Translated material
Banker, drink poison!
Where "toxic" assets are drained
The tool for intoxication. The world banking system is seriously ill. Different "medicines" are used for its treatment. In the United States, it was decided to create a fund of problem (“toxic”) assets, which will redeem “bad debts” from banks. How this financial instrument works and whether it is applicable in Russia - The New Times found out 
Such situations usually arise during periods of economic shocks that result in a drop in the value of assets (securities and real estate, widely used by banks as pledges on loans) and in a serious reduction in economic activity (as a result of which the borrower is faced with a fall in demand and becomes insolvent). So “bad debts” appear: a loan, which some time ago brought a steady percentage income to the bank today becomes problematic, because due to a change in economic conditions, the borrower can no longer repay it.
Cleaning balances How can the state help banks in such a situation? When banks in the mass order are faced with the problem of “bad debts”, the case is not limited to simple liquidity. The state is forced to go to more serious measures related to the recapitalization of banks: large, as a rule, receive additional capital from the budget, small and medium -sized are forced to “bow” to large banks or sold it. At the same time, before giving money to the capital of banks, the state is obliged to clear their balances: together with management, auditors, investment consultants, customers to carefully analyze the assets of banks, understand their real value in the current conditions and the prospects for the return of loans issued.
In the course of such an analysis, part of the assets is inevitably revealed, the real value of which is zero - they just need to be written off from the balance. Some of the assets are very good, bringing current income and, possibly, only requiring a slight change in the terms of repayment of the loan. That part of the assets is also revealed, the restoration of the value and current profitability of which is associated with a qualitative improvement in external conditions and can take many years. Such an asset is often real estate, which, after a drop in prices, can bring a noticeably lower current income (due to the fall of rental rates) and whose market price can be below the estimate for which the bank took it as a deposit. Today in Russia, such assets are Rusalu loans, which has very stable competitive positions in the market, but at the current level of prices for its products, it may be necessary for decades. Banks simply cannot afford to keep “bad” assets in their balance in large quantities - they will not withstand the supervisory requirements of the Central Bank. Then states are forced by banks to accelerated the sale of such assets or (since accelerated sale obviously reduces their price) go to the creation of a special organization, the so -called “bad bank”, which redeems these assets from banks. Since the “bad bank” is not an ordinary bank, it does not apply to supervision requirements, it can keep assets on his balance sheet for an arbitrarily long time, entering into negotiations with debtors and ultimately earning a very good profit. The key question is in the activities of the Bad Bank - at what price to redeem problem assets? If the price is too high, then this means that the state simply “gives” the shareholders of the banks of taxpayers. If the price is too low, then banks can suspect the state of the desire to “rob” them. The elegant exit from this conflict is proposed by the current US administration: five “bad banks” will be created there, which will be managed by private companies and which will compete among themselves at auctions for the sale of “bad debts” (see certificate).
Life after sanitation after the sanitation of the bank’s balance was carried out, and the state decided to continue its functioning, it becomes necessary to replenish the bank’s capital so that it can work normally. For this, several tools are used. Ordinary promotions can be used somewhere-a good way if the bank shares were quoted in the stock market and their current assessment is understandable. In this case, the bank’s shareholders are “eroded”, and in some cases everything can lose everything - this was, for example, in Sweden during the 1992 crisis, where the law established that the state could deprive the bank's property of their property if the capital sufficiently venerated below 2%. Somewhere, privileged shares are used that do not give voting rights to meetings of shareholders, but give guaranteed and higher dividends. As a rule, they are used when the bank needs minor support and can restore its capital for a short period of time. Convertible bonds can be used somewhere-a tool that gives more flexibility to the state when making subsequent decisions.
What happens in Russia? Last fall, the banking system received more than significant support from the government and the Central Bank, which provided loans in various form banks worth more than 3 trillion rubles. After that, the banks were able to pay with their depositors, who took deposits quite intensively, and were able to purchase a sufficient amount of foreign currency to reduce currency risks to zero. One and a half dozen of the weakest banks went bankrupt, and the state took them “under guardianship” to minimize the losses of depositors and prevent the loss of banking assets. And on this everyone calmed down - but in vain ... An increasing number of loans passes into the category of bad ones, bankings look worse. Most experts include to the point of view that the situation will “break through” in the fall, when the number of “bad debts” will become so large that the banking system, including the largest banks, will begin to swing.
