MOSCOW, August 29. /Offset. TASS Marie Mesropyan, Rita Shpilevskaya, Elena Peterova/. The Bank of Russia on Tuesday announced the entry into the capital of Bank “Opening” – a systemically important credit institution, which occupies the eighth place in the Russian banking system by assets. The regulator explained that the Bank’s activity was tied to increased risks, which the Bank knew for a long time. As a result, the Bank itself asked for support to the Central Bank, which he received. The Bank and all its structures, including the Bank “trust”, “Rosgosstrakh” and the services “Point” and Rocketbank will continue to operate normally.
“For clients, nothing changes, all obligations to them, the Bank will continue to comply in full. I would like to emphasize that this applies to deposits and deposits – they will be fully preserved and maintained in the normal way”, – assured the TASS managing Director of “Opening” Alexander Dmitriev.
As the Central Bank will enter the capital “Opening”
The Bank will be the first project of the Fund for the consolidation of the banking sector, the Central Bank, which began work this summer. The Foundation will receive 75% of the Bank bought an additional issue of shares and current owners of the Bank will be able to save 25% in the Bank, if the Central Bank does not reveal a “hole” in the capital.
“If the capital will be considered equal to zero or take a negative value, then they are completely affected in their property rights to 1 ruble. The Fund consolidation becomes 100% shareholder of the Bank”, – told reporters at a briefing first Deputy Chairman of the Central Bank Dmitry Tulin.
The powers of the Executive bodies of the Bank are suspended and transferred to the interim administration, which will consist of employees of the Bank and Fund consolidation, said the regulator. The work of the Board of Directors and the General shareholders ‘ meeting will proceed, but their decision will take effect after consultation with the interim administration.
According to the Central Bank, the financial health of the Bank “Opening” with the use of the Fund the consolidation of the banking sector will last six to eight months, after which the Bank will operate in compliance with all mandatory standards.
The Bank’s problem
According to Tulin, a group of “Opening” in recent years, very rapidly growing, including through mergers and acquisitions. This process was financed by borrowed funds and the main risks accepted by the Bank. “The Bank’s capital was insufficient in comparison with the volume of transactions and risk. The capital of the Bank, published in the official reports, apparently, were significantly overstated in comparison with its real values,” he said.
While the Central Bank has long been aware of the problems of the Bank.
Senior Director of the banking analytical group Fitch Ratings, Alexander Danilov believes that the Bank was growing too aggressively buying assets, which raised questions from the point of view of quality and how to Finance these acquisitions.
“Because of this Agency of ACRE gave them a pretty low rating, which does not allow the Bank to attract the money of pension funds and government agencies. Nobody on the market before the end did not understand how the “Discovery” of money that he is to return. Therefore, the market is likely to have overestimated the problem, believing that there were many, although in reality, as I understand it, it was not so. “Discovery” is then limited to a formal review that “all is well”. But, judging by the market reaction and the subsequent massive outflows, it was interpreted as bravado,” says Danilov.
In addition, to the problems of “Discovery” brought “a significant level of economic connectivity with their Bank owners and their affiliates”. One factor could be the aggressive strategy of the Bank in mergers and acquisitions, adds associate Director for Bank ratings rating Agency “Expert RA” Vyacheslav Putilovsky.
The cost of the Central Bank to support the “Opening” can amount to hundreds of billions of rubles, he said: “Given the size of the “Opening”, the amount will be very large, probably hundreds of billions of rubles. The approximate size of the disaster will be known on the basis of the interim administration”. Here, according to Putilov, includes funds to increase financial sustainability and to ensure ongoing solvency of the Bank.
The outflow of clients ‘ funds
“Rock the boat” and serve as an impetus to the outflow of money could be a negative information background around the “Open” recently, analysts have a consensus opinion. “The key reason was the pressure on the Bank’s liquidity – outflows of client funds in July and August. They were caused by changes in the regulatory environment (in relation to the pension funds and budget funds placed in banks rated “BBB-” on the national scale in early July), as well as negative information background,” said TASS, a leading analyst of rating Agency Moody’s Petr Paklin.
For customers nothing changes, and all obligations to them, the Bank will continue to comply fully, said Mr Dmitriev. “I would like to emphasize that this applies to deposits and deposits – they will be fully preserved and maintained in the usual manner, – said the managing Director. – All this also fully applies to organizations within the Bank group “Discovery”: the Bank “trust”, SK Rosgosstrakh, Rosgosstrakh Bank, NPF “LUKOIL-Garant”, NPF “Elektroenergetiki”, NPF “RGS”, “Opening Broker” and services “Point” and Rocketbank. They continue to operate normally and to serve customers.”
We are not talking about some kind of surgery, the cleansing of the financial group or the Bank, said in turn the first Deputy Chairman of the Central Bank Tulin. “It is, in General, about continuity in the management and development of the Bank and group with the new owner,” he explained, adding that the regulator expects a rise in credit ratings for the Opening six to nine months.
The Fate Of “Rosgosstrakh”
As mentioned in the “Opening” set, first of all, to Finance one of the largest players in the insurance market – the company “Rosgosstrakh” (loss of the insurer under IFRS in the first half of 2017 has increased 2.7 times – up to 23.4 billion rubles).
In a press release about support for “Opening” the Central Bank has indicated that companies within the group, including Rosgosstrakh, Rosgosstrakh Bank and NPF “RGS”, will continue to operate normally.
“It looks like a signal that the Central Bank recognizes “Rosgosstrakh” in this group. There is clearly, on the one hand, to demonstrate that they are part of a group and to reassure the market that everything is under control. On the other hand, a clear funding plans of “Rosgosstrakh” not specified directly from the press release, the intention should not be – it is quite concise and is dedicated to the “Opening” and not “Rosgosstrakh” – says managing Director for insurance ratings “Expert RA” Alexey Yanin.
The fate of “Rosgosstrakh” depends on the loss ratio of insurance portfolio and the efforts of management to manage, and – the availability and amounts of further funding, says Janine. It required amount it to rate refused. To maintain stability it is planned to invest about 20 billion rubles, said the source TASS in the insurance market.