The discussion about the use for the recovery of the troubled banks of the mechanism of bail-in — forced conversion of creditors of the third stage in the subordinated loans or the Bank’s authorized capital is discussed and the possibility of introducing a Deposit insurance legal entities, the head of the Agency on insurance of contributions (ASV), Yury Isaev.
According to him, such an extension of insurance for deposits would be “logical”, as in the Western countries bail-in, usually used in the presence of equal guarantees for all categories of creditors.
“In our case, with a limit of insurance for individuals in 1.4 million rubles would be logically the same level of insurance to establish for legal entities. Then the procedure of the bail-in would be more logically built into this model,” — said the head of the ASV, noting that the timing of the introduction of such a mechanism too early to say (quoted by “Interfax”).
A serious obstacle to the introduction of insurance for deposits of legal entities is a requisite for payment of funds. “We must remember that the Deposit insurance Fund in deficit. The introduction of the procedure of insurance of deposits of legal entities, according to preliminary estimates, is of the order of plus 25% in benefits. While we are so dependent on loans of the Bank of Russia, in our view, this enter will be wrong,” — said Isayev.
In turn, Deputy Finance Minister Alexei Moiseev said that the Finance Ministry the Finance Ministry is considering the possibility of inclusion in system of insurance of deposits of legal entities, but the process is still at an early stage. “It’s unclear how to do it, because the longer we discuss it, the more problems. Like warm ice cream that melts faster than its time to eat”, — said the Deputy Minister.
Previously with the idea of introducing insurance on deposits of legal entities was made by the Commissioner of the President on protection of entrepreneurs ‘ rights Boris Titov. “The fact that we have insured the deposits of individuals, socially much less important than if we will insure the deposits of corporate clients, because if the Bank goes bankrupt, and the only person losing money is the same person, and if the company loses money and goes bankrupt, it is dozens, if not hundreds, and sometimes thousands of people who work at the plant. Therefore, social protection effect of the companies is much higher than the social effect of protecting people, because you first need to save those who give work, who gives life,” — said Titov in October last year.
He also noted that the insurance on deposits of legal entities should cover at least 5 million rubles. This, according to Titov, is the minimum amount that ensures that small companies will not go bankrupt in the event of the collapse of the banks that serve them.
The use in Russia of the mechanism of bail-in, the Russian authorities are considering as a way of reducing the cost of rehabilitation of troubled banks. In February 2016, the Chairman of the Central Bank Mikhail Sukhov said that if the mechanism of bail-in was introduced three years ago, the cost of Bank rehabilitation would be reduced by 20-25%.
The head of the Central Bank Elvira Nabiullina called bail-in alternative to revocation of the license. “In fact, bail-in is a higher degree of protection of creditors and depositors. But all this should be discussed with the banking community and very carefully approach this issue”, — said Nabiullina.