Globex Puts Freeze on Term Deposits

October 15, 2008 by · Leave a Comment
Filed under: Global News 

In a sign that the liquidity crisis is becoming more acute for Russian lenders, Bank Globex, one of the industry’s medium-sized players, has blocked early withdrawals from fixed-term deposit accounts for five days.  The announcement raised immediate concerns about whether the bank’s move was even legal.

Emil Aliyev, vice president of Globex, said the measure was introduced after a spike in demand for early withdrawals of term deposits, “with many depositors explaining that they urgently wanted to transfer their money to VTB and Sberbank,” Interfax reported. Both VTB and Sberbank are state controlled.

Garegin Tosunyan, president of the Association of Russian Banks, said the Globex decision, while severe, was “the correct action to take.”

“When panic strikes, the banks need to take measures,” Tosunyan said. “You need to pour cold water over people’s head and say, ‘Look, enough; let’s stop panicking now.'”

Aliyev said deposits in Globex had fallen by 13 percent in September, from 27.1 million rubles to 23.5 million rubles ($1 million to $899,000), with most of the outflow coming from term deposits, Interfax reported.

Although the freeze does not affect checking accounts, concerns were raised after Kommersant reported that a client had been unsuccessful in trying to withdraw checking account funds at four different Globex ATMs on Tuesday.

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