdnaslacimehC 5.8 6.8 5.8 2.7 5.7 9.6 79 58 101 021 101 89

stcudorprepap�dna�plupdnarebmiT 2.4 0.5 1.5 3.4 4.4 6.4 001 001 301 021 99 111

mehtfoedamselcitradnaslatemsuoicerp,senotsmeG 8.3 9.5 0.6 8.4 1.4 5.4 28 131 401 311 38 611

)selitxettpecxe(slairetamwarlarutlucirgadnasffutsdooF 9.1 0.2 3.1 6.1 9.1 5.2 98 88 07 461 711 341

raewtoofdnasdoogelitxet,selitxeT 1.1 1.1 1.1 8.0 8.0 8.0 09 98 101 101 89 011

mehtfoedamselcitradnasruf,rehtaeL 5.0 6.0 3.0 3.0 2.0 3.0 001 001 25 031 58 711

sdoogrehtO 9.0 0.1 9.1 6.1 3.1 9.1 76 88 991 511 28 351

:drocerehtroF

delipmocatad(srallodSUnoillib,stropxelatoT)eettimmoCscitsitatSetatSdnaeettimmoCsmotsuCetatSyb 0.58 3.17 9.27 1.301 0.001 2.601

ST

AT

IS

TI

CA

L T

AB

LE

S

197

STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC STROPMINAISSURFOERUTCURTSYTIDOMMOC


7991 8991 9991 0002 1002 2002 7991 8991 9991 0002 1002 2002

latoT 001 001 001 001 001 001 511 28 07 211 421 011

selcihevtropsnartdnatnempiuqe,yrenihcaM 1.53 8.53 1.33 4.13 0.43 1.63 721 48 46 601 431 711

)selitxettpecxe(slairetamwarlarutlucirgadnasffutsdooF 1.52 6.42 6.62 8.12 0.22 4.22 611 08 57 19 521 211

rebburdnaslacimehC 3.41 1.51 1.61 9.71 2.81 6.61 511 78 47 521 621 101

stcudorplatemdnaslateM 0.7 9.6 2.7 1.8 2.7 3.6 59 18 37 621 011 69

raewtoofdnastcudorpelitxet,selitxeT 5.4 1.4 2.5 9.5 5.5 3.5 901 57 88 621 511 601

stcudorprepap�dna�plupdnarebmiT 6.3 9.3 6.3 8.3 0.4 3.4 721 98 36 021 031 811

,stcudorplareniM 8.5 5.5 0.4 3.6 1.4 7.3 111 77 05 771 08 001

:hcihwfo

stcudorpygrenednaleuf— 3.4 1.4 6.2 3.4 5.2 2.2 511 87 34 881 17 99

mehtfoedamselcitradnasruf,rehtaeL 4.0 2.0 3.0 4.0 5.0 4.0 611 05 78 641 571 39

mehtfoedamselcitradnaslatemsuoicerp,senotsmeG 2.0 1.0 2.0 2.0 1.0 1.0 71 43 031 161 53 241

sdoogrehtO 1.4 8.3 8.3 1.4 5.4 8.4 501 18 07 811 431 811

:drocerehtroF

delipmocatad(srallodSUnoillib,stropmilatoT)eettimmoCscitsitatSetatSdnaeettimmoCsmotsuCetatSyb 0.35 6.34 3.03 9.33 9.14 2.64

Table 13

198

BA

NK

O

F R

US

SI

A2

00

2A

NN

UA

L R

EP

OR

T

Table 14

SRENTRAPGNIDARTROJAMHTIWREVONRUTEDARTNGIEROFS’AISSUR SRENTRAPGNIDARTROJAMHTIWREVONRUTEDARTNGIEROFS’AISSUR SRENTRAPGNIDARTROJAMHTIWREVONRUTEDARTNGIEROFS’AISSUR SRENTRAPGNIDARTROJAMHTIWREVONRUTEDARTNGIEROFS’AISSUR SRENTRAPGNIDARTROJAMHTIWREVONRUTEDARTNGIEROFS’AISSUR


7991 8991 9991 0002 1002 2002 7991 8991 9991 0002 1002 2002

latoT 001 001 001 001 001 001 501 38 09 331 401 701

DCEO 3.75 4.85 2.85 4.75 0.85 9.75 621 58 98 131 501 701

UE 5.43 9.33 9.43 1.53 7.63 5.63 011 28 39 331 801 701

SIC 3.22 8.12 5.81 6.81 1.81 9.61 101 18 67 331 101 001

EEC 5.31 4.21 8.21 8.41 8.31 8.21 311 67 29 451 69 001

seirtnuoccitlaB 0.3 6.2 0.3 8.3 0.3 0.3 621 17 701 861 18 801

ynamreG 5.9 8.9 1.01 6.9 6.01 6.9 011 58 39 621 411 79

suraleB 8.6 1.8 8.6 8.6 6.6 5.6 441 89 57 331 101 601

ylatI 5.4 4.4 8.4 2.6 4.6 3.6 021 18 89 271 801 601

anihC 8.3 8.3 3.4 5.4 1.5 0.6 29 38 201 041 611 721

eniarkU 1.8 7.7 1.7 3.6 4.6 9.5 18 97 38 911 501 99

sdnalrehteNehT 2.4 2.4 2.4 7.3 9.3 4.5 331 58 09 711 901 941

ASU 2.6 0.8 9.6 4.5 2.5 5.4 011 801 77 301 101 39

dnalreztiwS 9.2 1.3 5.3 0.3 9.1 8.3 79 78 301 311 56 312

dnaloP 8.2 8.2 1.3 8.3 6.3 3.3 721 38 001 161 001 79

KU 1.3 6.3 5.3 0.4 7.3 2.3 001 79 58 551 59 39

ecnarF 3.2 7.2 4.2 3.2 9.2 0.3 211 59 08 621 431 901

dnalniF 4.3 1.3 3.3 0.3 1.3 9.2 801 67 69 121 801 101

natshkazaK 8.3 3.3 5.2 2.3 4.3 9.2 39 27 96 961 701 19

yekruT 0.2 1.2 9.1 5.2 4.2 7.2 321 88 97 771 79 221

napaJ 8.2 6.2 5.2 4.2 3.2 8.1 101 67 68 921 99 48

rehtO 6.33 8.03 2.33 3.33 5.23 2.23 201 67 79 331 101 601

:drocerehtroF

srallodSUnoillib,revonrutedartngieroflatoTeettimmoCsmotsuCetatSybdelipmocatad(

)eettimmoCscitsitatSetatSdna 1.831 9.411 2.301 0.731 8.141 3.251

ST

AT

IS

TI

CA

L T

AB

LE

S

199

SRENTRAPGNIDARTROJAMOTSTROPXENAISSUR SRENTRAPGNIDARTROJAMOTSTROPXENAISSUR SRENTRAPGNIDARTROJAMOTSTROPXENAISSUR SRENTRAPGNIDARTROJAMOTSTROPXENAISSUR SRENTRAPGNIDARTROJAMOTSTROPXENAISSUR


7991 8991 9991 0002 1002 2002 7991 8991 9991 0002 1002 2002

latoT 001 001 001 001 001 001 001 48 201 141 79 601

DCEO 9.65 2.85 4.95 3.95 5.85 4.75 811 68 401 141 69 401

UE 9.23 5.23 1.43 8.53 7.63 2.53 201 38 701 841 99 201

SIC 7.51 6.41 2.51 3.71 5.61 9.41 601 87 601 161 29 69

EEC 5.91 2.91 7.41 4.31 5.41 7.41 501 28 87 921 501 701


ynamreG 7.7 0.8 5.8 0.9 2.9 5.7 79 88 801 941 001 78

ylatI 2.4 5.4 2.5 0.7 4.7 0.7 621 09 711 391 201 001

sdnalrehteNehT 4.5 5.5 0.5 2.4 7.4 8.6 731 78 39 811 801 351

anihC 7.4 4.4 8.4 1.5 6.5 4.6 48 08 111 941 601 221

eniarkU 5.8 8.7 6.6 9.4 3.5 5.5 69 77 68 501 501 111

suraleB 5.5 5.6 2.5 4.5 3.5 5.5 331 001 18 841 59 111

dnalreztiwS 2.4 4.4 6.4 7.3 3.2 0.5 59 88 701 511 06 132

ASU 3.5 2.7 5.6 5.4 2.4 7.3 39 411 29 99 09 49

KU 3.3 2.4 0.4 5.4 3.4 6.3 98 401 89 261 29 88

dnaloP 0.3 1.3 6.3 3.4 2.4 5.3 811 78 021 171 49 88

yekruT 3.2 7.2 2.2 0.3 8.2 2.3 811 89 48 091 19 811

dnalniF 3.3 9.2 3.3 0.3 1.3 7.2 501 57 711 921 001 49

ecnarF 9.1 0.2 7.1 8.1 6.2 5.2 201 09 38 751 831 101

natshkazaK 9.2 7.2 7.1 2.2 8.2 3.2 79 77 56 381 321 78

napaJ 5.3 1.3 9.2 7.2 4.2 7.1 101 47 89 031 88 47

rehtO 5.43 0.13 3.43 6.43 8.33 1.33 49 67 311 341 59 401

:drocerehtroF

srallodSUnoillib,stropxelatoTeettimmoCsmotsuCetatSybdelipmocatad(


Table 15

200

BA

NK

O

F R

US

SI

A2

00

2A

NN

UA

L R

EP

OR

T

Table 16

SRENTRAPGNIDARTROJAMMORFSTROPMINAISSUR SRENTRAPGNIDARTROJAMMORFSTROPMINAISSUR SRENTRAPGNIDARTROJAMMORFSTROPMINAISSUR SRENTRAPGNIDARTROJAMMORFSTROPMINAISSUR SRENTRAPGNIDARTROJAMMORFSTROPMINAISSUR


