CB will divide banks into universal and limited

The Central Bank unexpectedly adjusted the concept of regulation of banks with small capital, which is expected to be 1 January 2018. The regulator refused already announced the division of banks at the regional and Federal decided to divide the market on the credit of the organization of universal and limited license, announced on 8 September, the Chairman of the Central Bank Mikhail Sukhov on the sidelines of the international banking forum in Sochi.

“We are not going to require banks with capital of up to RUB 3 billion to acquire the status of a universal Bank, which suggests a more complex and heavy regulatory system. In the range of capital from 1 billion to 3 billion rubles will be universal banks, and limited license banks,” said Sukhov (quoted by “Interfax”).

In late July the Bank of Russia published a draft law for public debate, separating banks into Federal and regional. According to him in the category of Federal had to be only banks with the capital from RUB 1 billion and assets of over RUB 7 billion If the Bank does not meet these criteria, it falls into the regional category. It was assumed that these regional banks will have the right to work only in the region where their head office and also in the neighboring regions. They determined a limited set of operations. In particular, it was assumed that they cannot work with non-residents and interbank operations can only be carried out through the company. Moreover, introducing restrictions on operations, the Central Bank had to simplify for them, the regulation required compliance with only five ratios.

The regulator decided to maintain the previously announced requirement: in the category of banks with restricted licenses will be credit institutions with capital less than 1 billion rubles. However, there is one “but” — banks with the capital from 1 billion to 3 billion rubles will be able to choose your status, but banks with capital of over 3 billion would be regulated as a universal. The criterion of asset size for the regional banks (not more than RUB 7 billion), the Central Bank will not be introduced, explained Sukhov.

The Central Bank is not going to restrict foreign exchange transactions for such banks. They can spend them through lending institutions with General license, which will sign the agreement. However, transactions with non-residents the Central Bank considers “unnecessary, incomprehensible to banks on such a scale”. “We do not anticipate that these banks will be permitted to provide loans to non-residents, acquisition of foreign securities, opening of correspondent accounts in foreign banks. —)”, — said the Chairman of the Central Bank.

The impact to your business

Any possibility of choice is always good, says changes in the conception of innovations, Vice-President of the Association “Russia” Alina Vetrova. “We hope that the new draft law there will be no restrictions on assets for banks because it does not allow the transition from one category to another,” she says.

One of the goals of the regulator is to reduce the load on the Supervisory unit as the supervision of banks with restrictions on individual operations will lead the simpler, the Director of Bank ratings Agency RAEX (Expert RA) Stanislav Volkov. The banks with limited operations will become less attractive to investors and attract capital they will be extremely difficult, says Volkov.

However, he believes that the transition in the status of the Bank with a limited licence will be very painful for credit institutions, because some investors may find that they prefer to be served in the Bank with a complete set of operations. “Also, the Bank may leave and some companies, believing that a universal Bank is not only more convenient, but safer. To earn such banks will be more difficult,” — said the expert.

Limitation of operations means that non-universal banks in the eyes of their customers will not have the usual set of banking functions, as part of the service will not be available, said Deputy President of the Asian-Pacific Bank”, Mikhail Pavlov. “Restricting the operation will hit the business of these banks, which would encourage their owners to consolidate, and those who consolidate will not run the risk to turn into a cash management organization”, — agrees with Pavlov pessimistic view of the future is not universal banks.

According to Pavlov, the owners of many small banks, including regions, are willing to sell them, but the banking business today is unattractive in power regulation and low profitability. “So if there are offers, usually at a discount of book value. The initiative of the Central Bank will force shareholders to lower the bar of expectations for the price and to go on sale, or consolidation, if they have no desire to limit their operations,” predicts banker.

“In turn, we are ready to provide their services to customers of small banks, if they want to go to the Bank with a universal license. In addition, we have experience in consolidation, and we are ready to consider the acquisition of small banks in the regions of our presence, if we see this as an opportunity of business development” — is Pavlov.

The head of a small Bank in Ryazan “Zhivago” (assets of 3.2 billion rubles, according to “the Banks.<url>” on August 1) Alexei Boundary, in contrast, believes that a simplified or regulation for regional banks with limited license is a definite plus that will allow you to reduce costs. “Our business model is built primarily on raising funds from individuals and legal entities of the Ryazan region and their placement in the credits to local population and business, and non-residents in the structure of the client base of the Bank is insignificant share. In addition, the income from cross-border customer transactions represent a small percentage of the total amount received by the Bank in income,” says Landmark.

However Vetrov believes that the prohibition of work for small banks with non-residents is too heavy-handed approach of the Central Bank. “It would be right to prohibit some specific types of transactions with nonresidents, where, in the opinion of the Central Bank, there are gaps from the point of view of control of shadow operations,” she concluded.