Insured: 400 thousand

Bankers discuss the initiative of deputies

The State Duma on Friday approved in the first reading a bill to increase the amount of insurance compensation on bank deposits of citizens from 190 thousand to 400 thousand rubles. According to the authors of the project - deputies Anatoly Aksakov and Vladislav Reznik, in 2007 there is a clear social and economic need to increase the existing level of compensation for deposits. According to calculations by the Deposit Insurance Agency, the minimum level of fund adequacy should be 5% of the amount of insurance liability. As of February 1, 2007, this figure was 5.5%. It is expected that by mid-2007 it will increase to 6-6.5%.

The adoption of the bill was preceded by a discussion in the State Duma in early February, during which it became clear that the initiative of the deputies was not supported by representatives of the Central Bank, the DIA and the Ministry of Finance. Member of the Board of Directors of the Central Bank Mikhail Sukhov noted that it is necessary to reduce the burden on banks, which are required to pay quarterly 0.15% of the total amount of attracted deposits. The head of the DIA, Alexander Turbanov, previously stated that the possible decrease would be 0.02 percentage points. The corresponding proposal will be considered on March 13 at the DIA board of directors. At the same time, according to opponents of the deputies, increasing the insured amount immediately to 400 thousand, and not to 300 thousand rubles, as planned a couple of months ago, will not have a significant impact on increasing public confidence in credit institutions. The Vremya Novostey newspaper found out what bankers think about the State Duma’s decision.

How much do you think the increase in the amount of insurance coverage to 400 thousand rubles will be? will it have a positive effect on increasing public confidence in banks?

Head of the financial and economic department of CB "Moscow Capital" Vladimir NIZHNIK:

-- This will not increase confidence in the banking system as such. This will increase the amount of the average deposit of one individual in one bank. At the same time, there will be some redistribution of deposits from state-owned (Sberbank, VTB-24) banks to other credit institutions offering a higher interest rate on deposits.

Vice President of MDM Bank Elena BUSHNYAKOVA:

- Of course, increasing the amount of payments by another 100 thousand will increase the population’s confidence in banks and in the deposit insurance system as a whole, since many clients today are forced to divide the amount of deposited funds between several banks.

Director of the financial department of B&N Bank Alexey KITAEV:

-- The deposit insurance system was conceived as an instrument for insuring savings placed in banks, primarily for small and medium-sized depositors -- i.e. for the majority of the country's population. A person who has a deposit (note, in only one bank!) in the amount of 400 thousand rubles is clearly not an average Russian. Therefore, the efforts of the deputies here are clearly not aimed at protecting the interests of the majority.

Head of the Economic Department of the Moscow Industrial Bank Andrey TIKHOTSKY:

-- Increasing the amount of insurance compensation will only lead to less diversification by depositors of their deposits across banks. Which is primarily beneficial for the state-owned Sberbank.

Head of the Marketing and Banking Products Department of the Russian Development Bank Dmitry ORLOV:

-- Public confidence in banks depends not only on the amount of insurance compensation. Indeed, an increase in the amount will have a positive impact on the amounts placed in banks among a certain segment of clients who are ready to place such large amounts and are primarily focused on the return of their funds. For the most part, retail clients have less significant available funds.

Chief Specialist of the Retail Business Development Department of Promsvyazbank Tatyana LUKYANOVA:

-- Now some investors are splitting up their savings and placing them in different financial institutions in the hope of receiving maximum compensation for their deposits. Increasing insurance coverage will encourage higher deposits and greater confidence in private banks.

Head of Non-Trading Operations Department of Retail Business Department of Sobinbank Maria ANDREEVA:

- Of course, positively. An increase in the amount of insurance compensation directly affects the amount of deposit that a depositor can make in one credit institution whose offers are most profitable for him. At the same time, the private client has a firm guarantee that his funds are protected.

Do you consider the current contributions to the fund to be very high? Will a reduction in the contribution rate of just 0.02 percentage points be significant for the bank?

Head of the Department of Settlement Products and Individual Deposits of the Moscow Credit Bank Vladimir KUSTOV:

-- Currently, the established rate of contributions to the insurance fund, amounting to 0.15%, is the maximum value. And during the short period of existence of the Deposit Insurance System, banks made contributions to the fund precisely at the maximum rate, since it was necessary to form the fund itself in case of bankruptcy of any bank. At the moment, we view the reduction in contributions as a positive fact. After all, the funds transferred to the fund are the banks’ own money, which will not be returned back. At the same time, a rate reduction of only 0.02% will not be significant for the ICD.

Head of the Economic Department of the Moscow Industrial Bank Andrey TIKHOTSKY:

-- Additional costs of 0.6% per annum for attracting deposits from individuals are already significantly increasing the cost of raising funds from the population; with a further decrease in the refinancing rate, the share of this component in the cost of resources will only increase. This leads to a number of negative aspects. The inclusion of insurance premiums in the amount of bank expenses prevents the reduction of interest rates on loans they provide to legal entities and individuals, including mortgages. The amount of insurance premiums is included in the amount of expenses attributed to the cost price, and thus reduces the profit received by banks, and the amount of income tax decreases accordingly.

As for a possible decrease of 0.02 percentage points, this will not have a significant impact on our bank.

Vice President of MDM Bank Elena BUSHNYAKOVA:

-- I consider the current amount of deductions to be very high, but reducing it by only 0.02 percentage points will not be significant for the bank.

Head of the financial and economic department of CB "Moscow Capital" Vladimir NIZHNIK:

-- By reducing the percentage of deductions, banks will be able to increase either interest rates on deposits or the frequency of interest calculations, which in turn will affect the effective interest rate on deposits. In 2006, contributions to the savings account amounted to 0.36% of all expenses of our bank. Therefore, reducing the amount of deductions by 0.02% will not have a significant impact on the bank as a whole.

Director of the financial department of B&N Bank Alexey KITAEV:

-- Payments of the maximum established rate of 0.15% per quarter currently significantly reduces bank margins, which are already low in the context of lower inflation and lower refinancing rates. A reduction in the rate by only 0.02 percentage points will reduce bank contributions by only 13%, which cannot be encouraging. It's better than nothing though.

Head of the Marketing and Banking Products Department of the Russian Development Bank Dmitry ORLOV:

-- Any person who counts money wants to pay less, so reducing deductions is a plus. For significant volumes of funds raised, even 0.02 points is a significant value.

Head of Non-Trading Operations Department of Retail Business Department of Sobinbank Maria ANDREEVA:

— The savings will not be very significant, but the initiative to reduce deductions is, of course, pleasant.