The State Duma's Financial Management Committee recommends approving in the first reading a bill that calls for the creation of additional mechanisms to rehabilitate lending institutions. The draft law is scheduled for consideration at the Duma's February 22 plenary session, said the Association of Regional Banks of Russia whose president, Anatoly Aksakov, chairs the given parliamentary committee.
Aksakov paid attention to the issues about efficiency of the current procedure for bank rehabilitation, which arise quite often, including in the State Duma. "Instances were identified when banks, selected as rehabilitation agents, become institutions that soak up funds provided for rehabilitation, which is identified in the course of inspections, or "good" assets are taken out of an institution under rehabilitation," he noted.
According to the Duma member, reasons of concern are the high price of the current rehabilitation procedure and also the fact that "banks under rehabilitation are provided with favorable terms that do not encourage them to become solvent". "This initiative should resolve issues related to the current procedure," Aksakov said confidently.
The lawmaker noted that the draft law provides for setting up a consolidation fund for the banking sector that will be funded by the Bank of Russia and a company that will manage funds invested in lending institutions under rehabilitation in order to turn them into solvent institutions.
The bill is designed to cut the amount of funds earmarked by the Bank of Russia for rehabilitation of banks, tighten control over the targeted use of the money, exclude dependence of rehabilitation on the financial standing of rehabilitation agents, provide equal competitive terms for the operation of under-rehabilitation banks and other lending institutions, the lawmaker pointed out.
As Aksakov emphasized, the bill's aspect in principle is the decision that an under-rehabilitation bank "should immediately enter the competitive environment, i.e. it should create capital to comply with all CBR ratios, and this bank should be a rival for other lending institutions". As experts believe, the new rehabilitation procedure will require less funds than the current one that provides for CBR loans, the involvement of the Deposit Insurance Agency and rehabilitation agents, he added.
