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Experts do not exclude the occurrence of financial problems at individual banks in Russia

September 29 2008

Financial problems at individual banks in Russia, whose solution may require the sale of their shares in the near future can not be excluded, told RIA Novosti deputy chief of staff to Prime Minister Mikhail Kopeikin in the margins of the second session of the Forum of Regional Cooperation. Such problems in individual banks could still be said, when asked about the possibility of repeating the scenario debt settlement bank KIT Finance and Svyaz-Bank. Svyaz-Bank is part of the thirty largest banks in Russia, "KIT Finance" - in the fifties. Previously reported that the State Vnesheconombank agreed to acquire Svyaz-Bank, who have debts payable to partners.

Expected allocation of budgetary funds to settle his debts. Kopeikin said that in the event of a need to settle debts of banks, to prevent systemic crisis, the government will resolve such situations at their own expense. With Kopeikin agree and Chairman of the Board of Directors of MDM Bank and former head of the Federal Financial Markets Service Oleg Vyugin and a member of the National Banking Council (NBS), a State Duma deputy Pavel Medvedev. According to Vyugin, the issue of settlement of stock repurchase, which shattered KIT Finance and Svyaz Bank, largely depleted. However, at present narostaet quality problem of corporate credit portfolios of banks. "This will be the second wave of problems in the banking system. It will not be such a strong and visible, but will be more dangerous: it can not resolve short-term infusions of liquidity (the state)," - said Vyugin.

In connection with the outflow of difficulty refinancing debt on international markets reduced credit growth of Russian banks, experts say the Russian market. Consequently, according to Vyugina and growing debt burden of borrowers and their credit quality deteriorates. According to experts, many companies are expected to refinance, restructure their debts, or to attract new loans to pay off existing ones. However, if the current situation on the international and Russian monetary and credit market make it very difficult, hard to borrow and the banks themselves, adding market participants. Therefore, if companies will have difficulties with the return of loans to Russian banks, the latter, realizing that the situation with the involvement of money in the short term does not improve, banks can not roll over some loans, according to Vyugin.

According to him, that if the bank understands that the extension or restructuring of loans is not possible due to the fact that even in the case of deferred payment, they are unlikely to be received, the bank will be forced to assign such loans to the category of problem and to increase reserves for losses on such loans (and, hence, to withdraw money from circulation). Not be ruled out and the process of recovery of arrears, which lasted more than one day, and the vehicle after such actions do not come immediately.

Consequently, the lending institutions from this chain of events may have financial problems, reduced liquidity and difficulties with the return of money already to their partners. Consequences of these problems for some banks may be fatal. Medvedev added to the current problems of banks and even the possibility of default standards for the Central Bank, the calculation of the majority of which are based on the amount of capital. Many banks have played the stock market and kept the funds in securities.

Value of the portfolio of market assets are regularly reassessed, and it is recognized by the amount of bank capital. Due to the fact that stock prices sagged seriously (by some papers, even more than 50%), the portfolio's value sharply declined. Consequently, decreased and the amount of capital.According to Medvedev, some banks have approached critical levels standards of the Central Bank, calculated on the basis of the level of capital. However, following growth of the market by the end of last week, many of these banks breathed a sigh of relief, he added. Despite this, the bankers, it's hard to quietly subside as the volatility of the stock market remains high and there is expectation of reduction of quotations, Medvedev added. In his opinion, a temporary reduction ratios for banks in the period trubulentnosti Russian market, it would be a bad decision.

"It would be the same as during the influenza epidemic at the hospital to establish that the temperature of 38 degrees is normal," - he said. However, such a variant by Russian financial authorities have not yet seen. Therefore, according to Medvedev, the initiative of the State to acquire shares in companies to support the stock market is good in terms of stabilizing the situation, including the banking system. "Yes, the use of reserved funds in the budget, would support the banking sector, but, of course, is not a market measure, and therefore it is not ideal," - said Medvedev. Previously reported that the planned reserve $ 500 billion budget for 2008 and 2009 to support the stock market. However, officials did not rule out that the funds can not go into circulation, if not needed.

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