The Central Bank will consider the creation of a new fund to support banks

The Central Bank announced a set of measures to supervise banks during the crisis. In particular, he is exploring the possibility of creating an autonomous fund to support the financial sector.

The Central Bank is thinking about creating a new fund to support the banking sector. The regulator announced this in a document on the new tasks of the financial market (.pdf).

In a negative situation in the economy, along with the help of the owners, banks may need systemic support. As the Central Bank writes, it “can be provided in various forms, depending on the scale of the problems - both in the form of direct capitalization through the acquisition of shares and (or) subordinated obligations, and in the form of providing capital guarantees that give the right to receive support in the event of a deterioration in the financial situation organizations."

“For these purposes, the Bank of RUSSIA may consider the advisability of creating an autonomous fund to support the financial/banking sector, formed by deductions from financial intermediaries (similar to the deposit insurance fund). At the same time, support will be provided only if the losses of financial organizations are associated with force majeure circumstances, and are not the result of previously used risky business models,” the Central Bank emphasized.

The Central Bank promised to "adjust" the banking system instead of a "catastrophe" Finance

These measures should not "cover losses resulting from the ineffective policies of the owners of individual financial institutions, thereby worsening the competitive position of those financial intermediaries that have adopted a more prudent and balanced approach to risk management."

In Russia, several formats for the recovery of banks are now being used - with the involvement of sanatoriums and the Deposit Insurance Agency, or with the involvement of the Central Bank itself. In the first case, an investor (not necessarily a bank) is involved, who buys the bank's shares and gains control over it, and the DIA can provide financial support to the bank in the form of a loan at a rate below the market. In the second case, the reorganization is carried out through the Banking Sector Consolidation Fund (FCBS) created in 2017 - Otkritie, Binbank and Promsvyazbank underwent recovery.

The regulator notes that when making a decision on reorganization, the systemic / regional significance of the bank, as well as the significance at the level of individual segments of the financial market, is taken into account. In addition to banks, non-state pension funds and insurers may be subject to reorganization. However, for brokers, for example, there is no financial recovery mechanism.

Franchise: 7 secrets. How to sell a ready-made business Instructions Pro You will have to pay more:

“First of all, it is logical to attribute to force majeure the losses arising from blocking sanctions, that is, the freezing of assets abroad. Losses from the depreciation of securities and exchange rate differences, despite the external unforeseen factors that cause them, should rather not be considered force majeure, especially since their impact on capital and financial results can be easily limited by temporary regulatory measures, this mechanism has already been worked out, ”says Belikov . If such losses cannot be compensated for in the long term, then we can already talk about the increased appetite of a particular bank for market risks and low diversification, he adds.

The expert calls for introducing different levels of contributions to the new fund, depending on the type of bank license and client base. If the accumulation of the new fund proceeds similarly to the deposit insurance fund, then on the horizon of the year we can expect the accumulation of several hundred billion rubles, estimates Yuri Belikov, managing DIRECTOR for validation of the Expert RA rating agency. In addition, the Central Bank can issue loans to the fund, which are then reimbursed through the activities of the fund and the contributions of participants, adds ACRA CEO Mikhail Sukhov.

“Consolidation of financial institutions in the current environment is inevitable, therefore, return financing of consolidation may be one of the most economical options for solving the problems of financial institutions, including the activities of the fund,” sums up Sukhov. He estimates the need for financing additional capitalization at 2–3 trillion rubles. within three years, this money can be found "through the capitalization of profits, point investments of owners and cost savings through consolidation."

What else does the Central Bank offer in response to the crisis

A separate block in the document of the Central Bank is devoted to the assets of banks blocked due to sanctions. The regulator is considering special accounting for these assets and liabilities on the balance sheets of the financial institutions themselves, as well as separating these assets and liabilities into separate special companies.

“If necessary, interested financial institutions will be able to unite such companies into special funds in order to jointly defend their interests and expand the opportunities for mutual exchange of claims with counterparties from unfriendly countries. Currently, the relevant legal framework already exists for banks,” the Central Bank emphasizes.

