(ATB) to Management Company of the Banking Sector Consolidation Fund LLC (FCBS) in order to take all necessary measures to support and further develop the bank's activities.
The press release of the Central Bank notes that the bank will continue to work as usual, fulfilling its obligations and making new transactions. ATB Bank ranks 60th in terms of assets among Russian credit institutions, is one of the largest in Siberia and the Far East.
Previously, a similar financial recovery mechanism was introduced in relation to three other credit institutions: FC Otkritie, Binbank and Promsvyazbank. In addition, in February - March 2018, three more were transferred under the management of the FCBS: Trust Bank, Rost Bank and Sovetsky Bank, but the procedure for their reorganization began even earlier - in 2014-2015.
Reasons for the creation of the FCBS
After taking office as chairman of the Central Bank of the Russian Federation in 2013, Elvira Nabiullina stepped up the process of rehabilitating the banking sector by closing credit institutions caught in dubious transactions or experiencing financial problems. Small banks began to withdraw their licenses. In 2014-2017, the Deposit Insurance Agency (DIA) paid compensation to their depositors in the amount of more than 1.7 trillion rubles.
For larger banks, a mechanism for financial recovery (sanation) was provided with the participation of the DIA or other credit institutions. However, their resources could no longer be enough to rehabilitate the banks in the top 20 in terms of assets. There were also examples when private banks had to be rescued, which were instructed to sanitize credit organizations("Opening" and "Trust", Binbank and "Rost Bank", etc.).
In July 2015, Prime Minister Dmitry Medvedev ordered the creation in Russia of a so-called bank of bad debts, or a sanatorium bank, which would support backbone corporations.
As part of the reorganization mechanism, funds for the elimination of financial problems of a credit institution are allocated by the state through the Central Bank. Initially, a temporary administration is introduced in the bank, which, after the end of the assessment financial position bank transfers control to the FCBS.
There is no moratorium on satisfaction of creditors' claims. If the temporary administration does not reveal a "hole" (excess of liabilities over assets) in the capital of the bank being rehabilitated, its current owners will keep 25% in it, the rest of the shares will become the property of the FCBS after the rehabilitation is completed.
As part of the reorganization, funds on the accounts of the top management of the rehabilitated banks in without fail written off to cover the expenses of the Central Bank. Also, the former heads of the credit institution are required to return previously received bonuses. This mechanism is beneficial for bank customers: in case of deprivation of licenses individuals could count on the reimbursement of deposits in the amount of up to 1.4 million rubles, and the companies did not have the right to reimbursement through the DIA at all.
On September 30, 2017, Nabiullina noted that after the completion of the sanation procedure, the regulator does not plan to leave the banks subjected to it in state ownership: they can subsequently be sold on the stock exchange. At the same time, the regulator plans to return most of the funds spent on rehabilitation.
Sanitation cases with the participation of the FCBS
"Opening"
On August 29, 2017, the Central Bank decided to implement measures aimed at increasing financial stability FC Otkritie bank (the largest private bank in Russia, the credit institution was at that time the 8th largest in terms of assets). Before that, against the backdrop of a downgrade of the Analytical Credit rating agency(ACRA) and rumors about possible financial problems at Otkritie, private and corporate clients in July - August 2017, 528 billion rubles were taken from it. This led to a sharp reduction in the bank's liquid assets. In October, it was reported that the size of the "hole" in the bank's capital amounted to about 190 billion rubles.
On November 29, the functions of the managing administration at Otkritie were transferred to the FKBS. On December 7, the Bank of Russia announced that it would capitalize Otkritie by 456.2 billion rubles. On December 11, it was announced that the regulator became the owner of 99.9% of the bank's shares (and not 75%, which would have been possible if a “hole” had not been found in the capital of Otkritie).
On September 20, 2017, the press service of the Central Bank reported that the owners of Binbank (12th in terms of assets) asked to consider the possibility of reorganization through the FKBS. The main owner, Mikail Shishkhanov, explained that "he did not calculate the business strength, the problems of Rost Bank, taken for reorganization, and MDM Bank turned out to be much more serious than expected in the conditions of a falling market and the current economic situation."
On September 21, 2017, the Central Bank launched the reorganization of Binbank with the participation of the FKBS. Then the regulator said that the bank needs additional reserves in the amount of 250-350 billion rubles. The bankruptcy prevention plan was approved on October 13, 2017. On December 15, 2017, the Bank of Russia assigned the functions of the temporary administration for the management of Binbank to the FCBS. On March 6, 2018, an additional capitalization of Binbank for 57 billion rubles was approved.
