Translated material
No deferment or benefits
VTB-24 will not restructure private loans
The head of VTB-24 bank, Mikhail Zadornov, invites borrowers to reduce their currency risks and convert dollar loans into ruble ones. In fact, this is the only measure of VTB-24 aimed at supporting private clients whose financial situation has worsened due to the crisis. Mr. Zadornov told reporters yesterday that VTB-24 does not yet plan to restructure problem loans or introduce deferments and installment plans for borrowers, as Sberbank intends to do.VTB-24 became the first large Russian bank to begin converting foreign currency loans into rubles in December. According to Mr. Zadornov, loans worth about 10 billion rubles have now been converted. Although bank branches are busy with the work of converting foreign currency loans into ruble ones, according to Mr. Zadornov, “not all borrowers understand the essence of these proposals; people do not understand currency risks well.” As you know, against the backdrop of a sharp drop in oil prices and capital outflow from Russia, the dollar exchange rate in Russia has increased by 14.6% since the beginning of September. At the same time, neither officials, nor analysts and economists have any doubts that the weakening of the ruble will continue next year.
According to Mr. Zadornov, VTB-24 is ready to take on currency risks, but is not ready to accept more significant concessions for borrowers. First of all, this concerns the introduction of a grace period for borrowers, during which Russians will pay less on loans or not pay at all. As you know, on Monday the head of Sberbank German Gref told Prime Minister Vladimir Putin about such a scheme for working with borrowers. Mikhail Zadornov intends to cooperate with the Agency for Housing Mortgage Lending (AHML), which will deal with mortgage restructuring, but VTB-24 will not develop independent programs for problem borrowers. According to the head of the bank, it is important that clients feel responsible for the loan received. “If a person took out a car loan and then stopped paying the bank, it means that we will take the car out of court and sell it,” says Mr. Zadornov.
The desire to restructure problem loans at Sberbank was explained not only by benefits for clients, but also for the credit institution itself. In particular, yesterday Mr. Gref said that “this is not charity on the part of the bank, this is a sober calculation.” According to him, people should not be driven into a corner. In addition, the bank does not need problems with non-payments when it will have to create additional reserves.
VTB-24 is not afraid of an increase in delinquencies, despite the decision not to carry out mass loan restructuring. Now its size is 1.1-1.15% of the total loan portfolio. According to Mr. Zadornov, it may be acceptable for the bank to double its overdue debt next year. VTB-24 intends to improve its risk management and increase requirements for borrowers in order to prevent a significant deterioration in the quality of the loan portfolio.
According to Mikhail Zadornov, the bank's profit in 2008 will increase 4.5 times, to 7 billion rubles. According to the results of 11 months of the year, VTB-24’s assets amounted to 231.3 billion rubles, its own funds - 12.7 billion rubles. Zadornov said that the bank's loan portfolio for retail car loans reached 18.56 billion rubles, for consumer loans - 65.2 billion rubles, for mortgages - 94 billion rubles, for credit cards - 7.56 billion rubles. In total, 213.95 billion rubles were issued in retail. Account balances of individuals amounted to 91 billion rubles, including 79.4 billion rubles on time deposits. According to Zadornov, according to preliminary data, in November VTB-24 took seventh place in terms of assets among Russian banks, while as of January 1, 2008 it was in 11th place. In retail loans to the population, VTB's market share as of December 1 was 7.4%, in the market for time deposits of individuals - 4.87%. VTB's market share of all funds raised from individuals reached 4.79%.
VTB-24 will receive a ten-year subloan from VTB for 15 billion rubles. at 8.1% per annum. According to Mr. Zadornov, the relevant documents will be sent to the Central Bank in the near future. The need to attract such a loan is caused, among other things, by the declining capital adequacy ratio, which as of November 30 was 10.5%, having decreased by 1.2 percentage points in November. Mr. Zadornov did not specify what the level of capital adequacy will be after receiving a subordinated loan.