How financial system of Russian Federation will change after the loss of BFG-Credit?

How financial system of Russian Federation will change after the loss of BFG-Credit?

Today the Central Bank has revoked the license of Moscow BFG-Credit Bank, which was in the top 100 of the country's banking system. At the same time, it was noted by the representatives of the Central Bank that BFG-Credit inadequately evaluated accepted risks despite of the poor quality of their assets. ‘‘Credit risk assessment and objective evaluation of assets led to the complete exhaustion of its funds,’’  the Central Bank noted in a press release.

The Central Bank informed that due to a significant imbalance between assets and liabilities of the bank, a recovery procedure is not possible.

As for the volume of public funds, BFG-Credit was in the 16th place (more than 9 billion rubles). ‘First Channel’, VGTRK, and ‘Mir’ broadcasting company were among the Bank’s clients.

In early May, the Deposit Insurance Agency selected agents to pay compensation to the clients of BFG-Credit. They are Sberbank and ‘Obrazovaniye’. In April, the Central Bank established a three-month moratorium to satisfy claims of creditors of the financial institution. A temporary administration was appointed to the bank, RIA Novosti reports.

Professor of the Finance, Money Circulation and Credit department at RANHiGS, Yuri Yudenkov, drew attention to the fact that the decision by the Central Bank to revoke the bank’s license was a big surprise. 

"This decision does not characterize the state of the banking sector. The Central Bank does not engage in a “rescue”, it simply immediately revokes banks’ licenses rather than putting clients of the bank and its employees in a very unpleasant situation,’’ he said, adding that the Central Bank should be rescue such major banks.

Researcher at the Study Center for Structural Studies of the Institute of Applied Economic Research at RANHiGS Mikhail Khromov recalled that the central bank set a moratorium the settlement with the creditors of the bank BFG-Credit. He said that the bank and the Agency paid the creditors the amount covered by insurance.

The expert reminded that in the past three years, the Central Bank revoked licenses of 300 banks. "According to experts, in the next three years another 300 banks will loser their licenses, including the top banks,’’ the expert concluded.