Russian Central Bank has introduced a new scheme of redevelopment of Russian banks in order to ‘remedy’ financial institutions through the consolidation foundation of the banking sector. It will allow to deal with the rehabilitation of the banking system in the country more effectively, Experts at RANEPA, Yury Yudenkov and Vasily Yakimkin, said in an interview with a Vestnik Kavkaza correspondent, commenting on the support of the Central Bank initiative by the Ministry of Finance and Ministry of Economic Development.
Recall that the Central Bank proposed to take responsibility for the effectiveness of rehabilitation, removing it from the Deposit Insurance Agency.
The Bank of Russia will create the above-mentioned fund and a management company. The completely accountable fund to the Central Bank will ‘enter’ into the capital of ‘sick’ banks and organize their recovery.
Renovated banks will be sold. This step will allow to save 25-30% of the current costs. Deputy Economic Development Minister, Nikolay Podguzov, said today that the Ministry of Economic and Finance Ministry support the idea of the Central Bank, however, they require to discuss details.
Professor of the Finance, Money Circulation and Credit Department at RANEPA, Yuri Yudenkov, expressed confidence that this scheme will work better than the current one.
"The central bank has not been involved in a reorganization of banks, and there is hope that the Central Bank will work effectively with weak banks instead of announcing them as bankrupts. This scheme should work and it will cause more enthusiasm on the part of Central Bank to restore poorly operating banks," he expressed his viewpoint.
Associate Professor of Stock Markets and Financial Engineering at RANEPA, Vasily Yakimkin, agreed that it's a more convenient measure in comparison with sitting responsibility for the reorganization of sanitation on the Deposit Insurance Agency.
"The Deposit Insurance Agency is always demanding money from the Central Bank for compensation. The Bank of Russia is annoyed and it would like to spend less, that is why reorganization should be carried out directly or through a controlled consortium. Thus, costs will be consolidated and minimized. This is how the Central Bank intends to solve the problem," the expert said.