"This measure is aimed at further normalizing the situation with liquidity in the banking sector, especially for second- and third-tier banks, and will free up to 100 billion rubles," said Alexei Ulyukayev, the Central Bank first deputy chairman.
Ulyukayev said the Central Bank will grant retail savings bank Sberbank, in which it holds a majority stake, 500 billion rubles ($19 billion) in a subordinated loan.
According to Ulyukayev, the first tranche will be granted in the form of a loan as the quickest way to provide liquidity. Eventually, Sberbank may issue bonds, which will be wholly purchased by the Central Bank.
Ulyukayev did not rule out the possibility that the Central Bank could subsequently use Sberbank's bonds in operations with other banks.
Yields on all loan tranches will equal 8% per annum. The subordinated loan will be granted until late 2019.
The Central Bank of Russia is expected to downgrade its forecast on net foreign capital inflow and raise its 2008 inflation projection, Ulyukayev said.
The Central Bank's current forecast for net capital inflow stands at $40 billion, while its inflation projection for this year is 11%.
Inflation in Russia stood at 0.4% in the first two weeks of October, totaling 11% from the start of the year to October 15, the country's top statistics body said on Wednesday.
In the same period of 2007, inflation measured 8.5%, the State Statistics Service said.
The government's official inflation forecast for 2008 is 11.8%.
