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Banks' Bailout Blueprints To Battle Big Trouble
January 14, 2013 13:37

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 The largest banks in Russia would have to put together bailout plans for different crisis scenarios, according to Vedomosti daily.

Count on no-one but yourself

Mikhail Sukhov, deputy chairman of the Central Bank, told Vedomosti that Russia’s Top 30 banks have been advised to draft up bailout blueprints and forward it to the financial regulator. It’s a recommendation so far, but it may become obligatory after the relevant amendments are passed, possibly in 2013.

The new demand is in line with the Basel III requirements that will be introduced in Russia starting from October 2013.

The focus is on the capacity of individual banks to resist emergency situations on their own, be it a downfall on the stock exchange, slowdown of GDP growth or rapid outflow of customers.

This requirement will be compulsory only for key banks, roughly in the Top 30.

Banks agree

Gazprombank’s first vice-president, Ekaterina Trofimova, praised the effort saying it is part of the world-wide trend and it’s key that banks adopt and include these anti-crisis plans in their daily operations.

The Central Bank expects the first reports to be sent in within several months.

According to S&P analyst Sergey Voronenko, the 2008 recession provided the best stress-test conditions possible and the banks should devise their strategies to battle financial shocks along the lines of what they went through during that period.

The Russian banking sector stayed afloat in 2008-2009 largely due to injections from the state, he said. According to the World Bank, the Central Bank poured some 1.4 trillion roubles as part of the rescue effort.

2013 forecast

Poor capital quality is still the main issue for Russia’s banking sector, according to Moody’s, which set the outlook for 2013 as negative.

Its analysts fear a sudden repeat of the 2008 crisis in case of a drop in oil prices, which would cripple private companies, de-value the national currency and prompt a massive capital flight.

Author: Mikhail Vesely

Tags: Russian banks Central Bank    

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