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. Last Updated: 07/27/2016

EDITORIAL: 100 Percent Guaranteed Exasperation




When the Russian financial system collapsed in August, lines of angry depositors formed outside banks across the nation, and people began to draw ominous comparisons with Indonesia.


Then the Central Bank announced that it would "100 percent" guarantee deposits in the six biggest commercial banks - SBS-Agro, Inkombank, Mosbiznesbank, Menatep, MOST-Bank and Promstroibank - provided citizens immediately transferred their accounts to state-owned Sberbank.


Since then, that guarantee has steadily shrunk. On Monday, Sberbank was supposed to finally give rescued depositors access to their money. Instead, they were offered no money, no real information, no apologies and no concern. Meanwhile, Sberbank was proudly trumpeting its intention to pay off a $225 million syndicated loan to Western banks on Tuesday.


This is outrageous behavior. The whole point of guaranteeing the deposits is to restore public confidence in banking. When the state casually alters the terms of the guarantee, the entire exercise becomes futile.


Sberbank and the Central Bank say that this is just a technical delay, that it's not their fault, that the commercial banks failed to provide proper documentation.


Nonsense. The state has taken an obscenely long time as it is to arrange things. The problem is not a lack of documentation from this or that commercial bank, but an utter lack of political will - or even polite interest - on the part of the government.


It has been that way from the start. When the Central Bank announced its 100 percent guarantee, depositors began moving their money to Sberbank. Then, days into the process, the Central Bank suddenly announced it would only pay out in mid-November. Given the fall of the ruble and the rise of inflation, that was a stunningly bad offer.


Those with dollar-denominated accounts, meanwhile, were told they would be paid in rubles, at an arbitrarily selected rate of 9.33 to the dollar. Given current exchange rates, on Monday that "100 percent guarantee" would have barely paid 50 cents on a dollar. Who knows now what a "100 percent guarantee" will pay - or when.


If the government cared about its people, Sberbank's doors would have been opened to cheated depositors Monday morning, as promised. Instead, the government apparently sees the people as masses to be pacified. It is motivated not by concern or duty, but by fear of the example of Jakarta.


So perhaps from the Kremlin's point of view, the 100 percent-guarantee-that-wasn't has been a 100 percent triumph: The people paused in their anger to listen, and now it's minus 20 degrees Celsius and too dark for rioting. Success!