MOSCOW - Russian President Vladimir Putin said on Thursday that money collected in one of the country's two "rainy day" funds should be used for supporting domestic banks, as part of broader efforts to help Moscow to overcome its economic woes.
Broadly shut out of external funding due to western sanctions over Moscow's role in the Ukraine crisis, Russia's largest banks such as VTB, Gazprombank and Russian Agriculture Bank are betting on the state support.
"We have a large amount of internal savings, they should become effective investments," Putin told in his union annual speech to members of parliament and other top officials in the Kremlin.
"Using our reserves, firstly, the National Wealth Fund, I propose to ... recapitalise leading domestic banks with funds offered ... to use for lending to the most important projects in the real sector of economy."
As of Nov. 1 the National Wealth Fund, aimed at covering future pension shortages, stood at $81.7 billion. Several Russian banks hit by sanctions such as VTB, Russia's No.2 bank, and Gazprombank already received state support earlier this year.
VTB and Gazprombank, the country's third-largest by assets, have asked for up to 250 billion roubles (3 billion pounds) and up to 100 billion in additional support to meet increased loan demand.
VTB shares were up 9.6 per cent, outperforming the MICEX index which was trading 0.5 per cent up at 1113 GMT.