The Central Bank plans to merge Binbank with FC Otkritie after the completion of additional capitalization in 2019.
Promsvyazbank
On December 15, 2017, it was announced that Promsvyazbank was transferred under the management of the FKBS. He ranked 9th in terms of assets. The "hole" in his capital was estimated at 100-200 billion rubles. On January 19, 2018, Finance Minister Anton Siluanov announced that Promsvyazbank, as part of the reorganization, would be turned into a support bank for state defense orders and large government contracts.
Subsequently, it was announced that it would be used for state support Russian companies subject to foreign sanctions. On March 21, 2018, the Bank of Russia announced that the Deposit Insurance Agency would buy out 99.9% of Promsvyazbank's shares in the amount of RUB 113.4 billion. The bank passed into the possession of DIA on March 29.
On April 24, 2018, the former ex-head of the Russian Export Center Pyotr Fradkov became the head of the provisional administration of Promsvyazbank.
"Soviet", "Trust" and "Rost Bank"
On February 22, 2018, Sovetsky Bank (106th place in terms of assets, previously its sanatorium was Tatfondbank, which lost its license in 2017), was transferred under the management of the FCBS, and on March 15 - Trust (19th place) and " Growth Bank” (15th place), whose sanators were previously “Opening” and former owner Binbank Mikail Shishkhanov. On the basis of the balance sheets of these and some other credit institutions, in July 2018 it is planned to create a fund of non-core and “bad” assets, the owner of which will be the Bank of Russia.
The Central Bank continues emergency consolidation of the banking sector. One country - one bank. The reorganization of Binbank and Otkritie makes the Central Bank the main banker of the country.
The new reorganization mechanism that the Central Bank applied to FC Otkritie, and from September 21 to Binbank, is radically changing the very configuration of the banking sector in Russia. From a mega-regulator, the Bank of Russia is turning into the main participant in the system. And she herself is increasingly moving into manual control mode.
Following FC Otkritie, the Bank of Russia may proceed with the operation of rescuing another bank from the "major league", albeit not included in the list of backbone banks - Binbank. This credit institution ranks 12th in terms of assets as of September 1, 2017. The owner of the bank himself asked for salvation.
On the morning of September 20, rumors circulating among market participants for more than one day about big problems and the possible reorganization of Binbank as a bank from the so-called Moscow ring began to take on flesh and blood.
“The owner of Binbank turned to the Bank of Russia with a request to consider the possibility of reorganization through the Banking Sector Consolidation Fund. We will make a decision on this issue in the near future,” Banki.ru was told in the press service of the regulator.
Mikail Shishkhanov, Head of the Board of Directors of Binbank since September 20 “Now we are in an active negotiation stage with the Bank of Russia. Our goal is, with the support of the Central Bank through the Banking Sector Consolidation Fund, to carry out an effective financial recovery of Binbank and Growth Bank. This best option, which fully guarantees the observance of the interests of all Binbank clients, including each depositor, ”said Mikail Shishkhanov, who on September 20 “suddenly” decided to head the board of directors of Binbank. Moreover, in this post, he replaced the main figure in the family business - Mikhail Gutseriev. Gutseriev himself, at the request of Shishkhanov, headed the board of directors of Binbank quite recently, in March 2017.
“I am sure that the joint actions of the regulator and the Binbank team will make it possible to do everything necessary to protect the interests of all clients,” Shishkhanov said. In addition, he publicly admitted that he "did not calculate the business forces." According to him, "the problems of Rost Bank, taken for reorganization, and MDM Bank turned out to be much more serious than expected in the context of a falling market and the current economic situation."
The Bank of Russia did not immediately respond to Binbank's request for reorganization. In the middle of the day on September 20, a mean message appeared on the regulator’s website: “The Bank of Russia has decided to provide Binbank with funds to maintain liquidity based on the request of a credit institution.”
Without specifying the amount and conditions on which it is provided. According to some reports, it was about 120 billion rubles. It is clear that after such a tranche, there could no longer be any talk of revoking the license - this would directly threaten the reputation of the Bank of Russia itself.
In appearance, this was very reminiscent of the Central Bank's emergency injection of liquidity into Otkritie shortly before the decision was made to reorganize the bank. The only difference is that in the case of Otkritie, neither the bank nor the regulator advertised that they were negotiating the reorganization.
Sanitation as it was said
Early on the morning of September 21, a source in Binbank told Banki.ru that the regulator's announcement of the reorganization could be expected around 9 am Moscow time. It appeared around 9:20 under the name.