7991 8991 9991 0002 1002 2002 7991 8991 9991 0002 1002 2002

latoT 001 001 001 001 001 001 511 28 07 211 421 011

DCEO 0.85 7.85 2.55 6.15 7.65 1.95 241 38 56 501 631 511

UE 9.63 1.63 9.63 9.23 7.63 4.93 321 08 17 001 831 811

SIC 8.62 0.62 5.72 2.43 7.62 1.22 89 97 47 931 69 19

EEC 1.01 8.8 0.7 2.7 3.7 0.8 431 27 55 611 621 121


ynamreG 5.21 6.21 9.31 5.11 8.31 2.41 821 38 77 39 841 311

suraleB 0.9 6.01 6.01 9.01 7.9 8.8 851 69 07 511 011 99

eniarkU 5.7 5.7 3.8 8.01 2.9 0.7 36 28 77 441 501 48

ASU 7.7 4.9 9.7 0.8 7.7 4.6 041 101 85 311 021 19

anihC 4.2 7.2 0.3 8.2 9.3 2.5 621 29 77 601 371 541

ylatI 0.5 2.4 8.3 6.3 1.4 8.4 311 96 46 401 141 031

natshkazaK 2.5 3.4 6.4 5.6 8.4 2.4 09 96 47 751 19 79

ecnarF 0.3 7.3 1.4 5.3 7.3 1.4 621 001 77 69 921 321

dnalniF 5.3 3.3 1.3 8.2 1.3 3.3 211 77 66 101 431 811

dnaloP 6.2 4.2 0.2 1.2 3.2 8.2 641 77 85 911 431 531

KU 8.2 8.2 2.2 5.2 4.2 4.2 131 28 55 721 611 211

sdnalrehteNehT 3.2 1.2 3.2 2.2 0.2 3.2 911 67 57 701 411 521

napaJ 9.1 9.1 5.1 7.1 1.2 1.2 101 38 65 521 351 211

yekruT 5.1 2.1 0.1 0.1 2.1 6.1 831 56 16 211 841 041

dnalreztiwS 0.1 0.1 0.1 8.0 9.0 9.0 801 18 37 88 441 601

rehtO 3.23 4.03 6.03 3.92 1.92 0.03 121 87 07 701 321 411

:drocerehtroF

srallodSUnoillib,stropmilatoTeettimmoCsmotsuCetatSybdelipmocatad(



201

Table 17

Table 18

3002,1YRAUNAJFOSATBEDCITSEMODTNEMNREVOGNAISSURFOERUTCURTS 3002,1YRAUNAJFOSATBEDCITSEMODTNEMNREVOGNAISSURFOERUTCURTS 3002,1YRAUNAJFOSATBEDCITSEMODTNEMNREVOGNAISSURFOERUTCURTS 3002,1YRAUNAJFOSATBEDCITSEMODTNEMNREVOGNAISSURFOERUTCURTS 3002,1YRAUNAJFOSATBEDCITSEMODTNEMNREVOGNAISSURFOERUTCURTS

)selburnoillib,rapta( )selburnoillib,rapta( )selburnoillib,rapta( )selburnoillib,rapta( )selburnoillib,rapta(

stnemurtsnitbeDcitsemodnilatoTtbedtnemnrevog

nodedart,esehtfOtekramseitirucesdesinagro

)KF�ZFO(sdnobnaollaredefemocni�nopuocdexiF 1.702 451

)DP�ZFO(sdnobnaollaredefemocni�nopuoctnenamreP 7.053 9.1

)KP�ZFO(sdnobnaollaredefemocni�nopuocelbairaV 1.42 —

)DA�ZFO(sdnobnaollaredefnoitaicerpedtbeD 3.24 3.24

)OKG(sdnobtnemnrevogsselnopuocmret�trohS 8.81 8.81

tbedtnemnrevogcitsemodfotrapsarofdetnuoccatbedrehtO 3.73 —

latoT 3.086 712

)selburnoillim(3002,1YRAUNAJFOSAAISSURFOKNABOTTBEDYRTSINIMECNANIF )selburnoillim(3002,1YRAUNAJFOSAAISSURFOKNABOTTBEDYRTSINIMECNANIF )selburnoillim(3002,1YRAUNAJFOSAAISSURFOKNABOTTBEDYRTSINIMECNANIF )selburnoillim(3002,1YRAUNAJFOSAAISSURFOKNABOTTBEDYRTSINIMECNANIF )selburnoillim(3002,1YRAUNAJFOSAAISSURFOKNABOTTBEDYRTSINIMECNANIF

teehs�ecnalabtAtbedfoeulav

snoitagilbo

tbedlatoT 044,545

:hcihwfO

stnemurtsnitbedtnemnrevognaissuR.1 520,843

:hcihwfo

sdnobnaollaredefemocni�nopuocelbairavdnaemocni�nopuoctnenamrep—�aissuRfoknaBfognirutcurtserehtfotluserasadeviecer)KP�ZFOdnaDP�ZFO(

9991niaissuRfoknaBybderiuqcadnastbedrehtodnaseitirucestnemnrevogdenwo 403,472

snoitarepooperhguorhtderiuqca— 382,3

setonyrossimorpyrtsiniMecnaniF— 120,11

snoitagilbotbedrehto— 714,95

snaolgnidnetxerofknabmonokehsenVotderrefsnartsdnufaissuRfoknaB.2ecivresdnatnemyapertbedngieroftnemnrevognaissuRrofyrtsiniMecnaniFot 360,791

stfardrevonotbeD.3 253

202


Table 19

* According to Finance Ministry’s data.

** According to the National Managers’ League, which has the Federal Securities Commission’s permission to

conduct operations as a self�regulating managers’ organisation.

*** According to the Labour Ministry’s Inspectorate for Non�governmental Pension Funds.

NOITAIDEMRETNILAICNANIFFOSETUTITSNI NOITAIDEMRETNILAICNANIFFOSETUTITSNI NOITAIDEMRETNILAICNANIFFOSETUTITSNI NOITAIDEMRETNILAICNANIFFOSETUTITSNI NOITAIDEMRETNILAICNANIFFOSETUTITSNI

3002.10.1:drocerehtroF

2002.10.1

snoitutitsnitiderC

latot,snoitutitsnitidercgnitarepO 923,1 913,1

:hcihwfo

sknab— 282,1 672,1

snoitutitsnitidercknab�non— 74 34

latot,tseretningierofhtiwsnoitutitsnitidercgnitarepO 621 621

aissuRnignitareposnoitutitsnitidercfosehcnarB 623,3 334,3

latot,snoitutitsnitidercnaissuRgnitarepofoseciffoevitatneserpeR 502 871

*seinapmocecnarusnI

latot,seinapmocecnarusnignitarepO 804,1 053,1

latot,tseretningierofhtiwseinapmocecnarusnignitarepO 84 45

**sdnuftnemtsevnitinU

latot,sdnuftnemtsevnitinugnitarepO 06 15

:hcihwfo

dne�nepo— 23 82

lavretni— 52 32

dne�desolc— 3 —

***sdnufnoisneplatnemnrevog�noN

latot,sdnufnoisneplatnemnrevog�nongnitarepO 482 262


203

Table 20

* Preliminary data.

3002,1YRAUNAJFOSASNAOLDEDNOBYCNERRUCNGIEROFTNEMNREVOGNAISSURGNIDNATSTUO 3002,1YRAUNAJFOSASNAOLDEDNOBYCNERRUCNGIEROFTNEMNREVOGNAISSURGNIDNATSTUO 3002,1YRAUNAJFOSASNAOLDEDNOBYCNERRUCNGIEROFTNEMNREVOGNAISSURGNIDNATSTUO 3002,1YRAUNAJFOSASNAOLDEDNOBYCNERRUCNGIEROFTNEMNREVOGNAISSURGNIDNATSTUO 3002,1YRAUNAJFOSASNAOLDEDNOBYCNERRUCNGIEROFTNEMNREVOGNAISSURGNIDNATSTUO

eussifoetaDnoitpmedeR

etadycnerruC

lanigironiraptanoitalucricniemuloVycnerrucfostinunoillim,ycnerruc

tseretninopuoC.a.p%,etar

)seussi6(noitpircsbusnepoybdecalpsdnoboruE

7991.30.52 4002.30.52 )MED(kramehcstueD 000,2 9

7991.60.62 7002.60.62 )DSU(rallodSU 004,2 01

8991.30.13 5002.30.13 )MED(kramehcstueD 052,1 573.9

8991.40.03 3002.40.03 )LTI(arilnailatI 000,057 9

8991.60.01 3002.60.01 )DSU(rallodSU 052,1 57.11

8991.60.42 8202.60.62 )DSU(rallodSU 005,2 57.21

)seussi2(sdnobOKGfognirutcurtsernideussisdnoboruE

8991.70.42 5002.70.52 )DSU(rallodSU 969,2 57.8

8991.70.42 8102.70.42 )DSU(rallodSU 664,3 11

)seussi2(srotidercknablaicremmocfobulCnodnoLottbedfognirutcurtserdnocesnideussisdnoboruE

0002.30.13 0102.30.13 )DSU(rallodSU 917,2 52.8

0002.30.13 0302.30.92 )DSU(rallodSU 925,91 5

)sdnobZVGVO7dna,6,5,4seireS(sdnobnaolycnerrucngieroftnemnrevogcitsemoD))ZVGO(9991nideussisdnobnaolycnerrucngieroftnemnrevogdna

3991.50.41 3002.50.41 )DSU(rallodSU 1, *089 3

3991.50.41 8002.50.41 )DSU(rallodSU 738,2 3

6991.50.41 6002.50.41 )DSU(rallodSU 057,1 3

6991.50.41 1102.50.41 )DSU(rallodSU 057,1 3

0002.20.1 7002.11.41 )DSU(rallodSU 588 3

204

BA

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T

Table 21

)srallodSUnoillim,noitatneserpcitylana(2002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserpcitylana(2002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserpcitylana(2002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserpcitylana(2002ROFSTNEMYAPFOECNALABS’AISSUR )srallodSUnoillim,noitatneserpcitylana(2002ROFSTNEMYAPFOECNALABS’AISSUR

1Q 2Q 3Q 4Q 2002:drocerehtroF

1002

tnuoccatnerruC 167,6 250,8 816,8 673,9 708,23 959,43

edartfoecnalaB 242,9 963,11 390,31 875,21 182,64 121,84

stropxE 985,12 731,62 818,82 307,03 742,701 488,101

lioedurc 063,5 488,6 644,8 180,8 277,82 365,42

stcudorpmuelortep 599,1 666,2 623,3 551,3 241,11 204,9

saglarutan 233,4 084,3 115,3 475,4 798,51 667,71

rehto 109,9 701,31 535,31 398,41 734,15 451,05

stropmI 743,21— 867,41— 527,51— 521,81— 669,06— 467,35—

secivresfoecnalaB 508,1— 342,2— 977,2— 342,2— 070,9— 444,8—

stropxE 775,2 671,3 028,3 964,3 240,31 587,01

secivrestropsnart 401,1 783,1 505,1 794,1 294,5 556,4

levart 617 810,1 465,1 098 881,4 065,3

secivresrehto 757 177 157 280,1 263,3 075,2

stropmI 283,4— 914,5— 995,6— 117,5— 111,22— 922,91—

secivrestropsnart 575— 696— 087— 118— 268,2— 489,2—

levart 381,2— 480,3— 211,4— 626,2— 500,21— 069,9—

secivresrehto 426,1— 936,1— 607,1— 472,2— 442,7— 482,6—

ecnalabegaW 55 55 91 76 791 031

)sdnedividdnatseretni(emocnitnemtsevnifoecnalaB 315— 789— 317,1— 550,1— 962,4— 980,4—

elbavieceremocnI 152,2 808 489 609 949,4 671,6

elbayapemocnI 467,2— 597,1— 796,2— 269,1— 712,9— 562,01—

tnemnrevoglaredeF 814— 686— 136,1— 858— 395,3— 748,4—

elbavieceremocnI 396,1 682 083 552 416,2 716,2

elbayapemocnI 111,2— 279— 210,2— 311,1— 702,6— 464,7—

)elbayapemocni(stnemnrevoglacoldnalanoigeR 01— 72— 01— 83— 48— 67—

)snaolFMInoelbayaptseretni(knaBlartneC 1— 0 0 0 1— 421—

ST

AT

IS

TI

CA

L T

AB

LE

S

205

Cont.