The authorities came up with a scheme to rid banks of frozen assets

In addition, it may provide financial institutions with the opportunity to build reserves for frozen assets for a longer time than other relaxations may apply. But the Central Bank will not buy frozen assets from banks: “This is fraught with large-scale money emission with devastating inflationary consequences for both the economy and the financial sector. The acceleration of inflation will lead to the depreciation of savings and incomes of citizens, will cause a significant increase in interest rates in the financial sector, and will make it impossible to form long-term savings and investments in the economy. Moreover, such an approach would require a buyout of assets from all holders, not just from financial institutions, which would make the consequences even more devastating.”

The Central Bank will develop approaches to the disclosure of financial statements, the publication of which is currently prohibited by banks. However, sanctions risks should be minimized at the same time. At the first stage, the Central Bank will give the right to all financial institutions to publish financial statements subject to the requirements for the presentation of information, and at the second stage, it will make it an obligation. However, the disclosure of information about the beneficiaries, owners and controlling persons of financial organizations, the structure of holdings is not currently considered, since it is "most exposed to the risks of being used to impose sanctions."

New plans for devaluation

The Central Bank is ready to participate in trading in national currencies at the first stages of their launch, but as turnover grows, “these segments should completely switch to working on market mechanisms.” The presence of such auctions will help stimulate settlements in national currencies under foreign trade contracts. The regulator considers it justified to issue government directives to companies in the real sector, which will encourage them to convert "toxic" currency into the currencies of friendly countries. “Similar recommendations of the government of the Russian Federation may relate to the need to refrain from using the currencies of unfriendly countries in new contracts, and where this is not possible in a short time, the inclusion in contracts of conditions that allow the fulfillment of requirements in rubles or currencies of friendly countries,” adds the Central Bank. The representative of the Ministry of Finance told RBC, that "shares the concern" about the savings of companies in unfriendly currencies and together with them "implements various measures to diversify foreign exchange assets, and also takes steps to restore imports." But “so far no directive decision is required,” the Ministry of Finance believes. It is necessary to open correspondent accounts of Russian banks in banks of friendly countries, the Central Bank believes. Western banks close such accounts to Russian partners. When establishing foreign exchange bans, the Bank of Russia will “proceed from the principle of reciprocity, that is, it will impose prohibitions and restrictions only on residents of those states that impose such measures against the Russian Federation.” Liberalization should be in relation to friendly states or possible with the easing of sanctions against Russia (for example, unlocking assets). The amount of foreign exchange reserves of the Central Bank blocked in But “so far no directive decision is required,” the Ministry of Finance believes. It is necessary to open correspondent accounts of Russian banks in banks of friendly countries, the Central Bank believes. Western banks close such accounts to Russian partners. When establishing foreign exchange bans, the Bank of Russia will “proceed from the principle of reciprocity, that is, it will impose prohibitions and restrictions only on residents of those states that impose such measures against the Russian Federation.” Liberalization should be in relation to friendly states or possible with the easing of sanctions against Russia (for example, unlocking assets). The amount of foreign exchange reserves of the Central Bank blocked in But “so far no directive decision is required,” the Ministry of Finance believes. It is necessary to open correspondent accounts of Russian banks in banks of friendly countries, the Central Bank believes. Western banks close such accounts to Russian partners. When establishing foreign exchange bans, the Bank of Russia will “proceed from the principle of reciprocity, that is, it will impose prohibitions and restrictions only on residents of those states that impose such measures against the Russian Federation.” Liberalization should be in relation to friendly states or possible with the easing of sanctions against Russia (for example, unlocking assets). The amount of foreign exchange reserves of the Central Bank blocked in When establishing foreign exchange bans, the Bank of Russia will “proceed from the principle of reciprocity, that is, it will impose prohibitions and restrictions only on residents of those states that impose such measures against the Russian Federation.” Liberalization should be in relation to friendly states or possible with the easing of sanctions against Russia (for example, unlocking assets). The amount of foreign exchange reserves of the Central Bank blocked in When establishing foreign exchange bans, the Bank of Russia will “proceed from the principle of reciprocity, that is, it will impose prohibitions and restrictions only on residents of those states that impose such measures against the Russian Federation.” Liberalization should be in relation to friendly states or possible with the easing of sanctions against Russia (for example, unlocking assets). The amount of foreign exchange reserves of the Central Bank blocked inUS and Europe, is about $300 billion.