As in the case of Otkritie, the Bank of Russia becomes the main investor in Binbank and Rost Bank, using funds from the Banking Sector Consolidation Fund. The temporary administration of the Central Bank was introduced into the banks.
“The implementation of measures to improve the financial stability of banks is carried out in cooperation with the current owners and heads of banks, which will ensure the continuity of their activities in the banking services market and subsequently take all necessary measures to further develop the activities of banks,” the regulator said in a statement.
According to the Central Bank, PJSC Binbank and JSC Rost Bank, as well as other banks of the group - JSC Binbank Digital (Moscow) and JSC Uralprivatbank (Yekaterinburg) - will continue to work as usual, performing its obligations and making new transactions. The Bank of Russia will provide financial support to the banks of the group, guaranteeing the continuity of their activities.”
As in the case of Otkritie, there is no moratorium on satisfying creditor claims. The mechanism of converting creditors' funds into shares (bail-in) is not applied.
The new chairman of the board of Binbank, Evgeny Davydovich, who was appointed to this position at the beginning of the week, urged customers not to worry and assured that the bank would continue to work as usual. Of course, already under the new owner - the Bank of Russia.
The Central Bank was preparing for the worst
On August 29, the Bank of Russia decided to reorganize FC Otkritie through the Banking Sector Consolidation Fund and, in fact, announced that it was becoming the owner of the credit institution. And already from September 1 introduced.
Then the Central Bank announced that banks experiencing temporary problems with liquidity will be able to apply for such assistance in the event that other sources of raising funds have been exhausted, including within the framework of standard instruments of the Bank of Russia. The new mechanism was created by analogy with the widely used in international practice Emergency Liquidity Facility (ELF). The Bank of Russia will make a decision on providing the bank with funds under the MEPL, taking into account its financial stability, as well as its systemic importance.
In order for the Bank of Russia to consider the issue of providing liquidity within the framework of the MEPL, the bank applies with a request to the division of the Central Bank that supervises the activities of this bank. In particular, the bank must attach to the application information on the reasons for the need for MEPL, as well as a forecast schedule of cash inflows and outflows during the expected period of liquidity raising, indicating the bank's ability to solve the problems that have arisen (“exit strategy” from MEPL). In the case of Binbank, this option seems unlikely.
But if other banks, seeing the situation with Otkritie and Binbank, want to turn to the Central Bank as the last and only savior, MEPL can play the role of a lifeline for someone.
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In any case, it looks like the word "consolidation" in the name of the new fund, which is now saving the dying big banks should be taken with the utmost literalness. The Central Bank is precisely consolidating the sector: if earlier large banks absorbed smaller ones (including with the help of a clearly failed the old rehabilitation mechanism), now the regulator itself is engaged in such absorption. And if, in addition to Sberbank and the VTB Group, a new, third giant state-owned banking group will soon appear in Russia from among those credit institutions that the Central Bank is now sanitizing, this will become a completely logical development of events. It will be extremely difficult to find a third-party buyer for such giant banks with such problems in the foreseeable future. It is no coincidence that Mikhail Zadornov, appointed chairman of the board of FC Otkritie, said that it would take 3-4 years to correct the situation in the bank.
"Now that's it, we've arrived"
Banki.ru asked experts how the reorganization of Binbank and FC Otkritie will change the Russian banking system:
Oleg Vyugin, Chairman of the Board of Directors of PJSC Safmar financial investments”, Member of the Supervisory Board of PJSC Moscow Exchange, former Chairman of the Board of Directors of MDM Bank:
Oleg Vyugin, Chairman of the Board of Directors of PJSC Safmar Financial Investments In three or four years, the Russian banking system will have a large public sector plus banks that will be subject to reorganization and will be used to build a large National Bank. Because then, most likely, these assets cannot be sold on the market. Most likely, if they create a management system, their shares will be slowly released to the market, and they will become semi-state or non-state. But it's not a very short cut.
There will be small banks that have found a niche in this life - that have a powerful shareholder with interest. For example, Rosneft has an interest in RRDB - they support it and will develop it. Or maybe a private shareholder who will develop the bank, usually at the regional level. There are few such banks, but they can be. Well, and several large private banks, noticeable in the market.
There was a crisis in the banking system earlier - in 2008-2009 and partly in 2014-2015. And now we are seeing its consequences, the state is forced to take action. If you look at the crisis with American banks, the authorities reacted quickly. The British took under the state all the banks, except for two, stopped the problem. In our case, for some reason, it was greatly delayed. They tried to solve the problem with some half-measures - for example, a trillion was added to the capital (the program of additional capitalization of banks from the top 30 as part of the anti-crisis plan of the Central Bank) after 2014-2015, which was absolutely not enough. And now we have to act more decisively and on a larger scale.