1002

sknaB 312 271 532 681 608 087,1

elbavieceremocnI 433 823 293 083 434,1 091,2

elbayapemocnI 221— 551— 751— 491— 926— 114—

sesirpretnelaicnanif�noN 892— 644— 703— 643— 793,1— 228—

elbavieceremocnI 422 591 112 172 009 963,1

elbayapemocnI 125— 146— 815— 716— 892,2— 191,2—

srefsnarttnerrucfoecnalaB 812— 241— 2— 92 333— 957—

stnuoccalaicnanifdnalatipaC 224,5— 884,1— 031,2— 178,4— 119,31— 125,61—

)srefsnartlatipac(tnuoccalatipaC 26— 271,1— 408,5— 053,5— 883,21— 653,9—

)sevresertpecxe(tnuoccalaicnaniF 063,5— 613— 476,3 974 325,1— 561,7—

)esaercedseifingis—,esaercniseifingis+(seitilibaiL 733 476,3— 301— 288,3 144 987,4—

tnemnrevoglaredeF 784,1— 864,7— 530,2— 438,2— 528,31— 468,9—

)seitirucestbed(tnemtsevnioiloftroP 813— 526— 72 326 392— 787,1—

eussi 05 4 3 004,1 754,1 321

)eludehcs(noitpmeder 236— 226— 506— 515— 573,2— 881,3—

tnuomalapicnirp 9— 611— 711— 65— 892— 751,1—

snopuoc 326— 605— 984— 954— 770,2— 130,2—

emocnifotnemtsevni�er 136 326 816 187 356,2 119,2

tekramyradnoces 763— 036— 11 240,1— 920,2— 336,1—

sgniworrobdnasnaoL 254,1— 634,6— 194,1— 117,1— 090,11— 120,7—

esu 702 811 631 212 376 446

)eludehcs(noitpmeder 956,1— 634,7— 024,2— 329,1— 834,31— 007,7—

gnirutcurtser 0 288 397 0 576,1 63

tbedeudrevO 372 404— 465— 657,1— 154,2— 396

noitalumucca 903 251 142 493 690,1 741,1

gnirutcurtser/tnemyaper 73— 655— 508— 051,2— 745,3— 554—

seitilibailrehtO 01 3— 6— 9 9 947,1—

stnemnrevoglacoldnalanoigeR 2 09— 21— 13 96— 271—

)snaolFMIhtiwsnoitarepo(knaBlartneC 0 0 0 0 0 267,2—

206

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T

* From 2001 Q3 these data include evaluation of non�provision of services for import advance payments.

** Before 2002 Q3 international reserves included the value of assets used as security for Bank of Russia foreign currency�denominated short�term obligations to non�residents.

End


1002

sknaB 701 706 354— 106,1 268,1 085,4

tnemtsevnitceriD 74 001 36 28 192 57

stisopeddnasnaoL 001 393 304— 424,1 415,1 678,3

seitilibailrehtO 04— 411 211— 59 75 926

sesirpretnelaicnanif�noN 517,1 872,3 693,2 480,5 374,21 924,3

tnemtsevnitceriD 713 305 997 115 031,2 493,2

tnemtsevnioiloftroP 392 832 464 499 989,1 647

sgniworrobdnasnaoL 090,1 635,2 131,1 775,3 433,8 967

seitilibailrehtO 51 1 1 2 91 974—

)esaercedseifingis—,esaercniseifingis+(sevresertpecxe,stessA 796,5— 853,3 877,3 304,3— 469,1— 673,2—

tnemnrevoglaredeF 675,1— 377,6 261,6 136,5 099,61 990,01

sgniworrobdnasnaoL 762,1 157 406,2— 546— 132,1— 203

tbedeudrevO 648,2— 500,6 330,8 687,4 979,51 832,9

stessarehtO 3 71 337 984,1 242,2 955

sknaB 506— 111 276 396— 515— 736,1—

tnemtsevnitceriD 3— 8 1— 53 93 07

stisopeddnasnaoL 826— 646 697 201— 317 642,1—

stessarehtO 62 445— 321— 726— 762,1— 164—

sdlohesuohdnasesirpretnelaicnanif�noN 615,3— 625,3— 750,3— 043,8— 834,81— 838,01—

stnemtsevnioiloftropdnatceriD 364— 189— 973— 444,1— 762,3— 637,2—

hsacngieroF 247— 415 452,1 348,1— 718— 518—

secnavdadnastidercedarT 463 203— 117— 363,1— 310,2— 574

stnemeergalatnemnrevogretnirednuseireviledytidommocnotbeD 62— 6 33 012— 791— 563—

dereviled�nonsecivresdnasdoogdnastropxemorfsdeecorpfotpiecer�noN*stcartnoctropmirednusrefsnartyenomtsniagaemitno 844,2— 866,2— 720,3— 520,3— 861,11— 883,6—

stessarehtO 102— 39— 722— 554— 679— 800,1—

snoissimodnasrorreteN 048— 074— 752,3— 459,2— 225,7— 622,01—

sevreserycnerrucngierofniegnahC**)esaercniseifingis—,esaercedseifingis+( 994— 590,6— 132,3— 055,1— 573,11— 212,8—


207

Table 23

Table 22

*)srallodSUnoillib(2002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTS *)srallodSUnoillib(2002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTS *)srallodSUnoillib(2002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTS *)srallodSUnoillib(2002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTS *)srallodSUnoillib(2002NIAISSURNITNEMTSEVNINGIEROFFOERUTCURTS

foepyTtnemtsevni

1Q 2Q 3Q 4Q 2002 1002:drocerehtroF

**2002 **1002

tceriD 4.0 6.0 9.0 6.0 4.2 5.2 4.2 5.2

oiloftroP 2.0 3.0— 4.0 6.1 9.1 7.0— 2.0 7.0—

rehtO 2.0— 0.4— 4.1— 7.1 9.3— 5.6— 9.4 2.3—

latoT 3.0 7.3— 1.0— 9.3 4.0 8.4— 5.7 4.1—

* Net growth in debt obligations to non�residents according to balance of payments data.

** These data do not take account of debt forgiveness and netting operations.

Notes.

— denotes decrease in residents’ foreign debt obligations.

Minor differences between total and sum of items are due to rounding off of data.

* Net growth in non�residents’ assets according to balance of payments data.

** These data do not take account of debt forgiveness and netting operations.

Notes.

— denotes decrease in residents’ foreign assets.

Minor differences between total and sum of items are due to rounding off of data.

)SEVRESERFOTEN(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTS )SEVRESERFOTEN(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTS )SEVRESERFOTEN(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTS )SEVRESERFOTEN(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTS )SEVRESERFOTEN(STESSANGIEROFNITNEMTSEVNITNEDISERNAISSURFOERUTCURTS

*)srallodSUnoillib(2002NI *)srallodSUnoillib(2002NI *)srallodSUnoillib(2002NI *)srallodSUnoillib(2002NI *)srallodSUnoillib(2002NI

foepyTtnemtsevni

1Q 2Q 3Q 4Q 2002 1002:drocerehtroF

**2002 **1002

tceriD 5.0 0.1 4.0 4.1 3.3 5.2 3.3 5.2

oiloftroP 1.0— 3.0 0.0 6.0 8.0 1.0— 8.0 1.0—

rehtO 2.5 6.4— 2.4— 4.1 1.2— 1.0— 8.61 3.21

latoT 7.5 4.3— 8.3— 4.3 0.2 4.2 9.02 7.41

208

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Table 24

METSYSGNIKNABNAISSURFONOITISOPTNEMTSEVNILANOITANRETNI METSYSGNIKNABNAISSURFONOITISOPTNEMTSEVNILANOITANRETNI METSYSGNIKNABNAISSURFONOITISOPTNEMTSEVNILANOITANRETNI METSYSGNIKNABNAISSURFONOITISOPTNEMTSEVNILANOITANRETNI METSYSGNIKNABNAISSURFONOITISOPTNEMTSEVNILANOITANRETNI

)srallodSUnoillim,3002,1yraunaJdna,2002,1yraunaJfosa( )srallodSUnoillim,3002,1yraunaJdna,2002,1yraunaJfosa( )srallodSUnoillim,3002,1yraunaJdna,2002,1yraunaJfosa( )srallodSUnoillim,3002,1yraunaJdna,2002,1yraunaJfosa( )srallodSUnoillim,3002,1yraunaJdna,2002,1yraunaJfosa(

fosaecnalaB2002.10.1

tluserasaegnahCsnoitarepofo

tluserasaegnahCnoitaulaverfo

rehtOsegnahc

latoTsegnahc


stessA 141,75 098,11 066,1 363— 781,31 823,07

daorbatnemtsevnitceriD 892,1 93— 801 3— 66 463,1

emocnidetsevnierdnalatipacninoitapicitraP 195 81 431 3— 941 937

latipacrehtO 707 75— 62— 0 38— 426

tnemtsevnioiloftroP 895 158 06— 864 062,1 758,1

latipacninoitapicitraP 11 0 4 1 5 71

seitirucestbeD 685 158 46— 764 552,1 148,1

mret�gnol 243 489 361— 764 882,1 036,1

mret�trohs 442 331— 99 0 43— 012

tnemtsevnirehtO 426,81 792— 582 207 096 413,91

stisopeddnahsacngieroF 097,41 900,2— 603 127 189— 908,31

sllitnihsacngieroF 429 362 11 9— 562 981,1

stisopeddnastnuoccatnerruC 668,31 272,2— 592 037 642,1— 026,21

mret�gnol 853 04 1 0 24 004

mret�trohs 805,31 213,2— 492 137 882,1— 022,21

sgniworrobdnasnaoL 921,3 955,1 61— 01— 435,1 266,4

mret�gnol 775,1 372 0 1— 372 058,1

mret�trohs 255,1 582,1 61— 9— 162,1 218,2

tbedeudrevO 361 01 6— 1 5 761

stessarehtO 245 441 0 01— 331 576

mret�gnol 94 0 1— 0 1— 84

mret�trohs 394 341 1 01— 431 726

ST

AT

IS

TI

CA

L T

AB

LE

S

209

Cont.




rehtOsegnahc

latoTsegnahc


sevreseR 226,63 573,11 723,1 135,1— 171,11 397,74

dlogyratenoM 080,4 0 0 043— 143— 937,3

)RDS(sthgiRgniwarDlaicepS 3 2— 1 0 2— 1

FMIninoitisopevreseR 1 0 0 0 0 2

stessaycnerrucrehtO 835,23 773,11 623,1 091,1— 315,11 150,44

seitilibaiL 006,41 268,1 25 02— 598,1 494,61

aissuRnitnemtsevnitceriD 500,1 192 34— 9 752 362,1

emocnidetsevnierdnalatipacninoitapicitraP 539 492 34— 21 362 891,1

latipacrehtO 07 3— 0 3— 6— 46

tnemtsevnioiloftroP 785,1 062 91 9— 072 758,1

latipacninoitapicitraP 35 12 91 4— 63 98

seitirucestbeD 435,1 932 0 5— 432 867,1

mret�gnol 065 271 1 0 271 237

mret�trohs 579 76 0 5— 16 630,1

tnemtsevnirehtO 700,21 113,1 67 91— 863,1 573,31

stisopeddnaselburhsaC 617,5 215 8— 21— 194 602,6

selburhsaC 891 11 01— 0 1 991

stisopeddnastnuoccatnerruC 715,5 105 1 21— 094 700,6

mret�gnol 825 192 0 1— 092 818

mret�trohs 989,4 012 2 21— 002 981,5

sgniworrobdnasnaoL 300,5 310,1 27 6— 080,1 280,6

mret�gnol 271,1 994,1 44 8— 435,1 607,2

mret�trohs 138,3 684— 92 3 454— 773,3

210

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End




rehtOsegnahc

latoTsegnahc


tbedeudrevO 637 363— 1 1 163— 573

seitilibailrehtO 355 051 11 2— 851 117

mret�gnol 28 51— 11 0 5— 77

mret�trohs 174 561 0 2— 361 436

noitisoptnemtsevnilanoitanretniteN 245,24 820,01 806,1 443— 292,11 438,35

For the record: + denotes net growth in assets and liabilities, — denotes their net decrease. This use of the sign differs from how it is used in balance of payments statistics.

