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Russian Central Bank Denies 'Banking Crisis'

7 July 2004 -- Russia's Central Bank today intervened to calm tensions on financial markets after one of the country's major banks said it had run out of money to pay depositors.

Guta Bank -- Russia's 22nd largest bank -- closed its branches in Moscow and St. Petersburg yesterday, saying it faced a liquidity crisis.

Central Bank chief Sergei Ignatiev said the state-owned Vnehstorgbank is now in talks to buy out Guta Bank, using a Central Bank credit.

Another bank -- Alfa Bank -- which is among Russia's top five, announced today that it too is facing difficulties as depositors rush to withdraw their funds.

Ignatiev tried to reassure Russians, saying: "There is no banking crisis in Russia."

He said current problems are mainly "psychological" and added that he expects the situation to return to normal within a short time.