A SUPPLEMENT TO EUROMONEY/APRIL 1999: EASTERN EUROPE
Looking out of the boardroom of Conversbank, it is easy to forget that there is a banking crisis going on. The river Moskva flows below, half choked with ice, and the bank's staff bustle about servicing the needs of their clients. It is business as usual. Well almost.
The financial crisis that swept through Russia last August has killed off such big players as Inkombank and crippled other leading banks such as Uneximbank, SBS Agro and Menatep. But medium-size banks such as Conversbank came through suffering little direct damage and have seen their business boom.
During the worst of the crisis deposits flooded out of the big banks: SBS Agro, Menatep and Rossiisky Kredit all lost between 10% and 20% of their deposits. The runs on these banks began as their liquidity evaporated. Confidence fell as payments failed to turn up.
The problem was that most of their accessible funds were tied up in state treasury bills, mostly GKOs, that were frozen by the central bank on August 17. At the time an estimated Rb35 billion ($5.8