Notes.

1. This Table presents data compiled by the Bank of Russia and credit institutions, including Vneshekonombank. It does not include data on operations with government

foreign debt and government foreign assets conducted by Vneshekonombank as an agent of the Russian Government.

2. “Reserves” include gold and currency reserves of the Finance Ministry as a monetary regulator. Before 2002 Q3, the value of assets used as security against Bank of

Russia foreign currency�denominated short�term obligations to non�residents was accounted for as part of international reserves.

3. Monetary gold is accounted for at $300 per troy oz.

4. “Other changes” include assets and liabilities of credit institutions which had their banking licence revoked in the period under review.

ST

AT

IS

TI

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L T

AB

LE

S

211 Table 26

Table 25

)srallodSUnoillib(2002NISNOITASINAGROLAICNANIFLANOITANRETNIOTTBEDNAISSURFOSCIMANYD )srallodSUnoillib(2002NISNOITASINAGROLAICNANIFLANOITANRETNIOTTBEDNAISSURFOSCIMANYD )srallodSUnoillib(2002NISNOITASINAGROLAICNANIFLANOITANRETNIOTTBEDNAISSURFOSCIMANYD )srallodSUnoillib(2002NISNOITASINAGROLAICNANIFLANOITANRETNIOTTBEDNAISSURFOSCIMANYD )srallodSUnoillib(2002NISNOITASINAGROLAICNANIFLANOITANRETNIOTTBEDNAISSURFOSCIMANYD

ytilicafgnicnaniF 2002.10.1fosatbeD desU diapeRegnahcxeoteudhtworG

noitaulaveretar3002.10.1fosatbeD

:snaolFMI 4.7 0.0 5.1 5.0 5.6

ytilicaFnoitamrofsnarTcimetsyS 0.1 0.0 6.0 1.0 5.0

ytilicaFdnuFdednetxE 8.5 0.0 8.0 4.0 4.5

naoLybdnatS 6.0 0.0 1.0 0.0 6.0

snaolDRBI 7.6 2.0 5.0 1.0 6.6

snaolDRBE 2.0 0.0 0.0 0.0 2.0

)srallodSUnoillim(2002NISEVRESERLANOITANRETNIS’AISSURFOSCIMANYD )srallodSUnoillim(2002NISEVRESERLANOITANRETNIS’AISSURFOSCIMANYD )srallodSUnoillim(2002NISEVRESERLANOITANRETNIS’AISSURFOSCIMANYD )srallodSUnoillim(2002NISEVRESERLANOITANRETNIS’AISSURFOSCIMANYD )srallodSUnoillim(2002NISEVRESERLANOITANRETNIS’AISSURFOSCIMANYD

rotacidnI

fosaecnalaB

2002 3002

10.1 20.1 30.1 40.1 50.1 60.1 70.1 80.1 90.1 01.1 11.1 21.1 10.1

sevreseR*)stessayrtsiniMecnaniFgnidulcni( 226,63 804,63 068,63 592,73 551,93 722,24 975,34 492,34 723,44 916,54 767,64 502,84 397,74

stessaycnerrucngieroF 245,23 713,23 867,23 971,33 520,53 694,83 848,93 465,93 695,04 788,14 430,34 074,44 450,44

**dlogyratenoM 080,4 190,4 290,4 611,4 131,4 137,3 137,3 137,3 137,3 237,3 337,3 537,3 937,3

* Before 2002 Q3, the value of assets used as security against the Bank of Russia’s foreign currency�denominated short�term debt obligations to non�residents was accounted

for as part of international assets.

** Monetary gold is accounted for at $300 per troy oz.

212

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Table 27

)srallodSUnoillib,ygolodohtemlanoitanretniotgnidroccadetaluclac(2002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,ygolodohtemlanoitanretniotgnidroccadetaluclac(2002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,ygolodohtemlanoitanretniotgnidroccadetaluclac(2002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,ygolodohtemlanoitanretniotgnidroccadetaluclac(2002NITBEDNGIEROFS’AISSUR )srallodSUnoillib,ygolodohtemlanoitanretniotgnidroccadetaluclac(2002NITBEDNGIEROFS’AISSUR

,1yraunaJ2002

,1lirpA2002

,1yluJ2002

,1rebotcO2002

,1yraunaJ3002

latoT 8.051 9.941 6.051 3.941 5.351

tnemnrevoglateneG 2.311 3.111 4.801 1.601 7.401

tnemnrevoglaredeF 2.211 3.011 5.701 1.501 6.301

tbednaissuRweN 0.15 6.94 0.94 0.84 4.84

snoitasinagrolaicnaniflanoitanretnimorfsnaol 4.41 0.41 2.41 7.31 3.31

FMI 4.7 1.7 3.7 9.6 5.6

DRBI 7.6 7.6 7.6 7.6 6.6

rehto 2.0 2.0 2.0 2.0 2.0

snaolrehto 4.6 0.6 3.6 8.5 7.5

seitirucesdetanimoned�ycnerrucngierof 9.62 5.62 3.52 5.52 2.62

sdnoborueyrtsiniMecnaniF 1.7 1.7 3.7 2.7 1.7

OKGfognirutcurtsernideussisdnoborue 4.1 3.1 3.1 4.1 4.1

bulCnodnoLottbedfognirutcurtserdn2rofdeussisdnoborue 4.71 9.61 4.51 4.51 3.61

9991nideussisdnobZVGOdnasdnobZVGVOfosehcnartht7dnaht6 0.1 1.1 2.1 4.1 4.1

)sdnobZFOdnaOKG(seitirucesdetanimoned�elbur 6.0 5.0 5.0 4.0 5.0

tbedrehto 6.2 6.2 6.2 7.2 7.2

tbedare�teivoS 2.16 7.06 5.85 1.75 3.55

snoitanrotidercfobulCsiraP 3.63 4.53 4.83 6.73 2.93

sdnobZVGVOfosehcnartht5dnaht4,dr3 7.1 8.1 3.2 2.2 7.1

seirtnuoctsilaicosremrofottbed 5.11 6.11 3.5 7.4 1.4

tbedrehto 8.11 9.11 5.21 6.21 2.01

stnemnrevoglacoldnalanoigeR 0.1 0.1 0.1 9.0 0.1

snaol 8.0 8.0 9.0 8.0 9.0

sdnoborue 2.0 2.0 1.0 1.0 1.0

ST

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AB

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213

End

* These include debt obligations of Bank of Russia and credit institutions, including Vneshekonombank. Foreign debt accounted for by Vneshekonombank as an agent of the

Russian government is shown as part of general government debt obligations.

Note.

Government securities are accounted for as part of the debt to non�residents and evaluated at their face value.

,1yraunaJ2002

,1lirpA2002

,1yluJ2002

,1rebotcO2002

,1yraunaJ3002

*)noitisopytiuqetuohtiw(metsysgniknaB 6.31 6.31 2.41 6.31 2.51

snaol 1.5 5.5 3.5 8.4 1.6

stisopeddnastnuoccatnerruc 7.5 3.5 9.5 1.6 2.6

seitirucestbed 5.1 7.1 9.1 8.1 8.1

tbedrehto 3.1 1.1 0.1 0.1 1.1

)noitisopytiuqetuohtiw(sesirpretnelaicnanif�noN 0.42 1.52 0.82 6.92 6.33

tnemtsevnitceridsasesirpretneybdeviecersnaol 6.6 6.6 8.6 3.7 6.7

gnisaelecnanifnotbed 3.1 3.1 3.1 4.1 3.1

snaolrehto 0.61 2.71 9.91 9.02 6.42

214

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T

Table 28

2002NISEIRTNUOCSICROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM 2002NISEIRTNUOCSICROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM 2002NISEIRTNUOCSICROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM 2002NISEIRTNUOCSICROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM 2002NISEIRTNUOCSICROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM

najiabrezA ainemrA suraleB aigroeG natshkazaK aizihgriK avodloM aissuR natsikijaT ainemkruT eniarkU

srotacidnicimonoceorcamyeK

tcudorpcitsemodssorG)raeysuoiverpfo%sa( 6.011 9.211 7.401 4.501 5.901 5.99 2.701 3.401 1.901 — 8.401

tuptuolairtsudnI)raeysuoiverpfo%sa( 6.301 2.411 3.401 9.401 8.901 9.68 6.011 7.301 2.801 7.121 0.701

revonrutedartliateR)raeysuoiverpfo%sa( 6.901 6.511 9.211 3.501 6.801 2.801 7.711 2.901 4.711 0.041 8.411

xedniecirpremusnoC)raeysuoiverpforebmeceDfo%sa( 2.301 0.201 8.431 4.501 6.601 3.201 4.401 1.511 5.411 8.701 4.99

etartnemyolpmenulaiciffOnoitalupopevitcayllacimonocefo%sa

)raeyfodnefosa( 53.1 4.9 0.3 — 6.2 1.3 — 8.1 — — 8.3

etarknab)lanoitan(lartneclaiciffO:%,raeyfodnefosa,)etargnicnanifer(

1002 01 51 84 — 9 59.7 — 52 02 21 2.31

2002 7 5.31 83 4.22 5.7 34.4 — 12 02 21 1.7

etaregnahcxe)knablartnec(laiciffO)ycnerruclanoitanfostinu(

raeyfodnefosa

:rallodSUtsniaga

1002 577,4 18.165 085,1 060.2 2.051 6817.74 9090.31 41.03 55.2 002,5 5892.5

2002 398,4 98.485 029,1 090.2 6.551 9490.64 0228.31 4487.13 00.3 002,5 4233.5

:elburnaissuRtsniaga

1002 34.851 74.81 13.25 3860.0 79.4 2385.1 0434.0 — 16480.0 46.271 671.0

2002 49.351 82.81 14.06 8560.0 98.4 9944.1 9234.0 — 73490.0 45.361 861.0

ycnerruclanoitanniylppusyenoM)%,raeyfotratsfosahtworgfoetar( 4.51 3.94 6.95 5.41 3.74 2.43 4.03 3.23 8.34 — 2.24

ST

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215

Notes.

