Russky Standart Caps Cash Advances

For VedomostiCustomers withdrawing funds from Russky Standart ATMs in July. It has limited cash advances on credit cards.
Tremors from the global financial-sector earthquake are beginning to reach Russian consumers as the country's retail banks begin to impose limits on credit card cash advances.

Russky Standart Bank, one of the country's largest consumer lenders, has instituted a limit of 5,000 to 10,000 ($190 to $380) rubles on cash advances for its credit card clients, with the exact sum depending on the borrower.

Clients had previously been allowed to take cash advances up to the credit limit on their cards, a client-service representative said Monday.

"As a market leader and a responsible lender, Russky Standart Bank evaluates its lending policies on a continuing basis to ensure that its clients have access to credit they can afford," said the bank's spokesman, Preston Mendenhall. "In this particular case, we limited withdrawals to prevent customers from financing their other debts with cash from Russky Standart Bank credit cards."

Total cash advance withdrawals on Russky Standart credit cards have more than doubled in the last week, said the bank's deputy chairman, Yevgeny Tutkevich, Kommersant reported.

Maxim Osadchy, a senior banking analyst at Antana Capital, said the reported rise in cash advances could be part of a larger trend among customers to keep cash on hand.

Russky Standart's measures followed a move by Renaissance Capital on Sept. 23 to limit total cash advance withdrawals to 5,000 rubles per week.

Withdrawals from deposit accounts were not affected.

"This is a very responsible move by a prudent financial institution," said Mikhail Galkin, a banking analyst at MDM Bank. "Russky Standart is trying to be very disciplined and keep a strong liquidity cushion."

In 2007, Russky Standart came under serious criticism over hidden fees on consumer loans.

"Russky Standart faced a mini-crisis before the rest of the market. It had to entirely readjust its business model," Galkin said, adding that it is now "among the least leveraged of Russian banks and in a better position than some of its peers."

Richard Hainsworth, CEO of RusRating, a Western-owned rating agency, said that, although " there could be better transparency," the fact that the bank did not immediately inform clients directly is not really the issue.

"There are limits on cash advances from credits cards all over the world," Hainsworth said. "The bank isn't obliged to lend them money, and the fact that the bank wants to conserve limits is fairly normal, especially in an environment that is beginning to get very sensitive to liquidity and wants to conserve cash."