Has the Central Bank moved away from the principles of increasing competition? They departed from the principles of competition a long time ago, when instead of privatizing state-owned banks, they began to develop and support them. It was already ten years ago. And, unfortunately, we too are reaping the fruits of this situation, the rejection of measures that seemed politically dangerous and risky. And now everything has arrived. It is already very difficult to privatize Sberbank in this situation.
Why sanitation and not recall? When a bank has large liabilities and claims from creditors, reorganization looks better than revoking the license, because it is necessary to pay large amounts of money and there can be big losses. Especially for those whose funds are not insured: corporations and other organizations. So the step is quite clear. Once the Americans did this with Lehman Brothers - they received it in full and realized that this could not be done under any fear of death. Now everything is developing according to the same logic.
Sergey Khotimsky, First Deputy Chairman of the Board of Sovcombank:
Sergey Khotimsky, First Deputy Chairman of the Board of Sovcombank Such large banks as Otkritie and Bin began to ask for help right now, because the law on the consolidation fund has appeared. And the Central Bank took up problems for which there was no tool before.
In the coming years, 50-100 banks will remain in Russia, and even fewer banking groups. Various scenarios are possible. But in the private sector, and in the state, and in the segment of foreign banks, only those who can earn a lot and at the same time transparently will remain. At some point, the share of private assets in the banking system may fall to 10-12%, but then it will grow. The most powerful private banks will grow, attracting and earning capital. The state, after the wave of nationalization, will actively begin to get rid of unnecessary state-owned banks, but this is a five-year perspective.
The best banks win, the weak ones drop out. There will be no consequences for depositors. Not now banking crisis, since it is not the customers who suffer, but the owners of the banks and the owners of the subord.
Problems in the banking system have been accumulating for 20 years. Accordingly, now it takes at least ten years for her full recovery, so as not to cause shocks.
“In general, the situation is tense”
Chairman of the board of a bank from the top 100, on condition of anonymity:
No one expected that Gutseriev would ask the Central Bank to reorganize Binbank. I won’t be surprised that there is intrigue in this story, that, for example, they will be given an unsecured loan, and then, they say, work on your own. In fact, it turns out to be a very bad precedent. Now the political assessment of these events is very important.
For Russia, with its tasks set by the president (for example, the development of small and medium-sized businesses), the nationalization of the banking sector is a serious systemic problem. After all, the sources of funding for small and medium-sized businesses will be only private, with all the ensuing restrictions.
For private depositors, the reduction in the number of banks will result in a reduction in the comprehensive offer. Products will not be so diverse. Until now, the market has developed in a highly competitive environment. Private banks are forced to implement Hi-tech, while state-owned banks can operate much more slowly. Look at the Russian Agricultural Bank - it is in no hurry. Another thing is Sberbank, driven by the ambitions of German Oskarovich (Gref). But Gref is not eternal.
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At the same time, state-owned banks have many internal and external restrictions in their development, especially in the form of sanctions. Therefore, a significant increase in the state's share in the sector will not lead to anything positive. Because no one knows how the same Sberbank will be funded under the fourth package of sanctions: relying only on internal resources in conditions of free convertible ruble. In general, the situation is tense.
If the state wants to keep this segment of the economy private, then the banking system should be represented by reliable private banks. I do not deny that weak assets are a systemic problem for private banks and the sector needs to be treated. But this should be done systematically, prudentially, working individually with each bank. The Central Bank has all the tools for this.
“The Central Bank has no other alternatives than to intercept manual control”
Valentin Popov, director of the financial and economic department of RosEvroBank:
At the moment, talking about a full-fledged crisis in banking prematurely. The rescue of FC Otkritie and Binbank is rather an echo of the 2013 banking crisis. Of course, the decision of the Central Bank to start bailing out banks made it a key player in the operational banking business, and the DIA faded into the background. The situation in the banking system is now quite complicated, and in such conditions the Central Bank has no other alternatives than to intercept manual control.
Dmitry Fedenkov, head of the analytical department of Nordea Bank: There are certain formal criteria for a crisis - in particular, the amount of funds spent by the state to support stability in the banking system. Today, this indicator quite objectively reflects the crisis phenomena in the sector. On the other hand, the crisis is a phenomenon that affects almost every participant. Latest events on banking market were notable because very large banks became their participants. However, it cannot be said that they reflect the general trend in the industry.
