The Ministry of Finance proposes to cut from the Federal budget deposits of banks, which limit the exercise of “banking operations for individual industries, individual enterprises (organizations) in connection with the use by Russia of measures sanctions impact”, published April 7 on the website of “Federal portal of projects of normative legal acts” of the draft government resolution on changes in rules of placing of means of the budget. Moreover, the document stipulates that the cause of failure can be not only restrictions, but also “risks and threats” of their application.
Deposits of the Federal budget will be deprived of the main “daughters” of foreign banks, according to analysts polled . “First of all, it will affect banks with foreign capital, because access to deposits, the Federal budget has a large state-owned banks, large banks with foreign capital and a small number of private banks,” — says the managing Director on Bank ratings “Expert RA” Stanislav Volkov.
The total amount of deposits of MinFin and regional budgets on the accounts of the banks as of March 1, 2017 amounted to 1.5 trillion rubles Lion’s share of this amount is attributable to accounts in state banks — 1,3 trillion roubles, in banks with foreign capital was placed just 4 billion rubles, says the Director of Fitch Ratings Anton Lopatin.
Federal Treasury places deposits of banks in a daily or weekly basis tens of billions of rubles. In recent times, 5 April, it posted a 74 billion rubles since the beginning of the year, the volume of placed through Treasury funds amounted to 664 billion rubles.
The new requirement will reduce the number of participants and therefore increase the size of the average lot (this figure varies from placement to placement, depending on the number of participants. — ) that adds Stanislav Volkov, managing Director on Bank ratings “Expert RA”. Due to the increase in the volume of deposits there is risk that someone of the participants unexpectedly will not be able to return the money, and it will be quite a significant loss, explains the analyst.
According to the document, the government will determine specific banks whose deposits will not be available for Federal funds. Exactly how they will be selected and will be disclosed in the draft resolution are not specified.
However, the requirement of “loyalty” to the Russian companies is not the only necessary condition. Also hosting the budget funds of the banks should be ratings on a national scale from one of the accredited CB rating agencies (now ACRE and the “Expert RA”), and the rating level is not below the established government.
This can reduce the activity of foreign banks on the Russian market, although will not have a significant effect on the volumes of attracted them “subsidiaries” means, analysts say. “Historically, foreign banks did not attract significant funds from the budget of the Ministry of Finance or, if necessary referring to the parent banks,” — says Anton Lopatin. Stanislav Volkov adds that any significant dependence on this source (of Finance Ministry deposits) foreign banks no. “In the current situation it’s more like a symbolic gesture,” said Volkov.
This is not the first initiative to restrict the activities of banks with foreign capital from the government of the Russian Federation, taken because of the sanctions. Earlier, the Finance Ministry, in particular, proposed to empower the government to ban the work with strategically important state-owned enterprises to banks, which formally meets the General requirements (minimum capital, participation in the Deposit insurance system, etc.), but restricted lending to individual enterprises and organizations, due to sanctions against Russia. The proposal is framed as an amendment to the bill “On the protection of the interests of the state when placed in banks of budgetary funds, state enterprises, state corporations and state companies” (submitted to the Duma by the government in July of 2016, in December, adopted in the first reading and preparing for the second).
The Russian authorities already have the ability to protect the interests of Russian banks and using another mechanism. According to the recently entered into force the decree of the government, they can solve under sanctions from the Bank to access Federal funds, even if it does not meet the General requirements for participation in the recapitalization program. A prerequisite for use of this norm is the finding of a shareholder under international sanctions.