GENEVA, March 14. The Chairman of the Bank of Russia Mikhail Sukhov believes that 2016 will be difficult for Russian banks, but the reasons for problematic situations there. He said this to journalists on the sidelines of the Russian economic and financial forum in Switzerland.
“Overall, I think it will be difficult, but there are no serious reasons for problem situations. The year will be difficult, but I believe that to manage banks in a difficult situation, not less responsibly, than to manage them in the period of favourable market conditions”, – he said.
Earlier, the head of the Bank of Russia Elvira Nabiullina declared that the Russian banks are experiencing difficult times, but the banking system is not experiencing a crisis. Nabiullina also emphasized that the measures the Central Bank and the Russian government to support the banks helped them adapt to the new economic conditions.
Profits of banks over January-February
Profit of Russian banks for January-February amounted to 83 billion rubles, according to the results of the first quarter may reach 100 billion rubles, said Mikhail Sukhov. “Profit for the January-February amounted to 83 billion rubles. These profits are received not only by our largest Bank but also the banking sector (in General) for the first time in last time is also profitable. In December and in the beginning of this year the profitability of banks started to recover. I think that in the first quarter earnings will exceed 100 billion rubles. With regard to annual forecasts, to do them carefully, but I think that the figure of 400 billion roubles is quite real”, – said Sukhov.
The Chairman of the Central Bank stressed that banking sector has started to recover operating profitability since the end of last year.
The Chairman of the Central Bank: the “hole” in the capital of Vneshprombank increased as a result of currency revaluation
“At the end of the year were large accrual of provisions for Russia (lost the license on January 21, approx. ed.), which were quite sensitive to the state of profits in December. We are closely watching how objective measures profit in relation to the risks taken by the banking sector. There is a hypothesis that there is a certain amount of the accumulated problems, which is not yet reflected in the ratio of the rate of growth of reserves and overdue debts”, – said Sukhov.
As previously reported, the net profit of Russian banks for the year 2015 amounted to $ 192 billion. For 2014 profit of Russian banks amounted to 589 billion rubles.
On the replenishment of the capital funds in RMB
Russian banks can replenish their capital funds denominated in the Chinese yuan, said the Chairman of the Bank of Russia.
“Any artificial stimulus payment in other currencies no, we just expanded the list of currencies in which to pay (capital contribution). It’s not an artificial measure, relieve discomfort for Chinese investors who want to invest in yuan, not more,” he said.
The Chairman of the Central Bank also explained that restrictions on the size of the contribution to the capital denominated in foreign currency, no. This will include yuan, said Sukhov.
The Central Bank does not expect significant changes in the LCR standard
The CBR will give systemically important banks 600 billion rubles
The Bank of Russia does not expect significant changes in the ratio of short-term liquidity (LCR) in systemically important banks in March, said the Chairman of the regulator. “The dramatic changes we don’t expect,” he said.
The Chairman of the Central Bank also said that at present about half of the systemically important banks have applied for contractual liquidity lines. “But this does not mean that someone has a liquidity shortage, and someone not,” he said.
The Bank of Russia has approved a number of systemically important banks credit lines amounting to about 600 billion rubles to meet the requirement for short-term liquidity.
Sberbank needs no instrument of irrevocable credit lines of Central Bank
The Bank of Russia approved the list of 10 systemically important banks
The CBR confirms the introduction of short-term liquidity standard from 2016
Earlier, first Deputy Chairman of the Central Bank Alexey Simanovsky has informed that, as at the beginning of February, all systemically important banks met the ratio of short-term liquidity.
The Central Bank of the Russian Federation from 1 January 2016 introduced the requirement for short-term liquidity for systemically important banks with a minimum of 60% with an increase of 10 percentage points annually until reaching 100% by 1 January 2019.
The state does not leave the sphere of financial recovery of banks
According to Sukhova, the state fully withdraws from the financial rehabilitation of banks.
The banking system of the Russian Federation in 2015. Dossier
“We do not anticipate that the state will completely withdraw from the sphere of financial recovery of banks. We assume that in those cases where it would be beneficial for creditors, legal or natural persons, they can be offered the tools in the form of Bank shares, subordinated bonds, which will be complemented by financial investments realized due to emission source”, – said Sukhov.
The Chairman of the Bank of Russia stressed that the state participation in the financial rehabilitation of the banks will reduce the fee for it for society. “We hope that we will intervene early and try to restructure the banks in those cases where it is the most economical for the society and can not make the current owner of the Bank,” he said.
Sukhov noted that in such situations it is always necessary to find a balanced solution that would save emission resource with one hand and to maintain confidence in the abilities of the authorities to implement measures for financial rehabilitation of the Bank on the other.
The revocation of licenses of credit organizations in 2013 – 2015 years: chronology
In turn, the Deputy head of Agency on insurance of contributions Andrey Melnikov during his speech at the conference noted that in the history of the Corporation has not yet been a case when the money from rehabilitation did not return. “There is reason to believe that we will continue in the same trend to go”, – said Melnikov.
According to the Bank of Russia, in 2015, under the reorganization were 15 banks, in 2014 there were 12. The Agency participated in financial rehabilitation of banks 30. This year started 16 remediation projects in relation to two credit institutions, the rehabilitation procedures were completed.
About the deductions of banks in Fund of insurance of deposits
The landmark contributions of Russian banks in the Deposit insurance Fund (FSV) in the future can be 10% from the profit sector, says Mikhail Sukhov. “The level of 10% while restoring profitability will be normal to the profit and payments to the Fund were proportionate”, he said.
How to get the money back from the Bank deprived of the license
Identified agent banks for payment of insurance compensation to depositors of the Master Bank – Sberbank and VTB 24. A schematic diagram for explaining how to get the money back from the Bank deprived of the license. Infographics ITAR-TASS
Sukhov said that the level of payments since the establishment of the Deposit insurance system (0,1% once a quarter) is not allowed to cover at the expense of banks those large-scale problems that have accumulated over the years.
“But the level of load that was over the years, was still quite high. Banks paid in CAF 7.5 per cent of total earned income. I don’t think that even in times of difficulties we need to raise the question of what banks need to seriously increase the payments to the Fund to the detriment of its own profits. Last year they paid a little more than half the profit that was received during the year. That’s a lot. However, to the subject of payments to the Deposit insurance Fund will need to return when you restore the profitability of the banking sector”, – said the Chairman of the Central Bank.
As previously reported, the Board of Directors of the DIA meeting in late January, considered the option of establishing the highest possible rates of contributions to the Deposit insurance Fund for banks, overestimating rates on household deposits since the second quarter of 2016. It is assumed that the new increased contributions by banks, overestimating rates will be paid in the third quarter.