Page 79 - RusRPTFeb19

8.1.7 Banks specific issues
The Central Bank of Russia (CBR) has cut the number of bank supervisors almost in half as the number of banks in Russia drops below 500 and the clean up comes into the end game. As a result of the centralization of banking supervision, the Central Bank dismissed about 45% of its staff, reducing their number to less than one thousand people, said Deputy Chairman of the Central Bank Olga Polyakova in an interview with Rossiyskaya Gazeta. Since she took over CBR governor in 2013 Elvira Nabiullina has been steadily closing 100 banks a year to make the sector easier to supervise. The Central Bank has conducted a two-year banking supervision reform, completing it in October. Supervisory functions were concentrated in two divisions in the central office of the Central Bank: the service of current banking supervision and the department of supervision of systemically important credit organizations. Employees of the service are representatives of the Central Bank in the regions who are in contact with banks. According to Polyakova, this supervision reform has increased the manageability of the sector, eliminated regional differences in the approaches to assessing the business models of banks and removed unnecessary links in the decision-making process, making oversight more operational and easier. Polyakova noted that the centralization of supervision, among other things, solved the problems associated with the fact that regional units were “too imbued with sympathy” for the banks they were supposed to supervise.
The Central Bank of Russia (CBR) will launch its new ‘fast payment system’ (SBP) for a limited number of clients at 12 banks on January 28. The system will allow bank customers to transfer money to one another by simply entering the recipient’s phone number. A notable absence from the list of participating banks is Sberbank, Russia’s largest bank and the leading player in money transfers. Representatives from the bank have been mum on the SBP, but they likely are not pleased that it will take away Sberbank’s competitive edge. Sberbank is ahead of the curve in this area, launching an electronic B2B payments joint venture with Yandex in late 2018. Russia’s CBR governor Elvira Nabiullina has made it clear, however, that Sberbank will join, even if it doesn’t want to. The system makes much less sense if Russia’s largest bank declines to participate. The banks launching the SBP so far include: VTB, Gazprombank, Rosbank, Promsvyazbank, Alfa-Bank, Raiffeisenbank, Tinkoff, Qiwi, NSCA Payment Centre, Ak Bars, Sovcombank, and SKB-Bank. On February 28, these banks will open the system to all customers. The CBR will operate the SBP, and it will be mandatory for all banks to join—particularly systemically important ones, Nabiullina noted on January 21. The system will be free to banks for the first year, after which they will pay RUB1 to RUB6 per transfer. The cost will be lower for banks than making transfers via card.
In 2018, mortgages origination in Russia reached a record high, surging 1.5x y/y to RUB3 trillion ($45.5bn), as rates a reached a record low of 9.42% in October 2018, Kommersant reported on January 25. Clients rushed for housing credit in anticipation of a rising interest environment. From 1 July 2019, the industry switches to escrow schemes and the new rules represent a challenge for medium and small developers. DOM.rf estimates that some 30% of projects currently under construction are at risk. Altogether, this represents a sizable downside risk to demand and industry volumes, and proactive regulatory steps could become necessary. We note that the government was subsidising mortgage rates in 2015-16, but that they were materially higher (at 13.0% vs. 9.5% currently). “We also anticipate the
79 RUSSIA Country Report February 2019 www.intellinews.com