The Central Bank has always been and will remain a key player in the banking business, both as a “lender of last resort”, ready to lend a shoulder if necessary, and as a strict regulator that suppresses dishonest behavior in the banking environment.
Competition and self-regulation of the market - important factors development in any industry. However, if it is about financial stability in the system as a whole, intervention in market processes is 100% justified in most cases.
Will such reorganizations help to improve the banking system? Undoubtedly. Recovery, as we have seen, can occur both through the withdrawal of unreliable or weak players from the market, and through rehabilitation. Banks that are now undergoing the "intensive care" procedure have every chance of returning to the ranks of strong and reliable members of the banking community after it is over.
Sabina Khasanova, head of the information and analytical service of Banki.ru:
Sabina Khasanova, head of the information and analytical service of Banki.ru:In my opinion, the presence of a crisis in the system is obvious. Here is a crisis of confidence, and a crisis of governance, and a crisis of overregulation, and a crisis of private small banks. And now there is a crisis of large private banking groups, which for one reason or another are unable to cope with management on their own. And the rapidly growing share of the state in the sector. There is a contraction of the resource base, assets and capital, which has reached phenomenal proportions. Of the 532 banks currently operating, 166 are unprofitable based on the results of work in August. That is, every third bank in Russia is unprofitable.
Is the Central Bank becoming a key player in the operational banking business? About 60% of all assets, capital and profits are accounted for by the top 5 Russian banks, 80% are concentrated in the top 20 banks. The remaining 500 banks are content with what is left. The state's share in the banking system already reaches 70% and is likely to continue to grow - this will be facilitated by the Banking Sector Consolidation Fund.
Isn't this approach evidence of the Central Bank's departure from the principles of development of competition in the system? The regulator understands that equal conditions for competition are the key to the successful development of the system and the economy. Whether the increase in the state's share in the banking sector is a deliberate step or a forced measure is unknown, and any discussion on this topic without access to relevant information is nothing more than speculation.
Kirill Yakovenko, analyst at Alor Broker: In this situation, it is not entirely appropriate to talk about the regulator's departure from the principles of developing competition or the nationalization of the banking sector. Suppose the Central Bank would not create new mechanism direct bailout and the Banking Sector Consolidation Fund, adhering to market principles. Under such conditions, one of the market participants would have to sanitize Otkritie and Bin, respectively, the seventh and 12th places in terms of assets. Let's assume that sanators would be found and received the assets of two large credit institutions, as well as the banks sanitized by these organizations. I do not rule out that in this situation, in the long run of two, a maximum of three years, the sanatorium was already required by the sanatorium itself. This is a vicious circle of transferring distressed assets, which is simply impossible to break using the usual recovery mechanisms.
On the other hand, the bankruptcy of large and even more so systemically important market participants in the current conditions is impossible. Yes, the example of Tatfondbank and its satellites, as well as Yugra, shows that scale is not always the determining factor. Could the Central Bank try out new reorganization mechanisms at Tatfondbank or Yugra? Theoretically, he could, but he did not, obviously, after weighing all the possible risks.
In my opinion, it also cannot be called a coincidence that the problems in Otkritie and Binbank surfaced just before the completion of work on the preparation of new sanitation mechanisms. Such coincidences simply do not happen.
Does this increase the importance of the Central Bank? Of course, but it is worth recognizing that in the current situation, when even major players market, it is almost impossible to cope without the funds of the Bank of Russia and manual control. Given the fact that “saving the drowning” requires more and more funds, and the uncontrolled pumping of the banking sector through sanatoriums with liquidity is fraught with problems of a much higher level in the future, one should not blame the regulator for striving to independently manage its own funds.
materials
Friends, I welcome you all. We are all right.) It just so happened that there was no time to write a full-fledged article, completely sewn up in other projects on time. And to write some kind of passing, not informative article is not in our rules.
So once again we ask you to excuse us.
We hope that next year we will try to return to the schedule of 2-3 articles per month (unfortunately, as before, 2-3 articles per 1-2 weeks, probably will not work.
Let's end the year not with a product article, but with a news one. Pro Banking services we will have time to talk with you next year, and even more so, we have already talked about the main products for the most part.
Today we will talk about… Banking Sector Consolidation Fund.
Nevertheless, this year will be remembered by the banking sector for the introduction of temporary administration in the three largest private banks: Otkritie, Bin, Promsvyazbank.
If someone does not know, then very briefly - in the summer current year, an analyst at Alfa-Bank, sent out information to VIP clients that four Moscow banks that are part of a single "circle" will have problems. Actually advice was to leave clients from these banks. The fourth bank from this message (ICB) is still in private status at the moment.
