NEW YORK, Dec 31: Russia's default on $26 billion in Soviet-era debt to commercial banks worldwide this week won't sUng top US banks further since most wrote off their Russian debts months ago, economists said, reports AP.

But the move gives banks an even stronger case for denying crucial new loans to help rouse the country from its crisis, analysts and economists tn London and New York said Wednesday.

"Any US bank is going to be extremely cautious about get-Ung involved with Russia in the near future," said James J. McDermott, chairman of banking analysts Keefe, Bruyette and Woods in New York. "Russia Is persona non grata as a borrower."

Russia's Central Bank

Chairman Viktor Gerashchenko said Wednesday in a Russian television interview that the bank had dug deep into its hard currency reserves recently to pay off its foreign debts. He said the reserves were down to $11 billion, about $ 1 billion less than on Dec 11.

Nevertheless. Russia failed Tuesday to make a $363 million cash interest payment on $26 billion worth of Soviet-era loans that must be repaid to more than 600 commercial creditors worldwide.

Bank of America, the payment agent for the lenders, on Wednesday officially declared Moscow to be in default on the payments, according to Dow Jones Newswires.

"An event of default ... has occurred and has not been

cured," Bank of America wrote to fellow creditors, according to Dow Jones. A spokesman for Bank of America said he could not confirm the report.

Major foreign creditors now may be asked by Bank of America to either give Russia time to resolve the matter or to ask for an acceleration of payments. If more than 50 per cent of principal debt holders ask for accelerated payment. Russia would be bound to repay the full debt — a sum it doesn't have.

Under a 1996 restructuring agreement. Russia was granted a grace period through 2002, during which it only had to make debt service payments.

Russia maintained that missing the payment didn't constitute a default because more than 70 per cent of debt

holders agreed to accept new bonds Instead of cash.

But the commercial creditors' committee, known as the London Club, stoutly maintained that 95 per cent of its members needed to approve such a plan to avoid calling the payment failure a default.

Whatever Russia's move is called, economists and bankers agreed that big US banks won't be hard hit by the country's payment failure.

Most banks wrote off their Russian debt after August, when the country defaulted on $40 billion In domestic treasury bills, most of which was held by foreigners.

"We didn't take a hit" this week, said Chase Manhattan Bank spokesman Andrew Tuck. "Our writeoffs for exposure in

Russia took place earlier in the year."

He said Chase had approximately $200 million in direct exposure to Russia as of Sept 30 — $ 250 million less than at the end of August.

Republic New York Corp, became the first big US bank to take an earnings hit from Russia's troubles in October, when officials reported that losses' from Russian investments wiped out third-quarter profits. The country's 17th-largest bank holding company has since reduced its exposure to Russia to zero.

Overall, Russia's financial troubles have proved to be a "hard lesson learned for US banks," McDermott said.

"One has to be careful about lending to countries where

there aren't proper legal and supervisory structures." he said, adding that there were plenty of warning signs about Russia.

Russia now faces about $1.50 billion in total foreign debts, and the government has budgeted only $ 9.5 billion next year to make $17.5 billion in foreign debt payments.

Some $5 billion is due in 1999 on $ 19.74 billion in credit and loans to the international Monetary Fund. 'The IMF does not expect Russia to default on its outstanding debt to the fund." according to an IMF official who spoke on condition of anonymity.

Moscow is trying to stay current with debts made since the collapse of the Soviet Union. On Saturday, it made a $120 million payment on a bond.