Are our authorities ready for such a development of events? And yes, and no. Yes - because they also talk about the upcoming banking crisis. No - because they see all problems exclusively in providing banks with more and more subordinated loans to which 555 billion rubles are allocated to the budget. And all world experience suggests that, before giving money to banks, it is necessary to clear their balances. Even if the bank is state.
The PPIF (Public-Private Investment Program) ransom program, proposed by the US Minister of Finance Tim Gaiter, is designed to solve the problem of the so-called "hereditary" (Legacy) assets-mortgage loans on banks or mortgage securities. The US Ministry of Finance deliberately preferred the more stringent term “toxic assets” (toxic asset) more harmonious “hereditary assets” (Legacy Asset).
PPIF is carried out to cleanse the balance of banks and other agents of the financial system from problem assets in order to subsequently restore business lending and households necessary for lifting the economy. The program creates opportunities for the purchase of “hereditary” assets in the amount of $ 500 billion to $ 1 trillion.
The purchase of problem loans from the balance of banks is carried out using the following scheme:
Banks and financial institutions represent problem assets and form a pool from them under the supervision of the Federal Corporation for Deposits Insurance (FDIC),
FDIC establishes the ratio of the ratio of borrowed funds to capital (Debt-to-equity) for each of such loans bullet, but not more than 6: 1,
Each loan pool is sold with a discount to the nominal value at the auction at the highest price of the application,
The best application gains access to PPIF to form 50% of its cost,
If the price satisfies the seller of a bad asset, the private investor finances the operation through the release of debt paper guaranteed by FDIC,
Since the sale of a problem asset, the fund has been managed and controlled by private managers.
In the framework of the ransom of problem securities, five US management companies selected by the US Ministry of Finance will receive funds from the following calculation: $ 100 state editing in the authorized capital of the Fund for every $ 100 funds attracted by private investors.
Alexander Khandruev, the first vice-president of the Association of Regional Banks from the II quarter of 2009, we can expect a further exacerbation of the situation with the repayment of the debt of enterprises and citizens to banks.
Unlike the liquidity crisis, the growth of the crisis of “bad debts” is hidden, but its consequences can be much more destructive. The Association of Regional Banks believes that all this will require the government to take urgent measures to manage problem debt at the level of the banking system as a whole.
It seems appropriate to create a special accumulation fund and redeem out problem debts of enterprises with the possible participation of private individuals on the terms of public-private partnerships. Its participants can become both domestic entrepreneurs (of those who are now “with money”) and foreign investors who will show interest in the acquisition of Russian assets.
Such a fund can be implemented in the form of an independent legal entity - the state corporation or joint -stock company.
Naturally, the ransom of debts will be made with a significant discount (discount) and only on the conditions of the full information openness of credit institutions regarding their real financial status and real owners (beneficiaries).
The purchased debts are issued in government securities with a maturity of up to 10 years with the possibility of their conversion into the shares of borrowing enterprises. Such government bonds can serve as a kind of “quasi -item”, which the bank can use as a deposit for short -term (shaggy) lending at the Central Bank.
When the repayment period comes, bonds can be converted into money and, if desired, regain your property. This will in no case be “nationalization”: everything that the state will do is serve the released papers. This is just a market way to solve the problem. The total amount of funds for the pre -capitalization of the banking system, according to the association, may exceed 2 trillion rubles.
By the way, you can start with a ransom for government bonds of overdue mortgage. At the same time, the pledge (apartment) will go into the property of the state, that is, it will actually turn into social housing. However, this does not exclude the acquisition by the borrower in the future of this housing in property, unless, of course, he finds a fund for this.
1 The ratio of the bank’s own funds to its assets, 10%is considered the norm.
Director for Macroeconomic Research of the State University