Following this, Otkritie in August, Bin in September, and Promsvyazbank in December lost their private status, because they could not cope with the “problems” in business on their own, in connection with which they received a temporary administration.
It was very lucky and fortunate that in May 2017, the Management Company Banking Sector Consolidation Fund was created, through a separate the federal law that governs its activities.
As a result, already 3 months after this law, the first bank, Otkritie, was essentially sanitized by the state.
Oh yes. If you do not know what kind of banking sector consolidating company it is. Its essence is to support significant banking system banks, through the removal of the current management, and the introduction of a temporary administration, to implement the financial recovery of the bank. The previously existing mechanism for revoking a license did not save the bank, and the state, because of this, incurred huge expenses, because. was obliged to return to individuals their deposits, in amounts not exceeding 1.4 million rubles.
The essence of the MC FCBS (as the Fund's Management Company is called for short) is to maintain the liquidity of the bank, through the implementation of the continuity of the bank's activities, without imposing a moratorium on any Bank operations. And the entry of the Bank of Russia into the capital of a consolidated bank in the amount of at least 75%.
We can draw your attention to the fact that indeed all the above-mentioned banks continue to function, massive layoffs, problems with creditors, etc. not noticed.
There are a lot of versions on the Internet, what is it, why did it happen, what is private banking business is getting smaller and smaller. We will not dive into the analytics of each of the versions, because our blog is read by people who know how and love to independently analyze and make decisions.
We list only the main versions, as usual, everyone will have their own truth.
1) Political decisions. The need to save banks is understood at the state level. All banks have high professional competencies in working with clients, therefore, it is impossible to lose the accumulated knowledge, skills and technologies. Why does the state close the holes of banks with its own funds, but to save customers' money and preserve competition in the market.
2) Reverse privatization. Transfer of the bank to the state status, due to fraudulent activities previous management (today, from the available media there is information that the owner of Otkritie and Promsvyazbank are no longer in the country.
3) Stabilization of the situation before the elections. Safety net of the state before the presidential elections, tk. in the event of a default of any of the designated banks, the competence of the Central Bank will be questioned, in addition to the loss of funds by the employees of the banks and the owner of the various companies serviced by these banks. Hence, avoid stressful environments.
4) Conflict of bank owners with the authorities. The reasons are completely different, who can come up with what, such stories are discussed on the Internet.
We tried to reduce all Internet traffic on this topic into the main four sections.
Conclusions, we repeat, everyone will have their own. But the most important thing is the saved 30-40 thousand jobs, employees who continue to work in these banks, who receive stable salaries, etc.
The absence of a moratorium on banking operations, which could have killed a huge number of businesses that kept money in these banks. After all, every business is not just a family of the owner, but also huge enterprises with a large number of employees, each of which also has a responsibility to their families.
Time will tell how successful this mechanism will be, whether banks will be able to convince entrepreneurs to continue working in order to maintain the right balance between active and passive operations in the bank.
We think this will be clear by April 2018, because. by this time, the recovery procedures will most likely end and banks will have to resume their normal work.
For this we say goodbye, we wish in the new year to receive only positive emotions from our achievements. Thank you so much for continuing to read our blog. We are still responding to comments. We are waiting for your wishes for new articles. Happy New Year!!! May it be better than the previous one.
Source Alexander MSBHelp Kiselev
From late August to mid-December 2017, the Bank of Russia announced the start of reorganization of three private banks that belong to the category of the largest, including two systemically important ones. In all cases, financial recovery has begun under a new procedure - de facto at the expense of the Central Bank of the Russian Federation itself through the Banking Sector Consolidation Fund. What is the newly minted fund, what are the powers of its governing bodies and is its creation justified, why is the new scheme for reorganizing credit institutions better or worse than the previous one?
Why and how the FCBS was created
Prior to the adoption of Law No. 84-FZ dated May 1, 2017, the financial rehabilitation of Russian credit institutions was carried out by sanator banks, which took from the Central Bank of the Russian Federation for rehabilitation soft loans(for 10-15 years at 0.51% per annum) through the Deposit Insurance Agency.
The effectiveness of this scheme turned out to be low, since some banks were still liquidated after the reorganization, while the recovery of others dragged on for many years - and only a few managed to return to full-fledged activity. But the saddest thing is that several large credit institutions at once, which were actively engaged in reorganizing and absorbing banks and insurance companies, ended up on the verge of bankruptcy themselves.
