Transcript Российский банковский сектор и экономик

Lessons learned from the crisis:
the CBR perspective
M.A. Bezdudny,
Head of Banking Sector Analysis and Systemic Stability
Monitoring Division
June 2010
Major Risks
Major vulnerability factors of the Banking sector and Russian economy
Macroeconomic factors:
• Poor diversification of economy;
• High dependence of the budget and corporate finances on energy
export;
• High dependence of financial market on speculative capital flows.
Banking sector factors:
• Existing deficit of long-term resources;
• Dependence on foreign borrowing;
• Sharp increase in risks during credit expansion due to poor
diversification of economy and high level of risk on related parties.
2
Global Financial Crisis and its
Influence on the Russian Banking
System
Main channels of influence:
• drastic and significant deterioration of foreign borrowing conditions
(for the most reliable Russian corporations and banks)/ closing of the
international credit market for the rest of Russian borrowers;
• outflow of private capital from Russia (net outflow more than
-180,5 bln. dollars in over year (01.07.2008 – 01.07.2009 )) (estimate);
•
drop in prices of Russian exports and slow-down of economic activity;
•
dramatic fall in stock indices.
3
Capital outflow
60
40
20
bln. USD
0
-20
Iq 2008 IIq 2008
IIIq
2008
IVq
2008
Iq 2009 IIq 2009
IIIq
2009
IVq
2009
Iq 2010
-40
-60
-80
-100
-120
-140
Net inflow/outflow of private capital
4
Global Financial Crisis and its
Influence on the Russian Banking
System
At early stages of the crisis the combination of these factors resulted
in acute shortage of liquidity in the banking system, exacerbated by
confidence crisis.
But Russian banks, basically, did not take risks typical to the
largest international banks:
• Russian banks did not open significant positions in "toxic"
instruments, they did not expand their activities into foreign markets that
were later affected by the crisis;
• Russian banking system did not depend much on the activities of
banks with foreign capital, parent companies of which suffered from the
crisis.
5
Development of the banking
sector
Public confidence in the banking sector
7,0
5,0
3,0
%
1,0
1.
1
1.
0
9.
20
08
0.
2
1. 008
11
.2
1. 008
12
.2
1. 008
01
.2
1. 009
02
.2
1. 009
03
.2
1. 009
04
.2
1. 009
05
.2
1. 009
06
.2
1. 009
07
.2
1. 009
08
.2
1. 009
09
.2
1. 009
10
.2
1. 009
11
.2
1. 009
12
.2
1. 009
01
.2
1. 010
02
.2
1. 010
03
.2
1. 010
04
.2
1. 010
05
.2
01
0
-1,0
-3,0
-5,0
-7,0
Monthly growth rates of individual deposits, %
Monthly growth rates of individual deposits with maturity exceding 1 year, %
6
Development of the banking
sector
Overdue loans
18 000
8
7,4
6,8
6,4
6,1
6
3,7
9 000
4
3,2
%
2,7
2
16103,5
0
1.
0
5.
10
16115,5
1.
0
1.
10
16526,9
1.
09
12287,1
0,9
1.
0
1.
08
1,1
1.
0
1.
07
1,3
8030,5
2,1
1.
0
1.
06
1,3
1.
0
1.
05
1,1
5452,9
1,9
1,5
1.
0
2674,9
1.
04
1,3
1.
0
1792,1
1.
03
0
1,6
3885,9
1,8
4 500
1.
0
bln.rubl.
13 500
Loans and other funds provided to non-financial organizations and households (incl. overdue
loans),bln rubles,(left scale)
Share of overdue loans in the loans to households, % (right scale)
Share of overdue loans in the loans to non-financial organizations, % (right scale)
7
Development of the banking
sector
Loan growth rate and overdue loans dynamic (corporate
portfolio)
700
70
600
60
47,1
500
50
44,1
42,0
37,9
40
34,7
27,9
300
30
24,5
19,7 15,3 12,0 8,4
200
3,2
5,7
20
2,8
0,3
100
10
0
5.
10
0
-10
1.
0
4.
10
1.
0
3.
10
1.
0
2.
10
1.
0
1.
10
1.
0
2.
09
1.
1
1.
09
1.
1
0.
09
1.
1
9.
09
1.
0
8.
09
1.
0
7.
