Page 71 - RPTRusFeb17

equity of universal banks are increased to RUB1bn (€15.9mn); the third type comprises banks with basic licenses, whose equity may start from RUB300mn (€4.7mn) and which will mostly service individuals, small and medium business, Nabiullina said. The CBR recommends significant simplification in the regulation of such banks because the level of risks assumed by them will be lower and they will not need to perform complex transactions, particularly international ones, according to the governor.
Russia’s Deposit Insurance Agency (DIA) estimated the value of the assets of liquidated banks RUB380bn ($6.6bn), or 13% of their total book value , according to first deputy head of the Deposit Insurance Agency Valery Miroshnikov, Vedomosti reported on February 17. “We will continue to bring to justice those responsible for bringing banks to bankruptcy, including the withdrawal of assets abroad ,” he said. The DIA opened 236 criminal cases involving credit institutions for various crimes in 2016 of which 25 ended in convictions. According to DIA estimates the average percentage of creditors' claims on 1 January 2017 was only 34.2%. This is about the level of January 1, 2016 (34.7%) and higher than January 1, 2015 (23.1%). Fitch analysts recently said that it is cheaper to deny a license to a troubled bank than to try and bail it out. According to Fitch reports, the financial recovery at 20 banks turned out to cost more than to close by RUB0.5 trillion. Economic losses incurred by the Central Bank for the rescue of banks was RUB957bn in 2016 while the loss incurred by the state and its companies related to the closing of banks was RUB459bn.
The Central Bank of Russia (CBR) has more than 6,000 bankers names on its “black list” of financial professionals not to be trusted, according to the CBR press service, reports Vedomosti. The list is made up of the names of bankers who the CBR considers will negative impact on the work of any bank. The list also includes data on persons whose goodwill is recognized as not conforming to the requirements of Article 16 of the Federal Law "On Banks and Banking Activity". Currently the black list includes 2,943 names of former leaders and members of the Board of Directors (Supervisory Board) of credit institutions as of January 1 and another 601 names of former owners of large blocks of shares in a credit institution. In addition there are another 2,500 individuals listed on other grounds.
Fitch Ratings believes the plan of the Central Bank of Russia (CBR) to introduce a “bail-in” mechanism to recapitalise failed Russian banks with equity injections "would be more effective and less costly than the current system of cheap loans from the regulator". Currently, the bailed out banks don't have to comply with regulatory ratios as they receive cheap funding from the CBR to rebuild capital. This creates an incentive for weak buyers to acquire rescued banks to dump toxic assets on their balance sheets, Fitch said.
The Russian government has decided not to prolong a program to subsidize interest rates on mortgage loans in 2017 , First Deputy Prime Minister Igor Shuvalov said February 9 at a meeting of government members with President Vladimir Putin. “Quite serious stabilization on the financial market with that low inflation that we have for 2016. The government has decided that we will not continue this program, because commercial banks already offer mortgage rates of 12% and lower now,” he said. “As part of the anti-crisis plan we were striving for the rate not to exceed 12% for a borrower. When we were making a decision on subsidization, banks were offering from 15% to 20% annually. This was almost impossible,” Shuvalov said, adding that the
71 RUSSIA Country Report February 2017 www.intellinews.com