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. Last Updated: 07/27/2016

Gazprom's Bank Hikes Loan Costs

Gazprombank drove up short-term borrowing costs for domestic banks to the highest level in nearly a month by transferring 473 billion rubles ($19.1 billion) raised from the sale of Yukos assets to the treasury.

The overnight Moscow Interbank Offered Rate stood at 7.8 percent on Tuesday, 4.4 percent higher than on Friday, when the money changed hands.

Gazprombank did not reply to questions about the reasons for the transfer.

"The moment to make the payment was obviously poorly chosen and it has had a quick impact on the state of the money market," said Yevgeny Nadorshin, chief economist at Trust Bank.

In anticipation of the transfer by Gazprombank, the overnight rate jumped 31.5 percent to 7 percent on Oct. 25. Before that increase, the lending rate had averaged 5 percent since the Central Bank lowered the overnight swap rate to 8 percent Oct. 11.

The Central Bank said in mid-October that it would take steps to increase liquidity as the collapse of the U.S. subprime mortgage market rippled through the global financial system, raising borrowing costs.

Thanks to the Central Bank's decision to lower the overnight swap rate -- the rate it charges for providing rubles in exchange for dollars or euros -- Nadorshin said the interbank rate would "most likely" not exceed 8 percent.

Gazprombank used the funds from the court-ordered bankruptcy sales to become a major lender to other banks.

Friday's transfer coincided with a profit-tax bill of about 200 billion rubles ($8 billion) that Russian companies must pay by the end of the month, further sapping liquidity, Nadorshin said.