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. Last Updated: 07/27/2016

Citi Russia President Says Ruble Deposits on the Rise

ReutersZdenek Turek, Citibank CEO Russia, Kazakhstan and Ukraine, talking to Reuters in Moscow on Tuesday.

After plunging during the global credit crisis, ruble deposits at Citibank's Russian arm have resumed rising, underlining a return of confidence in the local economy, the bank's Russia president said on Tuesday.

Deposits of rubles at the bank slid early as a result of the currency's depreciation, in which the ruble lost about 40 percent of its value versus the dollar during a slow burn devaluation.

This forced Russians to shift their savings into the dollar, which was seen as a safe haven during a time of instability in the global financial market.

Money began moving back into rubles towards the end of the second quarter, however, after the currency regained stability and the global crisis started to ease, Zdenek Turek said in an interview at the Reuters Russia Investment Summit.

"From the bottom, which for us was about January to February this year, we have managed to double the amount of ruble deposits," said Turek, a 20-year Citigroup veteran who took his post in January, transferring from South Africa.

He declined to give specific numbers, but estimated that ruble deposits at Citibank were now growing at a single-digit rate month to month. "Now, more or less, from our point of view, things are back to normal," he said.

In the Russian banking system as a whole, ruble-denominated retail deposits for terms of up to 30 days slumped to 729.4 billion rubles ($23.6 billion) on April 1 this year, from 840.0 billion on Jan. 1, but had rebounded to 855.9 billion by Aug. 1, according to central bank data.

Turek said the recovery of ruble deposits and a range of other data indicated that Russia's economy, which shrank 10.1 percent in the first half of this year in terms of gross domestic product, had stabilized and started to improve.

"We have seen positive trends in industrial production, we have seen positive trends in GDP month on month in June and July, so we have reasons to believe the economy has stabilized and started to grow."

With 58 branches and 3,000 employees, Citibank's Russian arm has issued 60,000 new credit cards so far this year and is now extending $20 million of new retail loans per month, Turek said.

Conditions in Russia's interbank money market have become "much better" after activity partially froze at the height of the crisis, he said.

Although Citibank suffered a rise in its nonperforming corporate loans in Russia, the increase was less than originally feared, Turek said.

"On our portfolio of loans and credit cards, we did see an increase in nonperformance, but less than anticipated, frankly, and for existing loans, we restructured with many of the clients very actively."

While some banks in Russia have been stuck with collateral that they have difficulty liquidating, Citibank has generally not faced this dilemma, Turek said.

"Our lending was always on the cash flow basis. When we give people money, we want to see their capital, we want to see the business strategy and the cash flows and we never provide too much emphasis on collateral.

"We don't have a particular experience with foreclosing and realizing the collateral, yet. We focused on restoring the cash flow generation of the company, restoring the profitability rather than trying to seize and realize the collateral."

However, Turek said it was "too early to declare a victory, there are still factors, external, that can disrupt the recovery."

"We do need to see internal demand picking up … but there is a modest optimism, a cautious optimism in the market.

"The government has addressed the situation in 2009 very well, but there is still the question of the situation in the medium and longer term."