09
1.
0
6.
09
1.
0
5.
09
1.
0
4.
09
1.
0
3.
09
1.
0
2.
09
1.
0
1.
09
1.
0
2.
08
1.
1
1.
08
1.
1
1.
1
0.
08
-6,5 -6,8 -5,3 -4,9
9.
08
-100
1.
0
bln.rubl
34,3
%
36,8
400
Past dues in FX loans, bln. Rubles (left scale)
Past dues in Ruble loans, bln. Rubles (left scale)
Annual growth of lending (in % over 12 months prior to reporting date) (right scale)
8
Development of the banking
sector
Loan growth rate and overdue loans dynamic
(retail portfolio)
250
75
200
60
51,0
50,7
47,4
45
40,9
34,0
28,4
100
30
21,0
14,0
50
7,9
15
3,0
0
-5,9
-1,5
-9,9
-12,0 -11,6
-11,0
-12,2
-6,3
-11,2 -8,7
1.
09
.0
8
1.
10
.0
8
1.
11
.0
8
1.
12
.0
8
1.
01
.0
9
1.
02
.0
9
1.
03
.0
9
1.
04
.0
9
1.
05
.0
9
1.
06
.0
9
1.
07
.0
9
1.
08
.0
9
1.
09
.0
9
1.
10
.0
9
1.
11
.0
9
1.
12
.0
9
1.
01
.1
0
1.
02
.1
0
1.
03
.1
0
1.
04
.1
0
1.
05
.1
0
bln.rubl.
35,2
%
150
-50
0
-15
Past dues in Ruble loans, bln. Rubles (left scale)
Past dues in FX loans, bln. Rubles (left scale)
Annual growth of lending (in % over 12 months prior to reporting date) (right scale)
9
Development of the banking
sector
Return on assets and equity,%
26,3
25,6
26
23,8
%
3
3,3
3,1
3,0
22,7
22,3
2,9
3,0
21,1
21,4
20
18,3
2,9
2,9
2,4
2
13,3
14
1,3
1,8
10,0
1
0,5
2,2
0
07
4.
0
1.
07
7.
0
1.
07
0.
1
1.
08
1.
0
1.
08
4.
0
1.
08
7.
0
1.
08
0.
1
1.
09
1.
0
1.
09
4.
0
1.
09
7.
0
1.
09
0.
1
1.
8
0,3
3,6
07
1.
0
1.
0,9
0,7
01
10
1.
0
.
4,9
6,0
2
01
10
4.
0
.
Return on assets (left scale)
Return on equity (right scale)
10
%
4
Measures to Overcome the Crisis
•Easing the monetary policy.
•Significant improvement of refinancing system.
• Increase in the insurance compensation on individual
deposits in the DIS member-banks.
• Enhanced monitoring and increased promptitude of
supervision.
• Dealing with weak banks.
• Changes in the system of banking regulation.
11
Framework of Dealing with
Weak Banks
Insolvency prevention measures
- a new law adopted, providing the right of the Deposit Insurance Agency
(DIA) to implement, upon the proposal of the Bank of Russia, measures
to prevent bank insolvency;
- a major precondition of these measures is the transfer of ownership to
new investors and/or DIA
- as of 01.05.10 18 banks undergoing insolvency prevention measures
(their share in the bank assets was 2.5%)
Transfer (P&A transaction) of a problem bank’s assets and liabilities
(fully or in part) to an investor (investors)
Delicensing (70 banks were delicensed from 1.09.08 to 01.05.10
their share in the banking system assets was 0,6%)
While dealing with a weak bank, the systemic significance of the bank,
including its regional significance, is taken into account.
12
Bank Capitalization Issues
• The liquidity situation
is now, by and large, settled; capitalization problem is
gaining importance
• Substantial amendments were introduced into legislation with the view to
simplification and acceleration of capitalization procedures as well as M&A
procedures. At the same time minimum capital requirements (180 mln rubl for all
banks existing after 01.01.2012) were put up.
