The state Duma adopted the law on the new Bank resolution mechanism
© Stanislav Krasilnikov/TASS
MOSCOW, April 21. /TASS/. The state Duma adopted in the third reading the law on the new Bank resolution mechanism which will enter into force 45 days after its official publication.
New Bank resolution will not be carried out by using preferential loans of the Agency for Deposit insurance (DIA) as it is now, and through the recapitalization of reorganized credit institutions of the CBR. Conduct financial health of banks is planned through the establishment of the Bank of Russia Fund the consolidation of the banking sector and LLC “Management company of the Fund the consolidation of the banking sector”. The management company on behalf of the regulator will deal with the prevention of bankruptcy of credit organizations with the use of the Fund the consolidation of the banking sector.
It is expected that this will allow the CBR by the Fund to invest in the capital of the banks, undergoing the process of rehabilitation, to the extent required to ensure the proper capitalization. Upon completion of the rehabilitation of banks expected their sale to the new owner at a public auction conducted by the Bank of Russia.
The fate of the Agency for Deposit insurance
DIA will continue the process of reorganization of those banks in respect of which recovery mechanism was launched before the date of entry of this law into force. In addition, the Bank of Russia will be entitled to renew for up to five years of the operation of treaties on the granting of loans without collateral to the Agency for Deposit insurance, the funds of which are for payments to depositors of troubled banks.
However, in connection with the new scheme of rehabilitation of banks the law changed the composition of the Board of Directors of ASV. So, in the Council increased from five to seven the number of representatives of the Central Bank of the Russian Federation and reduced the number of Council members from the government of the Russian Federation – from seven to five members. Chairman of the Board of Directors of the ASV will be the head of the CBR Elvira Nabiullina.
The current Bank resolution mechanism
Reorganization of banks through the Agency for Deposit insurance will require an increase of funding allocated by Bank of Russia for this purpose, said earlier the Chairman of Bank of Russia Vasily Pozdyshev.
In the current scheme, the recovery of the banks after the Central Bank determines the size of the “hole” (the excess of liabilities over assets) in the equity of reorganized credit institutions, the regulator allocates preferential loan of ASV, which is almost on the same terms (with an increase by 0.01% points) is allocated to a private investor-the turnaround a period of 10 years.
However, this mechanism becomes irrelevant in the face of declining inflation and interest rates in the economy, said Pozdyshev.
Therefore, according to him, the Bank of Russia offers to move credit mechanism of financial recovery for capital, when is concessional loan to the troubled Bank dokapitalizatsiya CBR.