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Friday, 23 January 2015

Ruble Colluding With Oil Brews Russian Toxic Loan Morass - Bloomberg

Ruble Colluding With Oil Brews Russian Toxic Loan Morass - Bloomberg:



"An increasingly toxic mixture of high interest rates, spiraling inflation and plunging oil means Russian banks will probably need a lot more than the $18 billion set aside last year to protect against bad loans.



Russia is facing an “extremely widespread” banking crisis in 2015, and lenders may need to boost provisions for souring debts to $50 billion should oil stay in the mid-$40s, according to Herman Gref, the head of the nation’s biggest lender, OAO Sberbank. That’s after banks increased reserves by 42 percent last year, compared with 27 percent in Turkey and 7.5 percent in Poland in the first 11 months, official figures show.



Seven of Russia’s 10 worst-performing bonds this year are from banks as policy makers raised rates by the most since 1998 to shore up the ruble, whose 47 percent slide over the past 12 months deepened the burden of loan payments for consumers and businesses. With the economy foundering after crude’s decline and sanctions over Ukraine, the ratio of bad debt will double from the third quarter of 2014 to as much as 13 percent by year-end, according to Liza Ermolenko at Capital Economics in London."



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Putin Said to Shrink Inner Circle as Hawks Beat Billionaires - Bloomberg

Putin Said to Shrink Inner Circle as Hawks Beat Billionaires - Bloomberg:



"Vladimir Putin isn’t just angering leaders from Berlin to Washington. He’s irking some of his richest friends, too, by snubbing their pleas to end the conflict in Ukraine and ostracizing all but a handful of hardliners.



The ruble’s plunge has heightened opposition to Putin’s backing of the rebellion in Ukraine among his wealthiest allies, prompting the president to shrink his inner circle from dozens of confidants to a small group of security officials united by their support for the separatists, two longtime associates said.



Putin is increasingly suspicious of men who owe their wealth to their ties to him and who are being hurt the most by U.S. and European sanctions, according to the people, who spoke on condition of anonymity to avoid reprisal. The 21 most affluent people in the country lost a total of $61 billion last year, a quarter of their combined fortune, according to the Bloomberg Billionaires Index."



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Oil Prices Probably Won't Keep Gains Made After Death of Saudi King - Bloomberg

Oil Prices Probably Won't Keep Gains Made After Death of Saudi King - Bloomberg:



"The increase in oil prices after the death of Saudi Arabia’s King Abdullah will probably be temporary amid an oversupply in the crude market.



Brent, the global oil benchmark, climbed as much as 2.6 percent and U.S. marker WTI jumped 3.1 percent after the king’s death was announced by Saudi royal court. Crown Prince Salman bin Abdulaziz, Abdullah’s half-brother who will succeed him, is seen sticking to the oil policy of the world’s biggest crude exporter.



Saudi Arabia, OPEC’s biggest producer, has led the group’s strategy of maintaining production quotas amid a 58 percent drop in crude since its peak in June. While smaller producers including Venezuela called for action to prop up prices, Saudi Oil Minister Ali al-Naimi highlighted the need to preserve market share as global demand slows and the U.S. pumps the most since 1983."



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Saudi Arabia’s New King Probably Will Not Change Current Oil Policy - Bloomberg

Saudi Arabia’s New King Probably Will Not Change Current Oil Policy - Bloomberg:



"King Salman, Saudi Arabia’s new ruler, will probably stick to the oil policy of his predecessor, the late King Abdullah, maintaining production levels to preserve market share even at the cost of depressing prices.



A key indicator will be whether Salman, 79, retains the oil minister, Ali al-Naimi, who has driven decision-making since 1995. Al-Naimi, who turns 80 this year, has said he’d like to devote more time to his other job, chairman of the science and technology university named after the late sovereign.



With production of 9.5 million barrels a day and exports of 7 million, Saudi Arabia accounts for more than a 10th of global supply and a fifth of crude sold internationally. The kingdom’s refusal to surrender market share to rising U.S. output has contributed to the worst slump in prices since the global credit crisis of 2008."



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