Alexander Turbanov: “Adaptation to new realities and structural reformation of the bank system aren’t yet completed”

The situation in the bank sphere becomes more stable. The anti-crisis measures, undertaken during the crisis, helped to soften the blow. The system has managed to stand. Nonetheless, estimating the current economical situation the specialists don’t hurry to make optimistic forecasts. The General Director of the Deposit Insurance Agency Alexander Turbanov tells about development of the bank sector in 2010, about crediting and reliability of the bank deposits.

-Alexander Vladimirovitch, the hardest stage of the crisis is over but the problems in economics are still to the fore. What in your opinion 2010 is going to be? For the bank sector

The bank system has survived through the serious crisis and now we may say with a certain share of optimism the situation is becoming normal. But frankly speaking we are still catching our breath and found in the state of stagnation after the fall. For the last year the bank assets have grown up just by 5% and the credit portfolio has reduced by 2,5%.

In the first months of 2010 the situation wasn’t cardinally changing. It means the adaptation to new realities and the structural reformation of the bank system aren’t yet completed, so if we fail to undertake any additional steps, the bank system will most probably show the zero growth. The problem of “bad” debts will still remain urgent. The volumes of state support will be inevitably cut down and the means of the Central Bank of Russia will be partially replaced for the deposits of population. The capabilities for the savings can be shortened too: the wages in the budget sector are frozen, tariffs grow up and unemployment remains the major headache for the Russian authorities. Small revival of the bank corporate crediting is possible but only with the simultaneous reduction of the retail crediting.

-What financial resources does the Deposit Insurance Agency possess for readjustment of the problematic banks and how does the Agency manage these means?

The Agency has received 200 billion rubles fr om the federal exchequer for the readjustment and credits of the Central Bank of Russia are one more source of financing for prevention of the bankruptcy among Russian banks.

For today the Agency has spent 327,7 billion rubles, including the means, obtained fr om the Central Bank of Russia – 136,7 billion and including the asset contribution of Russian Federation to the Agency – 191 billion. These means were directed to solve the problems of those 18 banks, which during the crisis exerted the most negative influence on the situation both in Russia in a whole and in some of its regions. At that 12 banks are regional and six – federal.

-The Deposit Insurance Agency returned money to the depositors of “SOTSCREDITBANK” – the Bashkir bank, admitted a bankrupt. Are all obligations before natural persons carried out? What sum still remains not yet returned for today? And do the depositors have any chances to return this money?

The Agency has fulfilled all its obligations before the depositors by the date fixed. The overwhelming majority of the depositors had the deposits at the rate of less than 700 thousand rubles, so they’ve received 100% of their means. But among more than four thousand depositors of “SOTSCREDITBANK” there were several dozens, whose deposits exceeded the sum of the insurance coverage. The money will be paid to them back in the course of the bankruptcy proceedings. The bankruptcy manager, which functions the Agency performs too, has formed the register of the depositors’ demands for the sum of 731,2 million rubles. But I have nothing to encourage them – the quality of the assets (mainly the “bad” credits) turned out to be horrible. So those depositors, who kept more than 700 thousand rubles in the bank, will receive just about 12% of the deposits, not covered with the insurance. The repayments will start in a day or two.

-The Agency is busy with the readjustment of “BASHINVESTBANK” now. What are the prospects of this bank in your opinion?

If we say these prospects are rosy, it would be a certain exaggeration. The bank turned out to be in a rather uneasy situation and its full recovery would take one –two years but the “patient” is already on the mend and either the Agency or the BIN-BANK – the owner of the “BASHINVESTBANK” – have no doubts this readjustment project will be successful.

-Is the possibility to insure the deposits of either individual businessmen or small business companies under consideration now?

We always advocated for widening of the circle of the subjects of insurance. Several years ago the Agency has initiated the public discussion concerning the expediency to spread the insurance protection first on the means of individual business people, small enterprises and organizations, non-commercial organizations and later on the means of all legal persons. In a whole we’ve met certain understanding both among expert and at the state level. At present time the bill, spreading the guarantees of the deposit insurance system on the funds of small enterprises is found under consideration by the State Duma. The bill was approved by the Government and in the nearest future the sphere of our responsibility would be widened.

-The state stimulates consolidation and enlargement of the banks but big banks are the source of high risks. What do you think about it?

You are right – high concentration of the risks in the giant banks threatens the stability of the bank system in a whole so we would like to have special requirements for such banks – this is our initiative. I believe the mandatory circulation of a part of their shares in the stock market would contribute to higher transparency and thereby to higher financial stability of the big banks. Besides, it would be expedient to increase the norm of the capital adequacy for them (up to 13-14%). But this is just the invitation to discussion and not the project of a ready-made solution.

-And if small banks are absent, who will credit small enterprises, since the big banks aren’t interested in their kopecks?

The Agency stands for the variety of the bank system and it is clear that big, small and medium banks are necessary for development of our economics. Small banks occupy their own niche in the market, crediting small business, especially in those places where the federal banks have no interest, but let’s stop mixing the small banks and the pseudo-banks with the kopeck capitals, living thanks to suspicious operations and avoiding crediting the enterprises in the real sector of economics. The already active requirement for the minimal size of the bank capital (about 90 million rubles) and the requirement concerning the increase of the capitals up to 180 million rubles, coming into force fr om the beginning of 2012, are called to clear the market from such quasi-banks. Further increase of the capitals is expedient only for big and medium banks, working at the federal level or on the territories of several Russian regions but for the banks, working on the territory of just one region – lets call them “local” banks – it would desirable to make more comfortable conditions – it would be just fair.

-The moratorium on the exclusion of the banks from the deposit insurance system is valid till the end of 2010. The number of the banks, which don’t correspond to the requirements of the Agency, is growing up. Doesn’t the moratorium threaten the stability of the bank system?

There are several dozens of such banks and we still see no grounds for serious trouble. Sure, ideally all banks have to meet the requirements, originally set for all participants of the deposit insurance system but during the crisis we have to choose the lesser of two evils. If not the moratorium, the regulator would have to put the veto on these banks to attract the means of population and that would be resulted in the rise of intenseness among depositors, the outflow of their means and, quite probably in the bankruptcy of these banks. And that in its turn might cause the chain reaction and more reliable banks would start crashing on the wave of the panic moods.

-Can we expect the Agency to initiate the increase of insurance money? And wh ere did the sum at 700 thousand rubles come from? Coming from what was it calculated?

We have the whole system of social-economic indices, which determine the adequacy of the insurance money and today all indicators of this system don’t show that there is the necessity to increase the volumes of the insurance money. The results of the investigations, made by VTSIOM by our order, prove that.

-The law guarantees full repayment of means of the bank depositors within the lim its of 700 thousand rubles in case of the bank’s bankruptcy. The Deposit Insurance Agency faces the practice of splitting the deposits, exceeding the lim it and we know the cases when the court admitted such actions quite legal. Can you comment these decisions of some Russian courts and is the splitting of the deposits in one bank admissible?

First understand the distribution of the means on different deposits at the rate of 700 thousand rubles isn’t illegal; moreover, we always recommended the depositors to do so – to have several deposits in one bank for the total sum 700 thousand rubles, registered on different members of their families. The agency struggles with the illegal operations when the bank is already the bankrupt, no means enter its accounts and new deposits are registered through the fake inter-bank transfers. At that the bankers themselves offer such schemes to the depositors, trying to move their obligations before them to the agency. In the majority of cases the courts admit the relevancy of our refusal for payments of the insurance money to such “false” deposits, registered exactly before the recall of the bank license.