The Ministry of Finance is preparing a new law on Bank rehabilitation, the current mechanism is too expensive
The Russian Finance Ministry hopes that the law on the new Bank resolution mechanism will enter into force in March 2017, reports TASS with reference to the text of the notification of the office about the early development of the bill.
It the project is about creating a Central Bank Fund the consolidation of the banking sector and a separate management company. Through them, the regulator will be able to enter the capital of reorganized Bank to the extent required to ensure its capitalization and liquidity, with the subsequent sale of the shares of this Bank.
A bill to create a resolution Fund is to be submitted to the state Duma in the autumn session.
“When deciding on the financial rehabilitation of the Bank of Russia approves the plan of financial rehabilitation of the Bank, which along with the increase of capitalization can provide controlled timing of removal of other not connected with formation of reserves on possible losses the problems of the Bank caused by the acts or omissions of the former owners and managers”, – the document says.
As for the Bank resolution mechanism, it is, in the opinion of the Ministry of Finance, leads to higher debt Agency on insurance of contributions (ASV) to the CB. This debt currently has exceeded 1 trillion rubles, and together with the amount of credits of the Central Bank on payments on insured deposits is estimated at 1.5 trillion rubles.
In the Finance Ministry also reported that on September 1, 2016, the DIA has taken part in the prevention of bankruptcy of 50 banks and transferred the assets and liabilities of troubled banks six financially stable credit institutions.
In June, the Central Bank has taken the initiative to change the mechanism of recovery of credit institutions, proposing to bring it under its control through the establishment of a special Fund for Bank resolution. Under the new scheme the funds will be sent directly to the capital of reorganized agencies and not be transferred in the form of loans to the DIA, and then banks-sanatory.
While ASV is actually suspended from the mechanism of rehabilitation of credit institutions.
The concept was discussed for several months and has not caused enthusiasm nor the DIA, nor the government (especially the Finance Ministry, headed by Anton Siluanov is Chairman of the Board of Directors ASV), but the Central Bank’s position was considered virtually inviolable.
Last week, however, the concept of reforming of Institute of rehabilitation of banks was discussed at the meeting with first Deputy Prime Minister Igor Shuvalov. According to its results, the newspaper “Kommersant” wrote that the DIA will remain a major turnaround of troubled banks.
In this case, however, the funds for rehabilitation by the Central Bank will not stand out as it is now, Bank turnaround, and directly – to the rehabilitated Bank, apparently in order to prevent abuse on the part of the sanatory the money in their own needs, about which much has been officially stated recently.
In addition, agreeing to abandon their initial idea directly supervise the sanitation, the Central Bank demanded the return of indirect control over the healing process – through the majority of the Board of Directors of ASV.
Now the majority (seven of 13 members of the Board of Directors) of the government, which, in fact, is the founder of ASV (Agency – public Corporation established by the Russian Federation). Five seats in the Council at the Central Bank. One is the General Director ASV (ex officio). The interviewed experts believe the compromise is reasonable.