Russian private lenders will ask Moscow to renegotiate with European and other foreign banks to postpone repayment on up to €310 billion of loans, a Japanese newspaper said on yesterday, sending the euro tumbling.
A proposal had been submitted to the Russian government and some foreign banks, including HSBC and Deutsche Bank, which have indicated they would like to have such negotiations, the Nikkei business daily said.
Deutsche Bank and HSBC both declined to comment.
The request was submitted by the Russian Association of Regional Banks, Anatoly Aksakov, president of the industry group, told the Nikkei in an interview.
The government would negotiate with foreign banks on behalf of the Russian lenders, and may include some repayment guarantees, if the proposal is accepted, the report said. The euro fell sharply on the report, with the single European currency sliding more than one per cent against both the dollar and the yen.
"It has always been the case that what's bad for Russia is bad for the euro as well," said Jan Lambregts, head of research, Asia, with Rabobank Global Financial Markets in Hong Kong.
In addition to business ties between Europe and Russia, the rouble is tied to a euro-dollar basket.
Russian officials have so far made no remarks suggesting Russia may seek to postpone corporate debt.
"There is an obvious mismatch between a source of information and one-time financial consequences," a Russian government source, who declined to be identified, told Reuters.
Over the last six months, Russia has spent a third of its foreign exchange reserves, or about €155 billion, to ease downward pressure on its currency as the rouble was devalued to trade more in line with lower oil prices and slower economic activity.
"As was the case last week when Fitch downgraded Russia, bad news about Russia basically becomes a factor for the euro to fall," said Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities SMBC.
This is because of the eurozone's economic ties with Russia, and also since banks in the eurozone probably have large lending exposure to Russia, Mr Nagasaki said.
Fitch Ratings downgraded Russia's sovereign rating to "BBB" last Wednesday and said further cuts were possible due to low commodity prices, high capital outflows, melting reserves and corporate debt problems.
Fitch's downgrade followed one from Standard & Poor's in December, making it the second ratings cut for Russia since the end of its last major financial crisis in 1998, when Russia devalued the rouble and defaulted on $40 billion of its debt.