Financial market indicators for Russia have been calculated as weighted averages for December 2002. The Interbank interest rate on loans in the national currency has been

calculated on the basis of overnight loans. The yield on government securities is the average volume� and term�weighted yield on GKO bonds with terms up to 90 days. Interest

rates on long�term deposits and loans in the national currency have been calculated for terms longer than 1 year (excluding the Savings Bank (Sberbank).

Interbank lending rates in CIS countries have been calculated as follows: 180 days in Azerbaijan, 15 to 360 days in Armenia, 1 day in Belarus and Ukraine, up to 30 days in

Georgia and Kazakhstan, and all terms in Kirghizia, Moldova, Tajikistan and Turkmenia. Yields on government securities in Azerbaijan and Kirghizia have been calculated on

the basis of papers with a term of 3 months, Armenia 9—12 months, Belarus 6—12 months, and all terms in Georgia, Moldova and Ukraine.

This Table has been compiled on the basis of data provided by CIS central (national) banks.

End

najiabrezA ainemrA suraleB aigroeG natshkazaK aizihgriK avodloM aissuR natsikijaT ainemkruT eniarkU

)raeyfodnefosa(srotacidnitekramlaicnanifrojaM

snaolnoetarknabretnIycnerruclanoitanni 00.81 61.31 1.64 — 00.6 28.7 45.7 1.5 00.42 0.7 5.4

stnemurtsnitbedtnemnrevognodleiY 79.9 06.51 0.83 94 — 10.7 94.01 76.21 — — 69.8

detanimonedsnaolnoetartseretnI:ycnerruclanoitanni

snaolmret�trohs 82.71 38.81 1.94 13.32 1.41 39.42 48.81 9.41 22.31 — 2.22

snaolmret�gnol 62.21 17.32 5.12 00.71 7.41 89.22 63.91 5.41 00.03 — 6.71

stisopeddlohesuohnoetartseretnI:ycnerruclanoitanni

stisopeddnamed 77.1 98.5 0.9 4.2 0.1 04.0 64.6 0.1 10.0 — 7.3

stisopedmret�trohs 74.71 81.11 6.53 34.01 3.01 78.01 64.31 2.4 00.5 — 8.41

stisopedmret�gnol 23.7 99.11 7.93 31 6.31 89.51 69.41 9.51 66.22 — 7.91

:sknablaicremmocderetsigerfo.oN

1002 35 03 92 72 44 02 61 359,1 71 31 981

2002 64 52 23 52 83 02 61 377,1 71 31 281

216

BA

NK

O

F R

US

SI

A2

00

2A

NN

UA

L R

EP

OR

T

Table 29

*2002—0002NISEIRTNUOCSIC�NONROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM *2002—0002NISEIRTNUOCSIC�NONROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM *2002—0002NISEIRTNUOCSIC�NONROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM *2002—0002NISEIRTNUOCSIC�NONROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM *2002—0002NISEIRTNUOCSIC�NONROFSROTACIDNITNEMPOLEVEDCIMONOCEROJAM

,PDGlaeRraeysuoiverpnohtworg%

,secirpremusnoCraeysuoiverpnohtworg%

,etartnemyolpmenUecrofkrowfo%

,ecnalabtnuoccatnerruC**PDGfo%sa

0002 1002 2002 0002 1002 2002 0002 1002 2002 0002 1002 2002

ASU 8.3 3.0 4.2 4.3 8.2 6.1 0.4 8.4 8.5 2.4— 9.3— 8.4—

adanaC 5.4 5.1 4.3 7.2 6.2 2.2 8.6 2.7 6.7 6.2 8.2 5.1

napaJ 8.2 4.0 3.0 7.0— 7.0— 9.0— 7.4 0.5 4.5 5.2 1.2 8.2

***noinUnaeporuE 5.3 5.1 0.1 3.2 5.2 1.2 2.8 4.7 7.7 4.0— 2.0— 3.0

****modgniKdetinU 1.3 1.2 8.1 1.2 1.2 2.2 5.5 1.5 2.5 0.2— 3.1— 8.0—

*****noinUyratenoMdnacimonocE 5.3 4.1 8.0 1.2 4.2 2.2 4.8 0.8 3.8 9.0— 2.0— 9.0

******ynamreG 9.2 6.0 2.0 4.1 9.1 3.1 6.9 4.9 8.9 1.1— 2.0 5.2

******ecnarF 2.4 8.1 2.1 8.1 8.1 9.1 5.9 7.8 0.9 5.1 8.1 1.2

******ylatI 1.3 8.1 4.0 6.2 3.2 6.2 6.01 6.9 0.9 5.0— 0.0 6.0—

gnoKgnoH 2.01 6.0 3.2 8.3— 6.1— 0.3— 9.4 1.5 3.7 4.5 5.7 4.11

eropagniS 4.9 4.2— 2.2 3.1 0.1 4.0— 1.3 3.3 4.4 7.61 0.91 5.12

nawiaT 9.5 2.2— 5.3 3.1 0.0 2.0— 0.3 6.4 2.5 9.2 4.6 1.9

aeroKhtuoS 3.9 2.3 3.6 3.2 1.4 8.2 2.4 8.3 1.3 7.2 0.2 3.1

anihC 0.8 3.7 0.8 3.0 9.0 8.0— 1.3 6.3 .a.n 9.1 5.1 9.1

aisenodnI 9.4 4.3 7.3 8.3 5.11 9.11 1.6 .a.n .a.n 3.5 9.4 2.4

aisyalaM 3.8 4.0 2.4 5.1 4.1 8.1 1.3 7.3 5.3 4.9 3.8 7.7

dnaliahT 6.4 9.1 2.5 6.1 7.1 6.0 6.3 2.3 9.2 6.7 4.5 0.6

senippilihP 4.4 2.3 6.4 3.4 1.6 1.3 1.11 1.11 4.11 3.11 4.0 8.3

ailartsuA 8.2 7.2 8.3 5.4 4.4 0.3 3.6 7.6 3.6 0.4— 4.2— 9.3—

ST

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217

End

* Based on national statistical sources of corresponding countries, EUROSTAT agency and IMF as of April 15, 2003.

** + denotes a surplus, — denotes a deficit.

*** Austria, Belgium, United Kingdom, Germany, Greece, Denmark, Ireland, Spain, Italy, Luxembourg, the Netherlands, Portugal, Finland, France and Sweden. Con�

sumer prices are shown as the harmonised consumer price index. The current account balance is based on IMF data.

**** Consumer price growth rates do not take account of mortgage interest rates; unemployment rate is calculated according to ILO methodology.

***** Austria, Belgium, Germany, Greece, Ireland, Spain, Italy, Luxembourg, the Netherlands, Portugal, Finland and France. Consumer prices are shown as the harmonised

consumer price index. The current account balance is based on ECB data.

****** Consumer prices are shown as the harmonised consumer price index.

,PDGlaeRraeysuoiverpnohtworg%

,secirpremusnoCraeysuoiverpnohtworg%

,etartnemyolpmenUecrofkrowfo%

,ecnalabtnuoccatnerruC**PDGfo%sa

0002 1002 2002 0002 1002 2002 0002 1002 2002 0002 1002 2002

acirfAhtuoS 5.3 8.2 0.3 4.5 7.5 1.01 3.62 0.82 0.03 4.0— 1.0— 1.0

learsI 2.7 7.0— 4.1— 1.1 1.1 7.5 8.8 4.9 3.01 7.1— 0.2— 1.2—

anitnegrA 8.0— 4.4— 9.01— 9.0— 1.1— 9.52 1.51 4.71 7.91 1.3— 7.1— 3.8

lizarB 4.4 4.1 5.1 0.7 8.6 5.8 9.7 8.6 1.7 2.4— 6.4— 7.1—

ocixeM 6.6 3.0— 9.0 5.9 4.6 0.5 2.2 5.2 7.2 1.3— 9.2— 2.2—

elihC 2.4 1.3 1.2 8.3 6.3 5.2 2.9 2.9 0.9 4.1— 8.1— 9.0—

yekruT 2.7 4.7— 8.7 9.45 4.45 0.54 6.6 5.8 6.01 9.4— 3.2 0.1—

yragnuH 2.5 8.3 3.3 8.9 2.9 3.5 4.6 7.5 8.5 8.2— 4.3— 1.4—

dnaloP 0.4 0.1 3.1 1.01 5.5 9.1 0.41 2.61 7.71 3.6— 9.3— 5.3—

cilbupeRhcezC 3.3 1.3 0.2 9.3 7.4 8.1 8.8 1.8 3.7 3.5— 7.5— 3.5—

218


Table 32

Table 31

Table 30

)selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM )selburnoillib,noitinifedlanoitan(YLPPUSYENOM

rotacidnI 2002.10.1 2002.40.1 2002.70.1 2002.01.1 3002.10.1

latot,)2M(ylppusyenoM 6.206,1 4.265,1 1.157,1 6.648,1 6.911,2

*)0M(noitalucricnihsac— 3.485 9.255 9.546 6.276 3.367

sdnufhsac�non— 3.810,1 5.900,1 2.501,1 0.471,1 2.653,1

.metsysgniknabehtedistuonoitalucricni)sniocdnasetonknab7991(hsaC*

)%(2002NIHTWORGYLPPUSYENOMFOSETARYLHTNOMEGAREVA )%(2002NIHTWORGYLPPUSYENOMFOSETARYLHTNOMEGAREVA )%(2002NIHTWORGYLPPUSYENOMFOSETARYLHTNOMEGAREVA )%(2002NIHTWORGYLPPUSYENOMFOSETARYLHTNOMEGAREVA )%(2002NIHTWORGYLPPUSYENOMFOSETARYLHTNOMEGAREVA

rotacidnI 1Q 2Q 3Q 4Q raeylluF

latot,)2M(ylppusyenoM 8.0— 9.3 8.1 7.4 4.2

*)0M(noitalucricnihsac— 8.1— 3.5 4.1 3.4 3.2

sdnufhsac�non— 3.0— 1.3 0.2 9.4 4.2


ERUTCURTS2M ERUTCURTS2M ERUTCURTS2M ERUTCURTS2M ERUTCURTS2M

rotacidnI2002.10.1 3002.10.1 xednihtworG

2002rofselburnoillib % selburnoillib %

latot,)2M(ylppusyenoM 6.206,1 0.001 6.911,2 0.001 23.1

:hcihwfo

*noitalucricnihsac— 3.485 5.63 3.367 0.63 13.1

sdnufhsac�non— 3.810,1 5.36 2.653,1 0.46 33.1

:hcihwfo

snoitutitsnilaicnanif�nonfosdnuf— 4.175 7.53 3.707 4.33 42.1

stisopeddlohesuoh— 9.644 9.72 9.846 6.03 54.1



219

Table 33

ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM ERUTCURTSSTIDNAESABYRATENOM

rotacidnI2002.10.1 3002.10.1 xednihtworG

2002rofselburnoillib % selburnoillib %

)yenomdaorb(esabyratenoM 3.829 0.001 6.232,1 0.001 33.1

:hcihwfo

— secnalabgnidulcni,noitalucricnihsac*snoitutitsnitidercfosllitni 5.326 2.76 9.318 0.66 13.1

— stnuoccatnednopserroc’snoitutitsnitiderc**aissuRfoknaBhtiw 5.441 6.51 7.961 8.31 71.1

— ***sevreserderiuqer 6.651 9.61 1.102 3.61 82.1

— stisoped’snoitutitsnitidercaissuRfoknaBhtiw 7.3 4.0 4.74 8.3 18.21

— esreverfosnoitagilboaissuRfoknaBseitirucesfoesahcruper 0 0 5.0 0.0 —

* Excluding cash in tills of Bank of Russia institutions.

