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entities in a single sector, according to Nabiullina. She named cross-sector deposits, risk shifting, deal and investment source concealment, mass sale of non-core risk assets as some of the practices that the CBR will seek to weed out. Most recently the head of the CBR argued that assets of the owners of the failed banks should pay for their bailouts . She estimated that so far the regulator recovered only RUB100bn in assets from former bank owners, while injecting RUB758bn in capital and RUB1.86 trillion worth of deposits. The numbers are final and additional capital and liquidity provisions are seen as limited.
In April 2018 the average mortgage interest rate for housing in newly constructed buildings for the first time declined below 9.5% to 9.43%, Vedomosti daily said on May 31 citing the data by state agency Dom.rf. The mortgage rates continue the stable downward trend, overall down by 2.01pp to 9.68% as compared to 2017. In addition to the overall lowering of interest rates in Russia, in the end of 2017 the government has adopted a program of subsidy-discounted mortgages for large families . With the government subsidies, the annual interest rate will be artificially lowered to 6%, at which level it will be fixed for the period of three to five years (depending on the amount of children). The programme is a continuation of the government’s policy to encourage home-ownership and follows on from the larger generic programme to subsidies mortgage rates so that the cost to the consumer was capped at 12%. However, after interest rates fell below this rate the programme was ended and now the government is introducing more targeted programmes to benefit more socially vulnerable groups, as well as continuing a policy to encourage a rise in birth rates. With lower rates in January-April the issuance of new mortgages soared by 63% year-on-year to 0.42mn loans or by 77% y/y in money terms to RUB831bn ($13.4bn). The overdue loans remained stable at 2.11% (2.52% a year ago), with the risk of bubble at the market "absent", the Dom.rf report notes.
The Central Bank of Russia (CBR) will consider ways to discourage insurance companies from becoming "too big to fail ", the head of the regulator's insurance market department Philipp Gabunia the industry conference on June 6. Russian insurance market will soon see an emergence of "the largest player in history" after VTB Bank sells its insurance assets to the country's largest insurer Sogaz . "I think, we will look for ways to deal with situations when you become too big and you must have a very large margin of safety," Gabunia said as cited by Tass. "We even may end up with discouraging companies from occupying an excessive stake on the market. I am now talking about a very large domination, and the problem, which is described as too big to fail," he added. Sogaz underwrote RUB158bn ($2.5bn) of premiums in 2017, making it the country's largest insurance company. VTB Insurance had RUB80bn in premiums in 2017, Russia's fourth largest premium portfolio. Analysts surveyed by RBC business portal estimated that the merged insurer will take 20% of the market, and up to 45% of the market in certain segments such as medical and property insurance. The "gigantic" player will be able to benefit from vast economies of scale, such as absorbing some re-insurance risks without re-insuring brokerage abroad. Notably, Sogaz has a stable portfolio in state companies and state institutions, such as in the Defence Ministry and other security agencies, Federal Customs, Sberbank, Rosneft, Russian Railways, and others.
Russian prime minister Dmitry Medvedev has signed a decree allowing
RUSSIA Country Report July 2018 www.intellinews.com