At the same time, as the head of the Central Bank, Elvira Nabiullina, argued, the sanator banks did not create the necessary reserves in the organizations being sanified and did not shun the transfer of problem assets to them. However, Elvira is modestly silent about the fact that the functions include control over all banking organizations- so if the described steps were taken, sanctions from the regulator should have followed immediately.
As a result, the regulator initiated the transfer of recovery financial institutions from the DIA and private investor banks to the Banking Sector Consolidation Fund (FCBS), which will operate directly under the control of the Bank of Russia. The fund’s birthday was July 12, 2017, and on August 4 it received licenses from the Central Bank to manage: securities, investment funds, mutual funds and NPFs.
Functions of UK FKBS LLC
The fund itself does not have legal status. persons, and measures to improve troubled banks are carried out by Management Company of the Banking Sector Consolidation Fund LLC. The Company is 100% controlled by the sole founder represented by the Bank of Russia. De facto, it is its autonomous subdivision, but de jure, according to the charter, it is a commercial organization.
The Charter of the Company, posted on the official website of the Banking Sector Consolidation Fund amfbc.ru, contains a list of activities:
implementation of measures to prevent bankruptcy of financial and credit organizations using the funds constituting the fund;
trust management of mutual funds created to prevent the aforementioned bankruptcy;
management of shares / shares of banking organizations;
securities management;
trust management of funds, property and property rights transferred to the management of the Central Bank of the Russian Federation (as a temporary owner of banks being rehabilitated), as well as property and funds acquired in the course of management;
dealer activity;
storage and accounting of property constituting mutual funds;
other activities not prohibited by the Russian legislation, corresponding to the goals of LLC UK FKBS.
For the purpose of reorganization, the Company performs the functions of the temporary administration of the rehabilitated banks or delegates its employees to its composition, participates in the analysis financial condition banks and the development of a plan for the financial recovery of banks under the leadership of the regulator.
Structure and capital of the fund
The supreme governing body of the Management Company of the Banking Sector Consolidation Fund LLC is none other than the Central Bank of the Russian Federation personally, who has reserved an impressive list of powers.
The next in seniority is the Supervisory Board, which consists of three employees of the Central Bank and two independent members of the collegiate body, the chairman of which, according to the charter of the FCBS, is elected from a trinity of employees of the regulator.
The current activities are managed by the sole executive body - the general director of the management company. In July 2017, Aleksey Kuznetsov was appointed as the first General Director of the Company, who had previously headed the management company EFG Asset Management of the Bin group (Safmar) for several years.
An audit of the financial and economic activities of the FCBS at least once a year is carried out by an independent auditor, at any time - audit committee Society.
The authorized capital of the fund is the share contributed by the Central Bank of the Russian Federation as the sole participant of LLC UK FKBS, equal to 1.5 billion rubles.
In addition to the authorized capital, the sources of funds and property of the FCBS are:
contributions of the sole participant of the LLC;
income from the services rendered by the management company and the work performed;
other receipts that are not prohibited by law and do not contradict the objectives of the activity.
The main source of money for the recovery of the largest financial organizations, which requires hundreds of billions of rubles, is, of course, the Central Bank's deposits, which are made through a buyout by the regulator mutual funds created by the Society. Money is poured into banks being rehabilitated not all at once, but as needed. The task of the employees of the MC FKBS is to skillfully manage problem assets, playing the role of anti-crisis managers.
In this way, the regulator invests in the capital of rehabilitated banks, becoming the owner of a controlling stake. It is planned that after a successful reorganization, the Bank of Russia will sell them at open auctions, and not necessarily with a profit.
Sanitation through the FCBS
Currently (at the beginning of 2018), the rehabilitation through the Banking Sector Consolidation Fund of large financial and credit structures continues in accordance with the decisions of the Central Bank:
The functions of the temporary administration for the management of Otkritie were assigned to the FKBS Management Company only on November 29, by Binbank and Promsvyazbank on December 15.
According to the first deputy head of the Central Bank, Dmitry Tulin, the reorganization will take place in two stages. The first one includes an assessment of the bank's financial position by the interim administration, drawing up and approving a plan for the regulator's participation in preventing bankruptcy. At the second stage authorized capital the bank is reduced to the actual size of the available own funds, and if it is negative - up to 1 ruble with a further issue of shares, at least 75% of which will belong to the Bank of Russia. The recovery will end with the termination of the work of the interim administration and the creation of new management bodies of the credit institution.
Conclusion
According to the Central Bank, the reorganization of Otkritie (and, therefore, other banks) will continue for 6-8 months against 10-15 years of recovery under the previous scheme.