• Granting subordinated loans to:
- state banks
Sberbank of Russia - 500 bln rubles (200 bln rubles repayeded to
Bank of Russia)
VTB
- 200 bln rubles
Rosselhozbank
- 25 bln rubles
- private banks – the state provides up to 15% of a bank’s capital if the private
investors provide no less than the same amount
Total subordinated loans reached more 900 bln. rubles
• Further measures on extension of subordinated loans (placement of deposits,
bond issuing) are being elaborated now, including measures aimed at increasing
Tier I capital
13
Capitalization of the banking
sector
Capital adequacy (1)
4620,6
4800
4597,3
20,9
4400
20,2
20
4000
3600
15,5
16
3200
bln.rubl.
24
2800
12
2400
2000
%
8
1600
1200
4
800
400
3
1.0
1.0
0
4
1.0
1.0
5
1.0
1.0
6
1.0
1.0
7
1.0
1.0
8
1.0
1.0
9
1.0
1.0
0
1.1
1.0
0
5.1
1.0
Own funds (capital), left scale
Capital adequacy ratio(right scale)
14
Some Changes in the Regulation
• Decrease of reserve requirements: down to 2.5% on every category of liabilities subject to
reservation (in September 2008 they were 5.5% to 8.5% - depending on the category of
liabilities)
• More balanced recognition of losses from the drop in the market value of securities:
banks were granted the right of one-off change in their accounting policy for 2008, including
permission to transfer securities from the trading to the investment portfolio
• Alleviation of requirements on credit risk assessment, temporarily in 2009:
- providing for wider use by banks of professional judgment while assessing the
quality of restructured loans;
- eased requirements on assessment of debt service quality depending on the
duration of overdue debt, assessment of quality of restructured loans as well as
loans made to repay loans granted earlier
Setting up the dependence of limits on banks’ participation in auctions on unsecured
loans from the Bank of Russia on their compliance with the Bank of Russia’s
recommendations regarding foreign assets and on-balance positions in foreign currency
15
Lessons of the crisis
Main reasons of the strong impact of the crisis on the Russian
banking sector were, basically, internal. They include:
• operations, most probably, connected with financing of the bank
owners;
• operations with financial instruments highly subjected to
market factors, executed, inter alia, via third parties;
• operations with “opaque” borrowers or counterparties that are
actually intermediaries;
• a separate factor substantially reducing stability both at macroand microlevels is risk concentration.
16
Exiting from anticrisis measures?
1.
After liquidity stabilization the Bank of Russia’s Board made a
decision to reduce twice credit risk limits and to increase
minimum ratings (given by three national rating agencies and
necessary for access to “non-traditional” liquidity source
such as uncollateralized loans form the Bank of Russia).
2.
The program of subordinated loans from Vnesheconombank
is completed.
3.
In the second half-year the Bank of Russia’s regulation
№2156-U (that allowed banks to take more balanced, to some
extent more liberal, decisions on provisioning) will be
substituted by a new regulation that will partially return the
standard provisioning requirements.
17
Growth of Funds Received from the
Bank of Russia and their Share in
the Total Funding
4200
12
10
2400
8
1800
6
1200
4
600
2
0
0
%
9.
0
1. 8
10
.0
1. 8
11
.0
1. 8
12
.0
1. 8
01
.0
1. 9
02
.0
1. 9
03
.0
1. 9
04
.0
1. 9
05
.0
1. 9
06
.0
1. 9
07
.0
1. 9
08
.0
1. 9
09
.0
1. 9
10
.0
1. 9
11
.0
1. 9
12
.0
1. 9
01
.1
1. 0
02
.1
1. 0
03
.1
1. 0
04
.1
1. 0
05
.1
0
3000
1.
0
bln.rubles
3600
14
The maximum amount of loans, deposits and other
funds received from the Bank of Russia was equal 3
653,6 bln. rubles with the share of 12,3 % in the total
balance sheet (on 1.02.09)
Loans, deposits and other funds received from the Bank of Russia (left scale)
Share of loans, deposits and other funds received by credit istitutions from the Bank of
Russia in the balance sheet total (right scale)
18
International cooperating
BCBS Working Group
• Basel Committee on Banking Supervision created a number of
subgroups for new concepts of supervision processes
elaboration, first of all corresponded to:
• capital requirements strengthening, especially for big banks;
• development of macro prudential approaches including
countercyclical capital buffer and dynamic regulation of loan
and loss provisions;
• improvement of liquidity regulation approaches;
• development of market risk estimation approaches;
• elaboration of more precise mathematical methods for credit risk
estimation.
19
Thank you for your attention!
20