** Ruble�denominated accounts, including balances on organised securities market and in ARCO correspondent

account.

*** For ruble and foreign currency borrowed funds entered to accounts.

220


Table 34

Table 35

)selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC )selburnoillim(STNUOCCALACITYLANA’SNOITUTITSNITIDERC

2002.10.1 3002.10.1 rofegnahC2002

sevreseR 2.903,243 0.679,764 8.666,521

stessangieroF 2.393,935 8.667,395 6.373,45

tnemnrevoglarenegnosmialC 2.236,385 0.012,496 8.775,011

:hcihwfo

stnemnrevoglacoldnalanoigernosmialc— 5.542,62 5.910,25 0.477,52

sesirpretnerotces�cilbuplaicnanif�nonnosmialC 1.203,97 1.692,121 0.499,14

sdlohesuohdnasesirpretnerotces�etavirplaicnanif�nonnosmialC 8.819,883,1 1.404,378,1 3.584,484

snoitutitsnilaicnanifrehtonosmialC 1.784,22 0.075,23 9.280,01

stisopeddnameD 0.964,585 0.042,607 0.177,021

stisopedycnerrucngierofdnastisopedsgnivasdnaemiT 6.401,039 7.673,443,1 1.272,414

:hcihwfo

stisopedycnerrucngierof— 1.600,025 3.328,127 2.718,102

stisopedssecca�detimiL 2.448,02 5.911,02 7.427—

stnemurtsnitekramyenoM 6.132,852 7.292,393 1.160,531

seitilibailngieroF 6.899,413 2.912,493 6.022,97

stisopedtnemnrevoglareneG 4.939,76 8.486,56 6.452,2—

:hcihwfo

stisopedtnemnrevoglacoldnalanoiger— 8.852,24 2.972,53 6.979,6—

seitirohtuayratenomotsnoitagilbO 2.506,742 9.702,222 3.793,52—

stnuoccalatipaC 1.808,116 6.292,087 5.484,861

)ecnalab(rehtO 2.859,08— 5.012,341— 3.252,26—

)selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM )selburnoillim(YEVRUSYRATENOM

2002.10.1 3002.10.1 rofegnahC2002

snoitutitsnitidercdnaseitirohtuayratenomfostessangierofteN 0.138,001,1 7.330,085,1 7.202,974

tiderccitsemoD 0.738,991,2 5.207,158,2 5.568,156

tnemnrevoglarenegottidercteN 6.088,807 3.391,228 7.213,311

sesirpretnerotces�cibuplaicnanif�nonnosmialC 0.283,97 1.453,121 1.279,14

sdlohesuohdnasesirpretnerotces�etavirplaicnanif�nonnosmialC 3.780,983,1 1.585,578,1 8.794,684

snoitutitsnilaicnanifrehtonosmialC 1.784,22 0.075,23 9.280,01

yenoM 2.726,291,1 7.561,994,1 5.835,603

yenom�isauQ 3.601,039 9.504,443,1 6.992,414

stisopedssecca�detimiL 2.448,02 5.911,02 7.427—

stnemurtsnitekramyenoM 6.132,852 7.292,393 1.160,531

stnuoccalatipaC 0.021,458 0.420,541,1 0.409,092

)ecnalab(rehtO 8.837,44 3.827,92 5.010,51—


221

Table 36

METSYSTNEMYAPNAISSURFOSROTACIDNIROJAM METSYSTNEMYAPNAISSURFOSROTACIDNIROJAM METSYSTNEMYAPNAISSURFOSROTACIDNIROJAM METSYSTNEMYAPNAISSURFOSROTACIDNIROJAM METSYSTNEMYAPNAISSURFOSROTACIDNIROJAM

1002 2002

stnapicitrapmetsystnemyapforebmuN 139,5 928,5

:hcihwfo

snoitutitsniaissuRfoknaB— 571,1 271,1

snoitutitsnitiderc— 323,1 133,1

:hcihwfo

snoitutitsnitidercknab�nontnemelttes— 83 14

snoitutitsnitidercfosehcnarb— 334,3 623,3

)sehcnarb(snoitutitsnitidercfoseciffolanoitiddaforebmuN 131,6 783,6

stnapicitrapmetsystnemyapybdenepostnuoccaforebmunlatoTnoillim,ycnerrucnaissuRni)tnediser�nondnatnediser( 1.452 4.172

:hcihwfo

noillim,stnuoccalaudividni— 2.052 2.762

noillim,stnuoccaetaroproc— 9.3 2.4

dnasuoht,stnemyapforebmuN 0.634,336 8.688,737

:hcihwfo

dnasuoht,metsystnemyapaissuRfoknaBhguorhtdetceffestnemyap— 7.591,382 8.017,053

dnasuoht,smetsystnemyapetavirphguorhtdetceffestnemyap— 3.042,053 0.671,783

selburnoillib,stnemyapfoeulaV 1.946,601 8.390,031

:hcihwfo

selburnoillib,metsystnemyapaissuRfoknaBhguorhtdetceffestnemyap— 8.172,36 2.343,67

selburnoillib,smetsystnemyapetavirphguorhtdetceffestnemyap— 3.773,34 6.057,35

dnasuoht,tnemyapfostnemurtsnisuoiravgnisudetceffestnemyapforebmuN 3.995,347 3.012,278

:hcihwfo

dnasuoht,sredrotnemyap— 7.868,255 6.512,276

dnasuoht,sredronoitcellocdnastseuqertnemyap— 7.365,11 2.709,41

dnasuoht,tidercfosrettel— — 7.706

dnasuoht,seuqehc— 8.313,1 3.099

dnasuoht,tnemyapfostnemurtsnirehto— 1.358,771 5.984,381

selburnoillib,tnemyapfostnemurtsnisuoiravgnisudetceffestnemyapfoeulaV 6.085,421 4.765,151

:hcihwfo

selburnoillib,sredrotnemyap— 8.449,701 7.303,731

selburnoillib,sredronoitcellocdnastseuqertnemyap— 2.936 9.968

selburnoillib,tidercfosrettel— — 5.06

selburnoillib,seuqehc— 4.041 7.451

selburnoillib,tnemyapfostnemurtsnirehto— 2.658,51 6.871,31

dnasuoht,stnemyapdetcudnocyllacinortceleforebmuN 9.767,493 6.082,335

selburnoillib,stnemyapdetcudnocyllacinortcelefoeulaV 6.514,08 9.503,901

dnasuoht,repapnodetcudnocstnemyapforebmuN 1.866,832 2.606,402

selburnoillib,repapnodetcudnocstnemyapfoeulaV 5.332,62 9.787,02

dnasuoht,stnemyaplanoigerartniforebmuN 1.634,685 1.943,176

selburnoillib,stnemyaplanoigerartnifoeulaV 1.805,19 2.483,901

dnasuoht,stnemyaplanoigerretniforebmuN 9.999,64 7.735,66

selburnoillib,stnemyaplanoigerretnifoeulaV 0.141,51 6.907,02

222


Cont.1002 2002

metsystnemyapaissuRfoknaB

dnasuoht,decivresstneilcforebmuN 055,77 294,96

:hcihwfo

snoitutitsnitiderc— 323,1 133,1

snoitutitsnitidercfosehcnarb— 718,1 377,1

snoitutitsnitidercnahtrehtostneilc— 014,47 883,66

:hcihwfo

seidobyrusaerTlaredeF— 204,1 483,1

dnasuoht,stnemyapforebmuN 7.591,382 8.017,053

:hcihwfo

)sehcnarb(snoitutitsnitidercfostnuoccahguorhtdetcudnocstnemyap— 5.212,132 5.929,882

snoitutitsnitidercnahtrehtostneilcfostnuoccahguorhtdetcudnocstnemyap— 9.848,74 5.354,75

:hcihwfo

stnuoccayrusaerTlaredeFhguorhtdetcudnocstnemyap— 4.787,91 9.849,03

laicnanifhtiwdetcennocstnuoccahguorhtdetcudnocstnemyap—snoitutitsniaissuRfoknaBfoseitivitcassenisubdna 3.431,4 8.723,4

selburnoillib,stnemyapfoeulaV 8.172,36 2.343,67

:hcihwfo

)sehcnarb(snoitutitsnitidercfostnuoccahguorhtdetcudnocstnemyap— 2.665,74 8.586,06

snoitutitsnitidercnahtrehtostneilcfostnuoccahguorhtdetcudnocstnemyap— 2.751,51 8.711,51

:hcihwfo

stnuoccayrusaerTlaredeFhguorhtdetcudnocstnemyap— 5.962,11 6.070,11

laicnanifhtiwdetcennocstnuoccahguorhtdetcudnocstnemyap—snoitutitsniaissuRfoknaBfoseitivitcassenisubdna 4.845 6.935

dnasuoht,stnemyapcinortceleforebmuN 0.522,942 6.111,523

selburnoillib,stnemyapcinortcelefoeulaV 7.020,25 0.643,07

gnitapicitrapsnoitutitsniaissuRfoknaBforebmuNstnemelttescinortcelelanoigerartnini 531,1 831,1

gnitapicitrapsnoitutitsniaissuRfoknaBforebmuNstnemelttescinortcelelanoigerretnini 130,1 380,1

stnemucodcinortcelefoegnahcxenignitapicitrapstneilcforebmunlatoT 090,3 553,3

:hcihwfo

)sehcnarb(snoitutitsnitiderc— 205,2 177,2

snoitutitsnitidercnahtrehtostneilc— 885 485

:hcihwfo

seidobyrusaerTlaredeF— 662 993

dnasuoht,repapnodetceffestnemyapforebmuN 7.079,33 2.995,52

selburnoillib,repapnodetceffestnemyapfoeulaV 1.152,11 2.799,5

syad,repapnodetceffestnemyaplanoigerartnifoemittnemeltteslautcaegarevA 1.1 1.1

syad,repapnodetceffestnemyaplanoigerretnifoemittnemeltteslautcaegarevA 7.4 8.4

stnuoccatnednopserrocnisdnuffokcaloteuddiapnustnemucodtnemelttesfomuSselburnoillim,)sehcnarb(snoitutitsnitidercfo)stnuoccabus( 042,01 215,8

