Banking sector: current state and prospects of development of

 

speech of the General Director of State Corporation "Agency on insurance of contributions" A. V. Turbanov at the XV North-Western banking conference.

In 2008-2009, the Russian banking system has experienced a serious crisis. With some optimism, we can say that the situation is normalized. But to be quite Frank – we translate the spirit and are in a state of stagnation.

The main function of the banking sector – the transformation of available resources into credit – currently implemented with caution and a minimum efficiency for the economy.
Although, it should be noted that the potential of the Russian banking system is ready to resume lending to the non financial sector. Liabilities are fairly quickly expanding. In the first five months of this year, the growth rate of deposits of the population amounted to 9.2%.

This increases Bank liquidity. The volume of liquid assets is almost comparable to the one that was in the beginning of last year, when the banks on a soft devaluation of the ruble invested in the currency. But in the period liquidity generated revenues in the form of significant exchange rate revaluations. Now it's just a broken tool.

The depth of the "crisis of excess liquidity" clearly you can judge for emergency measures to discourage the inflow of deposits. Lately they are frequently used by some banks. If a year ago they promised investors to keep the interest income even in the event of early withdrawal of deposits, now enter the fee for replacements.

As a result, we obtain the following estimate of the General state of Affairs. For the past fifteen years population and enterprises are net creditors to the banking sector. Borrowed from these funds are used for purposes other than from loans increase in Bank liquidity, investments in the stock market to repay the debt to the Bank of Russia and foreign creditors.

But forever it can not continue. I think the redirection of excess liquidity for lending to the economy – a matter of time. Perhaps very soon. Some optimism may inspire the data that for the first time in many months showed credit growth: corporate – 2% retail – 1%. That is a random "bounce" or the beginning of a new trend will be clear soon.
A few words about the stability of the banking system. This year its trend of moderate growth of overdue debt in loan portfolio of banks.
However, we must be prepared to ensure that the growth recorded in the balance of delay can be accelerated, since July, the Bank of Russia returns to pre-crisis order reflection of the quality of loans.

However, according to the Agency, is expected to resume growth in the share of delay will not create a risk of destabilization of the banking sector.

The average capital adequacy ratio now exceeds 19%. This is a very high level. Many large banks have excessive margin of safety in capital. No wonder that some of them consider the possibility of early repayment received during the crisis from the state funds for recapitalization.

However, there is a small but significant group of vulnerable credit institutions. Banks with low capital adequacy ratios and bad loan portfolio quality.

Since we are talking about equity, I note one alarming trend. This year the capital adequacy ratio and own funds is gradually reduced. With the beginning of the year, in absolute terms, capital decreased by 170 billion rubles, and the indicator of its sufficiency – 2 percentage points.

This is understandable. Falling profitability of the banking business, decreased significantly support the banks by the owners, banks are still forced to form reserves for possible losses. Thus, the authorized capital of the banking system increased in 2010, only 25 billion rubles (for the whole 2009 was 10 times more). This is clearly insufficient to compensate for losses associated with the formation of reserves. Only loan banks have increased reserves since the beginning of year on 100 billion rubles.

As already noted, the margin of safety is there. But if this trend continues – and the number of signals tells me that after a certain time the banks can be drained with a minimum value of capital adequacy. The amount of capital banks are clearly not to be missed for extended lending process of economic modernization. Probably, the exception may be only state-owned banks, but their flexibility in funding breakthrough (and therefore highly risky) technology typically lags behind the private sector.

Under existing conditions, the banking sector can accumulate required for the development of the economy means long enough. [Increase of requirements to capitalisation of banks to 180 million rubles from 2012, I hope, will accelerate these processes. Many people somehow believe this requirement is too stringent. But let's see what trends are happening in other countries. We will not take into account the economically developed, with them everything is clear. Take our neighbours in the CIS. It turns out that the minimum capital requirements, Russia is on the penultimate place. Just below Kyrgyzstan. Against this background, the proposal to raise capital to 1 billion rubles. does not appear to be excessive].

There are two ways to increase the capitalization of the banking sector. The first – attraction of foreign capital. But we must remember that he is unlikely to be actively lend to local small and medium businesses, innovative projects. The experience of Eastern Europe speaks about it more than clearly. The second option is the stimulation of the market capitalization of the banking sector at the expense of internal resources.

Actually this is just one illustration of the General problem. To Russia more than a decade faces the challenge of deep modernization. And without the accumulation of internal resources does not hold.

Priority rate on external borrowing and portfolio investment, as shown by the experience of recent years, pose significant macroeconomic risks. We all know that portfolio investors are as grasshoppers. Land where there is "food base", and can easily leave the previously fertile places, leaving devastation.

With regard to direct investment, business climate, infrastructure, quality and cost of labour we have not yet so attractive to investors lined up as in China.

Therefore, in our situation especially must be the accumulation of own resources, of course, together with sustainable external borrowing and direct investment.

The state did not have a lot of efficient mechanisms to promote domestic savings. By and large there are two.

First, it is a mechanism to protect investments of citizens.
The government needs to ensure the safety of savings, so people are not afraid of losing them. Neither the stock market nor in the private pension funds, nor for the long-term insurance of life and health. Approximately as they are now not afraid to lose Bank deposits.

Second, the protection of the rights of consumers of financial services. We have now this task is almost spur of the moment decides is not quite relevant the CPS, and not very systematically. In this regard, should look to the experience of the American and English colleagues, with their usual practicality of creating a special body for the protection of consumers of financial services. Having in mind that for the banking industry already has a body, which this feature can effectively carry out is the Central Bank.

In conclusion, let me say a few words about the lessons of the crisis. One of the main is that the banking system should be build so that it had a margin of safety in case of adverse developments. First and foremost, this applies to our largest banks.

If we talk about the role of government regulation, it must be aimed not only to reduce the risks of banks and improve their performance, but also provide invisible, besomebody for consumers withdrawal from the market of insolvent banks.

I believe that Russia, after the US and leading European economies (Britain, Germany,
France) need to think seriously about new stabilization mechanisms. Whether it's special collections stability of the banking system, which is formed by contributions from the banks and spent in case of need for a Bank bailout, or will be found other approaches, but the current crisis has clearly demonstrated that the XXI century formed entirely new challenges for the global financial system.

Before we know it, modern science and industry "jump on" the bold science fiction: Bradbury, Asimov, Ephraim. Become commonplace unmanned aerial vehicles, implanting electronics in living bodies.

Equally important changes occur in the social and economic spheres, and, first and foremost, in banking.

The main directions of transformation that we see is this:

1) "virtualization" of money and other financial assets (derivatives from the third and subsequent degrees to the estimated units of new electronic payment systems (Web money, etc.);

2) the penetration of credit operations in all spheres of life – electronic consumer credit and the youth cafe and the school cafeteria, and on the water and in the air – everywhere;

3) integration of different production activities under Bank management today, banks are the controlling owners or play a key role in many scientific and industrial clusters, uniting the enterprises of various industries. In today's global economy, the banking system begins to act as a kind of "market of the state planning Committee" – it carries out strategic planning of the ways and forms of development of the world economy. And this role will only increase.

All these challenges give rise to new risks. We live with them in the near future. It's time for them to identify, discuss, analyze, and proactively build security.