|RUSSIA STARTS TO FEEL THE PAIN OF $30 OIL|
Aruba, January 13, 2016 - Russia should consider selling state banking assets as plunging oil prices continue to batter the recession-hit country's government budget, Russian Economy Minister Alexei Ulyukayev said on Wednesday.
Speaking to an audience at the Gaidar economic forum in Moscow, the minister said Russian authorities should consider the idea of cutting the state's holdings in the country's two largest banks, Sberbank and VTB, Reuters reported on Wednesday.
The state should consider this, he said, as there was a risk that low oil prices may remain for a prolonged period of time, possibly "for decades."
That Russia could consider selling stakes in some of the country's largest lenders – it owns a majority 60.9 percent stake in the second-largest Russian banking group VTB and holds 50 percent of the share capital plus one voting share in Russia's largest lender Sberbank – reflects the tough times the country finds itself in.
Russia entered recession in 2015, an event that followed the dramatic decline in oil prices (Russia is a major oil producer) as well as international sanctions imposed on it for its annexation of Crime in March 2014 and role in the pro-Russian uprising in Ukraine in the same year.
When contacted by CNBC, Sberbank declined to comment on the remarks but highlighted comments made by the bank's chief executive in an interview with Handelsblatt newspaper in November in which he signaled a tacit approval of a privatization plan, saying it would "greatly improve our situation." VTB had yet to issue any comment to CNBC but said it was preparing a statement.
Chris Weafer, senior partner at Macro-Advisory, told CNBC that the economy minister's comments added weight to speculation that privatization of state assets is on the horizon.