Frenkel's Testaments

Russian bankers will be allowed not to comply with the recommendations of the Central Bank

Russian bankers will finally be able to independently decide whether to follow the recommendations of the Central Bank or not , without fear of sanctions from the regulator. The Central Bank is currently preparing appropriate clarifications on this topic together with the Association of Russian Banks (ARB). Now both financiers and ordinary employees of the Central Bank will be explained which documents are mandatory and which are not. In addition, the Bank of Russia will prohibit its territorial departments from applying sanctions against those banks that do not comply with its recommendations. And the regulator itself may impose sanctions on Central Bank employees who exceed their powers and apply enforcement measures to such banks. The problem of interpreting documents issued by the Central Bank in the field of banking supervision received wide public attention at the beginning of this year. Then banker Alexander Frenkel, suspected of murdering the first deputy chairman of the Central Bank Andrei Kozlov, stated in one of his open letters that the regulator, when issuing advisory documents, requires banks to comply with them.

As you know, the Bank of Russia issues different types of documents - instructions, regulations, directions, letters, clarifications, etc., but not all of them are normative in nature, and therefore not binding. Russian bankers also recognized this problem and turned to the regulator with a request to resolve it, explaining to their territorial departments that there is no need to apply sanctions against those credit institutions that do not use the recommendations of the Central Bank as a guide to action. “For example, during an inspection, representatives of the Central Bank discover that the bank does not comply with certain recommendations,” explains ARB Vice President Andrei Emelin. -- In this case, the inspector can apply sanctions to the bank, although it is not at all necessary to follow these recommendations. In addition, Central Bank employees sometimes do not agree on the internal control rules of banks until credit institutions include the regulator’s recommendations in them. Thus, these recommendations officially become mandatory for banks.” The Central Bank agreed to discuss this problem. As a result, the regulator and the ARB recently agreed on the concept of the letter, which states that territorial departments cannot apply sanctions to banks for failure to comply with the recommendations contained in acts that are not normative in nature. “We determined what exactly should be written in the letter,” says Mr. Emelin. “In particular, sanctions will not be applied to banks for failure to comply with recommendations; in addition, they will not need to be included in the internal control rules.”

Now the document is in the Central Bank, it is still unknown when it will be agreed upon within the department. “We very much hope that this letter will be published soon,” says Mr. Emelin. As you know, this topic is personally supervised by the Chairman of the Central Bank, Sergei Ignatiev, who promised to identify and punish Central Bank employees if they exceed their powers. Bankers are also pleased with the regulator's attitude to this situation. “It’s great that the Central Bank recognized this problem and decided to explain to its territorial departments the meaning of the word “recommendation,” notes Igor Kogan, Chairman of the Board of Orgresbank.

Natalia ROMANOVA