:hcihwfo

selburnoillim,dekoversawecnecilesohwsnoitutitsnitiderc— 843,6 430,5

selburnoillim,OCRAfolortnocrednusnoitutitsnitidercgnitarepo— 197,3 874,3

selburnoillim,OCRAybdellortnoctonsnoitutitsnitidercgnitarepo— 101 5.0


223

End1002 2002

smetsystnemyapetavirP

sknabtnediserhtiwsnoitalertnednopserrocevahtahtsnoitutitsnitidercforebmuN 122,1 352,1

sknabtnediser�nonhtiwsnoitalertnednopserrocevahtahtsnoitutitsnitidercforebmuN 522 281

snoitutitsnitidercybdenepostnuoccatnednopserrocforebmuN,)sehcnarb(snoitutitsnitidercrehtoni

:hcihwfo

stnuoccaorol— 246,8 035,9

stnuoccaortson— 744,7 990,8

sehcnarbevahtahtsnoitutitsnitidercforebmuN 384 284

snoisividneewtebstnemelttesrofdenepostnuoccatnemelttesetailiffaretniforebmuNnoitutitsnitidercenofo 107,61 793,41

dnasuoht,noitutitsnitidercenofosnoisividneewtebdetceffestnemyapforebmuN 3.764,59 6.316,511

selburnoillib,noitutitsnitidercenofosnoisividneewtebdetceffestnemyapfoeulaV 0.195,9 9.231,21

stnuoccatnednopserroc’snoitutitsnitiderchguorhtdetceffestnemyapforebmuNdnasuoht,)sehcnarb(snoitutitsnitidercrehtonidenepo 6.146,21 9.082,71

stnuoccatnednopserroc’snoitutitsnitiderchguorhtdetceffestnemyapfoeulaVselburnoillib,)sehcnarb(snoitutitsnitidercrehtonidenepo 7.905,7 8.092,01

dnasuoht,snoitutitsnitidercknab�nontnemeltteshguorhtdetceffestnemyapforebmuN 0.323,2 2.665,2

,snoitutitsnitidercknab�nontnemeltteshguorhtdetceffestnemyapfoeulaVselburnoillib 2.826 4.847

dnasuoht,noitutitsnitidercafonoisividenonihtiwdetceffestnemyapforebmuN 4.808,932 3.517,152

selburnoillib,noitutitsnitidercafonoisividenonihtiwdetceffestnemyapfoeulaV 4.846,52 5.875,03

noillim,raeyfodnefosaaissuRnideussisdracknabforebmuN 6.01 5.51

noillim,aissuRnisdracknabhtiwdetcudnocsnoitarepoforebmunlatoT 7.091 2.182

selburnoillib,aissuRnisdracknabhtiwdetcudnocsnoitarepofoeulavlatoT 3.044 7.027

224


Table 37

* The number of credit institutions in points 4, 5, 6 and 7 differs from the amount of credit institutions in the respec�

tive sub�points because several coercive actions may be used against one bank.

Note.

As of January 1, 2003, the restriction on settlements on behalf of legal entities, such as the transfer of funds to

budgets of all levels and government extrabudgetary funds was in effect with regard to four credit institutions.

As of January 1, 2003, of all operating credit institutions, only banks under the control of the government Agency

for the Restructuring of Credit Organisations (ARCO) had a backlog of unfulfilled settlement documents on pay�

ments to budgets of all levels.

2002NISNOITUTITSNITIDERCOTDEILPPASNOITCNAS 2002NISNOITUTITSNITIDERCOTDEILPPASNOITCNAS 2002NISNOITUTITSNITIDERCOTDEILPPASNOITCNAS 2002NISNOITUTITSNITIDERCOTDEILPPASNOITCNAS 2002NISNOITUTITSNITIDERCOTDEILPPASNOITCNAS

.oN snoitcnasfonoitpircseDfo.oNsknab

snoitcaevitneverP

1 )draobyrosivrepus(srotceridfodraobro/dnatnemeganamgnitirwnigniyfitoNsnoitcalaidemergnidnemmocerdnakrowstinisgnimoctrohstuobanoitutitsnitidercfo 781,1

2 gniteemagnillaC 103

3 ,gnitroperrevolortnocesaercni,snoitcalaidemerfonalpapuwardotsnoitadnemmocer(rehtO).cte,stropernistnemetatssimdiova,ksirtidercfotnemssessacitsilaerekam 452

snoitcaevicreoC

4 seniF *327

:hcihwfo

1.4 stnemeriuqerevreserhtiwecnailpmoc�nonrofsenif 544

2.4 sdradnatslaitnedurprehtofonoitaloivrofsenif 374

5 snoitutitsnitidercybdetcudnocsnoitarepogniknablaudividninosnoitcirtsergnisopmI *131

:hcihwfo

1.5 tisopednosgnivasdlohesuohgnikat 501

2.5 stegdubotsdnufforefsnartnidevlovniseititnelagelfoflahebnostnemelttesgnitceffesdnufyrategdubartxetnemnrevogdnaslevelllafo 32

6 snoitarepogniknablaudividnignitcudnocmorfsnoitutitsnitidercgnitibihorP *55

:hcihwfo

1.6 tisopednosgnivasdlohesuohgnikat 82

2.6 rehto 25

7 snoitpircserP *389

:hcihwfo

1.7 stnemeriuqerevreseraissuRfoknaBhtiwylpmocotnoitpircserp 051

2.7 tnemeganamecalperotnoitpircserp 01

3.7 rehto 869

8 sehcnarbgninepomorfsnoitutitsnitidercgnitibihorP 38

9 snoitutitsnitidercotsnoitartsinimdalanoisivorpgnitnioppA 6

01 ecnecilgniknabgnikoveR 62

ST

AT

IS

TI

CA

L T

AB

LE

S

225

Table 38

SNOITUTITSNITIDERCFONOITADIUQILGNIROTINOM SNOITUTITSNITIDERCFONOITADIUQILGNIROTINOM SNOITUTITSNITIDERCFONOITADIUQILGNIROTINOM SNOITUTITSNITIDERCFONOITADIUQILGNIROTINOM SNOITUTITSNITIDERCFONOITADIUQILGNIROTINOM

noigeR

ecnecilfo.oN

sredronoitacover

deussi

tidercfo.oN

kcurtssnoitutitsni

retsigeretatSffo

ecneciloteud(

noitacover

)noitadiuqildna

eboT

detadiuqil

nekatsnoisicednoitadiuqilfo.oN noitadiuqilfo.oN

snoissimmoc

sreviecer(putes

srotadiuqildna

)detnioppa

gnirotinomfo.oN

serudecorp

detutitsni

lanoisivorpfo.oN

srotartsinimda

detnioppa

detneserpsteehsecnalabfo.oN

latot

hcihwfo

snoisiced

decrofno

noitadiuqil

2002ninoitadiuqilmiretni

steehsecnalab

noitadiuqil

steehsecnalab

latot 2002ni latot 2002ni latot

hcihwfo

snoisiced

decrofno

noitadiuqil

latot 2002ni latot 2002ni latot 2002ni latot 2002ni latot 2002ni

ayehgydAfocilbupeR 7 0 7 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

iatlAfocilbupeR 8 0 6 2 2 2 2 1 1 2 1 0 0 0 0 2 0 0 0

yrotirreTiatlA 71 0 41 6 3 3 3 0 0 3 0 0 0 0 0 1 0 2 2

noigeRrumA 6 0 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRkslegnahkrA 8 0 7 3 1 1 1 0 0 1 0 0 0 0 0 1 0 0 0

noigeRnahkartsA 9 0 6 5 3 3 3 0 0 3 0 0 0 0 0 2 1 2 2

natsotrokhsaBfocilbupeR 81 1 21 0 6 6 5 1 1 6 1 0 0 0 0 3 0 2 2

noigeRdorogleB 3 0 2 0 1 1 1 0 0 1 0 0 0 0 0 0 0 0 0

noigeRksnayrB 7 0 5 2 2 2 1 0 0 2 0 0 0 0 0 2 0 0 0

aitayruBfocilbupeR 8 0 2 2 6 5 5 1 1 5 3 0 0 0 0 3 1 0 0

noigeRrimidalV 4 0 2 2 2 2 2 0 0 2 0 0 0 0 0 2 0 0 0

noigeRdargogloV 12 0 41 1 7 7 7 0 0 7 4 0 0 0 0 6 0 0 0

noigeRadgoloV 7 0 6 2 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRhzenoroV 3 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

natsehgaDfocilbupeR 26 0 1 0 16 16 06 2 2 05 61 0 0 0 0 3 1 21 21

noigeRsuomonotuAhsiweJ 4 0 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRovonavI 5 1 3 0 2 1 1 0 0 1 0 0 0 0 0 0 0 1 1

226

BA

NK

O

F R

US

SI

A2

00

2A

NN

UA

L R

EP

OR

T

Cont.

noigeR

ecnecilfo.oN

sredronoitacover

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retsigeretatSffo

ecneciloteud(

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)noitadiuqildna

eboT

detadiuqil


snoissimmoc

sreviecer(putes

srotadiuqildna

)detnioppa

gnirotinomfo.oN

serudecorp

detutitsni

lanoisivorpfo.oN

srotartsinimda

detnioppa


latot

hcihwfo

snoisiced

decrofno

noitadiuqil


steehsecnalab

noitadiuqil

steehsecnalab


hcihwfo

snoisiced

decrofno

noitadiuqil


aitehsugnIfocilbupeR 3 0 1 0 2 2 2 0 0 2 0 0 0 0 0 0 0 0 0

noigeRkstukrI 11 0 7 4 4 4 3 0 0 4 0 0 0 0 0 4 0 0 0

cilbupeRraklaB�onidrabaK 6 0 4 0 2 2 2 2 2 2 2 0 0 0 0 1 0 1 1

noigeRdargninilaK 61 1 41 2 2 1 1 0 0 1 0 0 0 0 0 1 0 0 0

aikymlaKfocilbupeRhcgnaTgmlahK 01 0 5 1 5 5 4 0 0 5 1 0 0 0 0 5 0 0 0

noigeRagulaK 9 0 8 0 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRaktahcmaK 5 0 4 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

naissacriC�iahcaraKcilbupeR 7 0 6 1 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

aileraKfocilbupeR 5 0 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRovoremeK 01 0 6 4 4 4 4 0 0 4 1 0 0 0 0 4 2 0 0

noigeRvoriK 8 0 4 0 4 4 0 0 0 4 0 0 0 0 0 2 0 2 1

imoKfocilbupeR 9 0 9 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRamortsoK 7 0 6 1 1 1 0 0 0 1 0 0 0 0 0 1 0 0 0

yrotirreTradonsarK 64 1 13 4 41 31 31 1 1 31 2 0 0 0 0 01 0 2 2

yrotirreTksrayonsarK 81 0 71 2 1 1 1 0 0 1 0 0 0 0 0 1 1 0 0

noigeRnagruK 4 0 3 1 1 1 1 0 0 1 1 0 0 0 0 1 0 0 0

noigeRksruK 5 0 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRdargnineL 4 0 2 1 2 2 0 0 0 2 0 0 0 0 0 2 0 0 0

noigeRkstepiL 5 0 4 2 2 2 2 0 0 2 2 0 0 0 0 2 1 0 0

noigeRnadagaM 5 0 4 1 1 1 1 0 0 1 0 0 0 0 0 0 0 0 0

ST

AT

IS

TI

CA

L T

AB

LE

S

227

Cont.

