Savers queue for their money in Russian bank panic

A crisis of confidence in Russia’s banking market spread today to one of Russia’s largest banks as dozens of customers rushed to retrieve their savings only to find that they had to wait in Soviet-style queues and pay a 10% penalty.

The management of Alfa Bank has insisted that the bank was secure and that it was flush with cash and the Central Bank also said it saw no problems with Alfa Bank, but that did not reassure Alfa’s customers, some of whom spent their second day queuing today.

“They promised us a lot, but they are telling us nothing,” said Natalia Alexandrovna, 48, a chief bookkeeper at a nearby firm who was among about 60 people standing outside the closed doors of Alfa Bank’s Bolshaya Polyanka branch. She said that she had been waiting for three hours.

“Alfa Bank…will continue to carry out the instructions of its clients in full and without restrictions or delays,” the bank said in a statement.

The banking sector’s recent troubles began in May when the Central Bank revoked the licence of medium-sized Sodbiznesbank because it was allegedly laundering money, including payments made in connection with a mafia-style assassination. Sodbiznesbank has denied the charges.

It was the first time the Central Bank had pulled a licence before a bank had actually defaulted on a loan, and it spurred fears that a purge of the banking sector was on the cards.

Bank-to-bank lending rates soared, and many banks closed credit lines to one another. The fears largely affected small and medium-sized banks, but troubles at Guta Bank raised the stakes.

Central Bank Chairman Sergei Ignatyev insisted that there was no crisis.

Alfa Bank, Russia’s fourth largest by assets, has long been considered one of Russia’s most stable banks after successfully weathering the August 1998 financial meltdown.

It has assets worth €4.5bn on its balance sheet, said Natalia Orlova, a banking analyst at Alfa Bank’s analytical wing.

She said the bank was ready for a run by depositors. “We are prepared,” she said.

Over the past week, the company said some €90m had been pulled out of the bank by panicking depositors – 10 times more than normal.

To fend off a run on deposits, the bank introduced a 10% penalty commission for clients seeking to retrieve their funds – a move allowed under the agreement all clients sign. But a bank representative said that they would probably get rid of the commission in about a week and return the money to depositors.