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Year of rehabilitation: skins from banks

Год санации: шкурки от банков

One of the highlights of the year for the Russian economy was the continued “cleansing” of the banking system. A new mechanism of sanation of credit institutions the Bank of Russia tested the largest private banks – “Open”, PSB and the Bank. As a result, the Central Bank is the regulator and owner.

Temporary administration entered December 15, PSB, included in the top-10 largest Russian credit organizations, found evidence of destruction (or rather, missing) the credit profile of the corporate borrowers at an astronomical sum 109,1 billion rubles this was announced by Deputy Chairman of the Bank of Russia Vasily Pozdyshev. These words on 22 December.

Exactly the day before the main owner and former Chairman of the management Board Dmitry Ananiev has left for London. And to return in the near future is clearly not intended.

From there on Skype, he gave an interview to “Vedomosti”, which sharply criticized the Bank of Russia: “In my opinion, the Bank shot, the skin was thrown into the consolidation Fund. Of course, we might say that the take-off shot, but the Bank normally and stably operated. The success of the Central Bank in resolution of desire is not want, the decision was made for the state account”.

According to him, no requests to the controller, unlike the colleagues (there is a clear allusion to the key of the owner of Binbank Mikhail Shishkhanov, who asked the Central Bank to rehabilitation) to save the Bank he did not send.

The history of PSB – the final link in a chain of shocks and tectonic shifts that took place in the Russian banking system in seems to be a relatively favorable from an economic point of view for the country 2017.

Despite the fact that the total profit of Russian banks for the year probably will amount to a trillion rubles, and a structural surplus of liquidity (or, to put it simply, the “extra money” that banks have nowhere to spend it) and it has already reached 2 trillion, this number of failures of large banks, as in the past year, was not even in the peak of the crisis in 2014-2015.

As a result, the dominance of the state in the banking sector acquired a truly cosmic scale. The three largest private banks of Russia — “Otkrytie”, Bank and Promsvyazbank — came under the direct control of the Bank of Russia. They sanitize through the Fund’s consolidation of the banking sector, driven by Central Bank. In addition, the Bank of Russia became the owner of the largest Russian insurance companies — “Rosgosstrakh” (enters into holding “Open”).

In 2017 for the first time in Russia’s post-Soviet history (the Soviet Union, of course, all banks were state and, in fact, just redistributed public money) was a paradoxical situation: the Bank of Russia, whose functions include regulation of the banking market and the largest of its direct participant.

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It’s as if the referee of a football match at the same time was the head coach and captain of one of the teams playing. Moreover, the strongest. If we consider that the Central Bank is the main shareholder Sberbank, will soon have to raise the question of the meaning of the existence of commercial banks in the country as such.

The Russian banking market is reeling from major scandals and loud insurance claims whole 2017. It started with this regional banking crisis in Tatarstan. The result is included in the top ten Russian regions in all economic indicators, Republic lost the second largest regional Bank Tatfondbank (which were at the time of revocation of the license in the top-50 of Russian banks) and several credit institutions.

In the beginning of the year had urgently to save the Bank “Peresvet” (top 50), among the owners of which were ROC and which eventually came under the control of the Bank (the shareholders of “Rosneft” and its structures).

In the summer of in the financial market happened new powerful earthquake. First, July 10, was introduced temporary administration of the Central Bank, and after two and a half weeks of revoked license of the Bank “Ugra” of the top 30. This was the largest insurance event in Russian history — the government through the Deposit insurance system was obliged to pay the depositors of “Ugra” about 170 billion rubles, which exceeds the annual budgets of many Russian regions.

And for the owners of the Bank said the Prosecutor General’s office, even trying to block has already begun payments to investors of “Ugra”. The trial around the Bank are still the owners are trying to challenge the revocation of the license.

But the main turmoil began in late summer and autumn. Three private banks from top-15 became the property of the Central Bank. If you add up the total assets of only three flagship Bank, where a readjustment in the property of the Central Bank — “Opening”, the Bank and PSB (these banks are sanitized other credit organization) at the time of introduction of temporary administration, they would have amounted to about 4.8 trillion roubles.

By this measure conditional “group, the Central Bank” would now fourth place among all Russian banks, second only to Sberbank, VTB and Gazprombank.

The Bank of Russia promises to sell the rehabilitated banks to private investors at the earliest opportunity. But if such a situation on the banking market in the Russian economy persist, it is unlikely they will be buyers in the foreseeable future.

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This raises serious questions to the Bank of Russia. If the country begins to crumble — and the global in the absence of external negative factors as, for example, in the second half of 2014, when coincided unfolding war of sanctions, the collapse in oil prices and the sharp weakening of the ruble — major banks, means the Central Bank is not able to effectively monitor their work? Holes in the balance sheets and manipulation of assets in banks shall be opened only “in hindsight”.

It turns out, the regulator is unable to regulate? No Bank accounts can not be trusted? Without financial oxygen tent of the state of any Russian Bank, even the largest, can turn “into a pumpkin,” like a carriage for Cinderella?

Central Bank and he understands that a mass revocation of licenses not yet made by the Russian banking system is fundamentally reliable and honest. Not by chance together with the Ministry of Finance has prepared a bill, which changes the penalty for banks for violation of the law, writes “Kommersant”.

The Central Bank has decided to tie the level of fines for banks who do not observe the law and not fulfilling the requirements of the regulator, to the value of their equity. The upper limit of the penalty is not installed.

According to Bank of Russia estimates, the modified penalties will replace the revocation of licenses and improve the situation for Bank customers. For people, even though guaranteed by the state to 1.4 million rubles of payments to review the licenses the Bank always stressful. Not to mention the businesses that anybody compensates nothing.

2018 will be decisive for the future of the Russian banking system. If it remains diverse with the presence of banks of different size, regional credit institutions, the visible or the private sector is gradually transformed into one or more “SBERBANKA” under total state control. Many Russians still too vivid memories of the early 90s, when suddenly collapsed, even the seemingly immutable and eternal structure of the savings Bank, and millions of people instantly lost their life savings.

With the stability and relative predictability of the ruble the Bank of Russia certainly did. Now he has to prove that it can effectively regulate the banking system. And that is something too many “skins from banks” around…

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