noigeR

ecnecilfo.oN

sredronoitacover

deussi

tidercfo.oN

kcurtssnoitutitsni

retsigeretatSffo

ecneciloteud(

noitacover

)noitadiuqildna

eboT

detadiuqil


snoissimmoc

sreviecer(putes

srotadiuqildna

)detnioppa

gnirotinomfo.oN

serudecorp

detutitsni

lanoisivorpfo.oN

srotartsinimda

detnioppa


latot

hcihwfo

snoisiced

decrofno

noitadiuqil


steehsecnalab

noitadiuqil

steehsecnalab


hcihwfo

snoisiced

decrofno

noitadiuqil


lEiiraMfocilbupeR 9 0 5 1 4 4 3 0 0 3 0 0 0 0 0 3 0 0 0

aivodroMfocilbupeR 5 0 3 2 3 2 2 0 0 2 1 0 0 0 0 1 0 1 1

wocsoM 105 02 252 07 242 622 222 75 65 281 46 11 01 01 01 84 33 56 75

noigeRwocsoM 01 0 01 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRksnamruM 9 0 8 6 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRdorogvoNinhziN 11 0 01 4 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRdorogvoN 2 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRksribisovoN 12 0 81 2 3 3 2 0 0 3 0 0 0 0 0 2 0 1 1

noigeRksmO 9 0 9 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRgrubnerO 51 0 41 3 1 1 1 0 0 1 1 0 0 0 0 1 0 0 0

noigeRlerO 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRazneP 6 0 5 1 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRmreP 9 0 8 5 1 1 1 0 0 1 0 0 0 0 0 1 0 0 0

yrotirreTemitiraM 51 0 9 3 5 5 3 0 0 5 0 0 0 0 0 3 0 1 1

noigeRvoksP 6 0 5 0 1 1 1 1 1 1 1 0 0 0 0 1 1 0 0

noigeRvotsoR 13 0 42 1 6 6 5 0 0 6 1 0 0 0 0 3 0 1 1

noigeRnazayR 4 0 2 0 2 1 1 0 0 1 0 0 0 0 0 1 0 0 0

noigeRaramaS 71 0 21 4 5 5 5 0 0 5 0 0 0 0 0 2 0 3 3

grubsreteP.tS 02 0 51 5 5 5 5 1 1 5 2 0 0 0 0 3 2 1 1

noigeRvotaraS 51 0 51 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

ahkaSfocilbupeR)aitukaY( 12 0 9 6 21 21 8 2 2 21 2 0 0 0 0 9 1 2 2

noigeRnilahkaS 71 0 51 4 2 2 1 0 0 2 0 0 0 0 0 2 0 0 0

228

BA

NK

O

F R

US

SI

A2

00

2A

NN

UA

L R

EP

OR

T

End

noigeR

ecnecilfo.oN

sredronoitacover

deussi

tidercfo.oN

kcurtssnoitutitsni

retsigeretatSffo

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)noitadiuqildna

eboT

detadiuqil


snoissimmoc

sreviecer(putes

srotadiuqildna

)detnioppa

gnirotinomfo.oN

serudecorp

detutitsni

lanoisivorpfo.oN

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detnioppa


latot

hcihwfo

snoisiced

decrofno

noitadiuqil


steehsecnalab

noitadiuqil

steehsecnalab


hcihwfo

snoisiced

decrofno

noitadiuqil


noigeRksvoldrevS 52 0 42 5 1 1 1 0 0 1 0 0 0 0 0 1 1 0 0

htroNfocilbupeRainalA—aitessO

3 0 2 0 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRksnelomS 7 0 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

yrotirreTloporvatS 42 0 61 7 8 8 8 0 0 8 0 0 0 0 0 0 0 5 5

noigeRvobmaT 3 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

natsrataTfocilbupeR 71 0 9 2 8 8 8 0 0 8 2 0 0 0 0 5 1 4 4

noigeRrevT 31 0 9 1 3 3 2 0 0 3 0 0 0 0 0 1 0 1 1

noigeRksmoT 31 0 31 1 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRaluT 5 0 4 1 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

avyTfocilbupeR 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRnemuyT 33 2 52 11 8 8 8 2 2 8 2 0 0 0 0 1 0 5 3

cilbupeRtrumdU 11 0 7 1 4 4 4 0 0 4 1 0 0 0 0 1 0 3 3

noigeRksvonaylU 21 0 01 3 2 2 2 0 0 2 0 0 0 0 0 2 0 0 0

yrotirreTksvorabahK 51 0 6 2 9 9 9 0 0 9 0 0 0 0 0 6 2 3 3

aissakahKfocilbupeR 3 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRksnibaylehC 7 0 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

cilbupeRnehcehC 81 0 81 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

noigeRatihC 7 0 4 1 3 3 2 0 0 3 0 0 0 0 0 2 0 1 1

cilbupeRhsavuhC 01 0 9 4 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

noigeRlvalsoraY 5 0 4 1 1 1 1 0 0 1 0 0 0 0 0 0 0 1 1

:latoT 673,1 62 678 212 194 864 044 17 07 214 111 11 01 01 01 851 84 231 121


229

Table 39

Table 40

NOITALUCRICNISETONKNABAISSURFOKNAB7991FOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNAB7991FOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNAB7991FOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNAB7991FOERUTCURTSETON NOITALUCRICNISETONKNABAISSURFOKNAB7991FOERUTCURTSETON

,noitanimoneDselbur

,noitalucricnilatoTselburnoillim fo%sA

2002.10.1erahs%

2002.10.1 3002.10.1 2002.10.1 3002.10.1

000,1 119,19 4.491,842 072 9.41 7.03

005 6.816,153 6.029,104 3.411 8.65 6.94

001 2.973,231 2.571,121 5.19 4.12 51

05 4.877,63 3.957,13 4.68 9.5 9.3

01 2.302,6 3.174,6 3.401 1 8.0

5 63 9.23 4.19 0 0

eussi7991fosetonknablatoT 4.629,816 7.355,908 8.031 001 001

*NOITALUCRICNISNIOCAISSURFOKNAB7991FOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNAB7991FOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNAB7991FOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNAB7991FOERUTCURTS *NOITALUCRICNISNIOCAISSURFOKNAB7991FOERUTCURTS

noitanimoneD,noitalucricnilatoT

selburnoillim fo%sA2002.10.1

erahs%

2002.10.1 3002.10.1 2002.10.1 3002.10.1

kcepok1 9.72 6.43 421 5.0 5.0

skcepok5 6.29 8.411 421 7.1 7.1

skcepok01 9.093 8.615 2.231 1.7 4.7

skcepok05 315 2.536 8.321 4.9 1.9

elbur1 6.323,1 1.146,1 421 2.42 5.32

selbur2 2.529 2.851,1 2.521 9.61 6.61

selbur5 8.038,1 2.532,2 1.221 5.33 23

selbur01 5.763 936 9.371 7.6 2.9

eussi7991fosnioclatoT 5.174,5 9.479,6 5.721 001 001

.slatemsuoicerpfoedamsniocgnidulcxE*

230


Table 41

2002NISNOISIVIDDNASEHCNARBAISSURFOKNABFOSNOITCEPSNITIDUALANRETNIEVISNEHERPMOC 2002NISNOISIVIDDNASEHCNARBAISSURFOKNABFOSNOITCEPSNITIDUALANRETNIEVISNEHERPMOC 2002NISNOISIVIDDNASEHCNARBAISSURFOKNABFOSNOITCEPSNITIDUALANRETNIEVISNEHERPMOC 2002NISNOISIVIDDNASEHCNARBAISSURFOKNABFOSNOITCEPSNITIDUALANRETNIEVISNEHERPMOC 2002NISNOISIVIDDNASEHCNARBAISSURFOKNABFOSNOITCEPSNITIDUALANRETNIEVISNEHERPMOC

rebmunlatoT2002.10.1fosa

2002nidetcepsnihcihwfO

rebmuN rebmunlatotfo%

)sknablanoitan(sehcnarblanoigeR 87 92 2.73

stnapicitraprehtodnasertnectnemeltteshsaCkrowtentnemelttesaissuRfoknaBni 323,1 095 6.44

seirotisopedlanoigerretnI 6 2 3.33

sertnecgniniartdna)segelloc(sloohcsgniknaB 41 7 05

sertnecyadilohdnasletohtroseR 6 4 76

aissuRfoknaBotelbatnuoccasnoitasinagrorehtO 21 5 24

:latoT 044,1 736 2.44

ST

AT

IS

TI

CA

L T

AB

LE

S

231

Table 42

* Excluding the shares of «nominee» shareholders accounted for in the Bank of Russia balance sheet.

** Since 2000 the Bank of Russia stake in Ost�West Handelsbank has been represented by registered single shares without nominal value.

*** Gold franc is the accounting unit of the Bank for International Settlements. It is equal to US$1.94149.

**** The stake of the Bank of Russia is represented by its contribution to the authorised capital of the bank.

SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISEKATSAISSURFOKNAB SNOITASINAGROREHTODNASNOITUTITSNITIDERCNGIEROFDNANAISSURNISEKATSAISSURFOKNAB

noitasinagrO ycnerruCserahsdenwo�aissuRfoknaBfoeulavlanimoN 3002.10.1fosaerahs%aissuRfoknaB

2002.10.1 3002.10.1 latipacdesirohtuani latipacgnitovni

*nodnoL,knaByndoraNwocsoM gnilretsdnuophsitirB 55.126,242,821 55.126,242,821 98.88 98.88

*siraP,knaboruE orue 00.628,792,161 00.628,792,161 30.78 30.78

**niaMmatrufknarF,knabslednaHtseW�tsO — serahs176 serahs176 26.15 26.15

anneiV,knab�uanoD orue 00.005,009,01 00.005,009,01 00.51 00.51

gruobmexuL,knaBdetinUtseW�tsaE orue 16.847,985,4 16.847,985,4 00.51 00.51

***lesaB,stnemeltteSlanoitanretnIrofknaB cnarfdlog 00.000,005,7 00.000,005,7 75.0 75.0

****wocsoM,knaBetatsretnI selburdnasuoht 000,01 000,01 00.05 00.05

wocsoM,knabrebS selburdnasuoht 396,506 396,506 75.06 67.36

wocsoM,knabgrothsenV selburdnasuoht 304,711,24 — — —

egnahcxEycnerruCknabretnIwocsoM selburdnasuoht 151,12 166,52 32.22 32.22

egnahcxEycnerruCknabretnIgrubsreteP.tS selburdnasuoht — 203 00.01 00.01

wocsoM,ertneCyrotisopeDlanoitaN selburdnasuoht 005,42 005,42 00.94 55.44

Published by Business News Agency Prime�TASS

Printed by Novosti PressNumber of copies — 320. Order No. 5154

20022002

THE CENTRAL BANK

OF THE RUSSIAN FEDERATION

ANNUAL REPORT