If after the reorganization there are no buyers for credit organizations, they will join the list of large state-owned banks. Experts call such nationalization excessive and therefore ineffective, but they admit that it corresponds to the current trend. Russian economy. Time will tell if the FCC and its policies become more effective tool problem solving in the banking sector.
On the brink of collapse
According to the report on the development of the banking sector in 2017, prepared by the Central Bank, 140 credit institutions completed last year with a loss of 772 billion rubles. About 95% of this amount was accounted for by banks in respect of which measures are being taken to prevent their bankruptcy.
Binbank was one of the unprofitable organizations - at the end of September 2017, the Central Bank announced that the owners of the 8th bank in terms of assets are asking to consider the possibility of its recovery through the FCBS. The main owner admitted that the problems of those taken for rehabilitation turned out to be too serious, and in the conditions of a falling market it was not possible to cope with them.
“According to the new scheme, for the recapitalization of a troubled bank, the Central Bank makes an injection directly into its capital, and thus the bank immediately complies with all the regulations,” he told Gazeta.Ru, noting that earlier concessions for reorganized banks became loopholes for unscrupulous investors, buying up troubled credit institutions and turning them into sewers for their toxic assets. And this advantage is not the only one. “When using the old scheme, there is a risk, which in fact has materialized, that rates will fall and banks will not be able to receive sufficient income from investments free money The Central Bank for the entire life of the loan, Danilov explains, noting that this gave rise to the risk of the need for a new bailout. When using the new scheme, there is simply no such risk, because the bank is recapitalized immediately.
In addition, reorganization through the FCBS is cheaper. "By old scheme in order to close a hole in capital, for example, 100 billion rubles at market rates of more than 10% per annum, the Central Bank had to allocate an amount that exceeded it by about one and a half times - 150 billion rubles. Now the rates have fallen, respectively, the amount to close a hole of the same size would have been 200 billion rubles or more. The money that the Central Bank issues is a ruble issue, which is fraught with an increase in inflation. According to the new scheme, to close a hole of 100 billion rubles, you need to print a similar amount, that is, a ratio of one to one. There is still a ruble emission, but it is much less, at current rates - twice, ”says the expert.
Discord assets
“The Bank of Russia aims to maximize the return of funds allocated for financial recovery. And not only by selling the bank and working with problematic and non-core assets We have talked about this many times. But also through coercion former owners to cover losses and return withdrawn assets,” the head of the Central Bank said on June 7 at the XXVII International Financial Congress. According to her, now the only mechanism that allows this to be done is a lawsuit.
“We have proposed and continue to offer a mechanism of subsidiary liability. So far, we have not met understanding in this matter, but we will continue to convince our colleagues,” the head of the regulator noted.
Some ex-owners of banks, however, are ready to meet the regulator halfway and transfer their assets to the FCBS to cover losses for reorganization - however, so far the former beneficiary of Binbank is a single example of such voluntary cooperation.
“In Binbank, everything ended relatively well - the bank was recapitalized, a huge interbank loan that hung on Binbank, at the expense of the Central Bank's money, left its balance sheet. Binbank is now more or less clean, it has fewer problem assets than its owner, again, the owner transferred more assets to pay off a hole in the capital, ”a S&P credit analyst shared his opinion with Gazeta.Ru.
The beginning of the transfer of assets by ex-shareholders of Binbank at the end of October 2017 was reported by the deputy chairman of the Central Bank. In particular, Mikail Shishkhanov ceded to the regulator his assets in the real estate market - the entire business of Inteko and part of A101 Development with a total development portfolio of almost 5 million square meters. m. It is assumed that the Central Bank will later sell these organizations to specialized market players. As Nabiullina said in an interview, the transferred assets are estimated at 100 billion rubles.
Binbank itself is also waiting for the sale - after it is merged with in 2019. “I want to outline a principled position here. The share of the state in the economy should gradually decrease. In this regard, I note that recently, as a result of the improvement of the banking system (and this is a very correct process, I support it), a number of financial assets. But they need to be vigorously brought to the market and sold, ”the president said in a message to the Federal Assembly.
Elvira Nabiullina voiced a similar idea back in September 2017. “We plan to quickly put financial institutions in order that receive funds from the Bank Consolidation Fund, and, if necessary, restructure such banks, including merging and bringing them to the market, not necessarily by looking for a strategic investor, but also by selling in parts, not at once or an IPO. We have no task to increase the state's share in the banking sector. On the contrary, our task is to Russian market healthy and successful private banks with a viable and profitable business model worked,” the head of the Central Bank assured.