CB: “haircut” of deposits, may create a new market finstrument

CB: “haircut” of deposits, may create a new market finstrument


The mechanism of bail-in will allow for a reorganization of the Bank to use the funds creditors. According to the Deputy Chairman of the Central Bank, “haircut” of deposits would allow to save on the financial restructuring of the rehabilitated banks about a quarter of the funds provided by the state.

MOSCOW, 12 Feb. Subordinated bonds, which will receive the creditors of troubled banks in the procedure for bail-in, also known as “haircut deposits” will be market rate, and the interest in them may create a new financial instruments market, said Deputy Chairman of the CBR Mikhail Sukhov.

Discussion about the implementation of the mechanism of bail-in, allowing for the resolution of troubled Bank to use the funds of creditors, the cash requirements which are converted into shares or are placed on subordinated deposits is carried out in Russia the last couple of years. In late January, Deputy Finance Minister Alexei Moiseyev said that the Ministry is discussing the possibility of introducing the procedure of the bail-in of deposits, the size of which exceeds 100 million rubles.

“Someone wants to take a chance to remain in stock, someone wants to get a fixed income and receive long-term subordinated bonds. In principle, this could be quite an interesting tool, because usually by the rehabilitated Bank the level of trust is appropriate. The market rate on the subordinated instrument will be a market, and may encounter further market these additional financial instruments”, — said Sukhov on air of TV channel “Russia 24”.

According to the Deputy Chairman of the Central Bank, in all Russian banks that have been sanitized, the funds creditors with a volume of over 100 million rubles accounted for a total of 130 billion rubles. “Haircut” of deposits, estimated Sukhova, could afford to save for the financial rehabilitation of credit organizations of these about a quarter provided by the state funds.