The Bank of Russia offered to split the costs of Bank resolution with the former owners of
The Russian Finance Ministry and the Central Bank of the Russian Federation prepared amendments to the law “On bankruptcy”. According to them, the cost of rehabilitation of banks and insurers, the Bank of Russia will share with the former owners. The amount of damages, as suggested by the initiative, the controller will determine based on the fact that the Central Bank could not give money to reorganize for free or at a reduced rate, and to place them on the key rate in effect at the time of transfer of funds for the rehabilitation funds consolidation in the banking or insurance sector.
The idea, from our point of view, definitely timely. To implement it would cost a year ago, before large-scale banking crisis which affected a number of the largest Moscow banks. Unfortunately, in Russia, Kazakhstan and other emerging markets is sometimes a common practice, when the owners of the financial company instead to support a business decides to liquidate the Bank, withdraw the assets. Sometimes the thus obtained become the starting capital for new credit institutions. The most high-profile cases in Russia were, however, quite a long time, after the default of 1998. Then, from the large private financial companies only shareholders of Alfa-Bank decided to keep the business.
Usually major shareholders of financial companies – are not poor people, having a diversified portfolio of assets. And it would be right to pass on to them the damages for errors in the management of the financial sector of their business. Privatization of profits and nationalization of losses – the underlying illness of the Russian economy. From this vicious practice, it’s time to give up.
The Director of analytical Department,