A bill to create a Fund consolidation of the banking sector will be introduced in the state Duma in the autumn session, said Monday, June 30, the Governor of the Bank of Russia Elvira Nabiullina at the XXV International financial Congress. According to her, the Fund would be reorganize troubled banks, and then sell them on the market.
The bill will be introduced in the context of changes to the system of rehabilitation of credit organizations, which is now the Bank of Russia is inefficient due to the use of the Bank-sanator of troubled banks for lending to your own business and making their balance sheets of bad assets, said Nabiullina.
“That is why existing sanctions we are tightening the control over the process of financial recovery, all transactions between turnaround and reorganized Bank will be the focus of supervision with the prohibition turnaround worsen the financial position of the reorganized Bank for its bad assets. We also set increased requirements to the financial position of sanator”, — quotes “Interfax”, Nabiullina. Over the past three years, a decision was made on reorganization of the 28 banks, said the head of the Central Bank.
Later, the Chairman of the Bank of Russia Mikhail Sukhov told journalists that the key in this mechanism that the Central Bank will invest capital in banks. “There is no task to invest so much money in a certain number of banks. If the Bank will meet the criteria of systemconnectivity and economic feasibility of recovery, the Central Bank will provide funds, — said Sukhov. “We expect investment in the capital of the troubled Bank will allow you start to invest 25%-30% less than the credit scheme.”
According to Sukhov, the ability to attract other individuals for investment will be discussed. “We will rely on the management company and at other organizations that will help us to perform these functions. At this stage there is nothing invalid, including the participation of the DIA in this work,” he added, noting that the old rehabilitation projects will continue.
However, tighter control does not solve the problem of systemic weaknesses of financial recovery associated with the credit mechanism, said Nabiullina and listed these deficiencies: “the Long existence in the market undercapitalized rehabilitated Bank — up to 10 years. As well as the high cost of the instrument: credit scheme in the current environment involves the allocation of resources, approximately in 1,6 times more than in the scheme of entering the capital. The inability to consolidate banks rehabilitated, as they sanitize different winners; insufficient number of sanator with a margin of financial strength; the increase in the debt burden on the DIA; the duration of the credit refund and the motivation of the turnaround is to use the reorganized Bank as a warehouse bad assets”.
“The Bank of Russia will be the main organizer of the process of rehabilitation. The transition to the new model will create conditions for optimization of the banking sector”, — said Nabiullina. According to her, the Fund will focus on improving the financial performance of the troubled Bank, the replenishment of its capital, after which commercial banks will be in the shop working and capitalize the banks.” “Operational management of the reorganized Bank can be undertaken by the specially established management company”, — said the head of the Central Bank.
The head of the Central Bank said that the new scheme of reorganization may lead to the risk of “nationalization of the banking sector”. “But it does not occur for two reasons. First, the importance of the rehabilitated banks for the sector is small. Secondly, the result of the scan should be selling banks. The second risk is that a conflict of interest, but we will build a Chinese wall between supervision and the Fund”, — Nabiullina has promised.