The bill is about forced conversion of unsecured debt of the creditors in the statutory capital of banks (bail-in) will be taken in two stages, said Deputy Finance Minister Alexei Moiseyev on the sidelines of the Gaidar forum. According to him, initially planned to adopt a law on Bank rehabilitation at the expense of the owners, and then the Finance Ministry will work on the draft law on bail-in.
“The original bill were chilled by the decision of the national Council for financial stability. This was done in connection with the adoption of the decision on the priority development of the law on rehabilitation. It will have elements of bail-in in relation to the ownership of banks”, — he explained.
The Finance Ministry expects that the improved recovery act will be passed during the spring session of the state Duma. Then, on the basis of the experience gained will develop a law on bail-in, said Moses. “I don’t want to run ahead of a steam locomotive,” he said.
What is bail-in
Bail-in is the forced transfer of unsecured creditor claims in the Bank’s authorized capital. The Ministry of Finance considers this mechanism as one of the options of saving the banks close to bankruptcy.
The mechanism of bail-in is beneficial for investors if the result is they will receive more than the liquidation of the Bank. It is assumed that the owners of large deposits, which in the case of bankruptcy will not be able to get anything more than 1,4 million rbl. — the sums insured by the Agency of insurance of contributions (ASV) will become the shareholders of the Bank and after a few years subject to successful operation of the Bank after the reorganization will be able to get their money back.
The concept of bail-in was born in the West against the background of a massive wave of bankruptcies during the global financial crisis of 2008-2009. The most famous case of application of bail-in — the rescue of Bank of Cyprus in 2013. Then the money 21 thousand customers with deposits of more than €100 thousand were converted into shares of the Bank.
“Cyprus scenario” for Russian banks
In Russia the similar scheme was used only twice: the money of major creditors of the third stage were transferred to capital Bank “Taurian” and Fundservicebank in 2015, and on a voluntary basis.
That is possible in Russia to legalize the mechanism of bail-in, Moses said back in January last year. Initially, the application of bail-in has been considered only in relation to legal persons, but now we are discussing the possibility of bringing to the rescue of troubled banks and individuals. the Mechanism can be applied to deposits exceeding 100 million rubles. the System of bail-in assumes that if the threshold is exceeded the statutory amount of the Deposit, the remainder can go to the recovery of troubled Bank.
Banks are increasingly considering the scheme of conversion of bad debts into equity. Thought about it, in particular, M2M private Bank, who eventually lost his license. Consider the application of bail-in and Bank “Peresvet”, which introduced a temporary administration and a moratorium on satisfaction of creditors ‘ claims, and Tatfondbank. Both credit institutions before the emergence of their problems was in the top 50 in terms of assets, according to Banki.ru.
On January 12 Tatarstan President Rustam Minnikhanov said on the sidelines of the Gaidar forum that the government is the main shareholder of Tatfondbank — negotiating with major creditors to convert their debts into equity. The turnaround for Tatfondbank has not yet been found. January 13, the press service of Tatneft reported that in the case of a decision on reorganization of Tatfondbank company is ready to convert the money placed on the open Bank deposits, shares of Tatfondbank. By 15 December 2016, when the Central Bank handed over control Tatfondbank interim administration, the total amount placed in the Bank funds of OAO Tatneft amounted to 5.4 billion rubles, or 0.7% of the total value of the assets of the company.
Earlier, first Deputy Chairman of Bank of Russia Dmitry Tulin said in an interview to “Interfax” that the regulator allows the opportunity to apply the old scheme of rehabilitation of banks prior to the adoption of the bill on the new model.
The conversion price of
The situation with the “Peresvet” and Tatfondbank can play a key role in the development of the law on bail-in, said a top Manager of the Bank from the top 100 by asset size. “These two examples are very significant in the case plan. If all interested parties will be able to find a scheme whereby shareholders will be able to do it, and still be able to find external sources of recapitalization, then it will be a working example, which will be created by appropriate legislation,” — said the source .
The mechanism of bail-in will not be actively used in the banking sector, said a member of the Board of Directors of the Bank Oleg Vyugin. According to him, it is difficult to find a lender who is willing to take responsibility for the management of the Bank.
“Imagine a situation when the Bank’s thousands of creditors, after the bankruptcy, they converted requirements into the capital. How are in this case the guiding solutions? Do it in Russia or the controlling shareholders or the state. Large companies interested in preserving their funds, but not at this price”, — he explained . According to vyugina, an illustrative example is the situation with the “Peresvet”: “Major shareholders and lenders are not interested in taking on additional risk, therefore, there is a tug-of-war”.