Expert opinion

According to the President of the Association of Russian Banks GAREGIN TOSUNYAN, contradictions in the regulatory documents by which banks operate are one of the reasons for nervousness in the financial market.

Garegin Tosunyan is convinced that deprivation of licenses is not the only way to improve the country’s banking system; there are other tools
Photo: Pavel Kassin, Kommersant / buy photo

The past year was eventful. The Bank of Russia was headed by a new chairman, Elvira Nabiullina, the Central Bank received the status of a mega-regulator, a key rate was introduced as the main indicator of interest rate policy, a law on consumer credit was adopted, and a major cleanup continued in the banking market.

Business guide: At the beginning of the year, the Central Bank continued its policy of revoking licenses, which increased the flow of money into state banks. When, in your opinion, will the Central Bank’s flywheel stop to deprive small and medium-sized banks of their licenses?

Garegin Tosunyan: In my opinion, the Bank of Russia is trying to bring what it started to its logical conclusion - to clean out the Augean stables and rid the market of players who, from the regulator’s point of view, are deeply problematic and have gaping holes in their balance sheets. In 2013, the number of operating banks decreased by 31 units: from 956 to 925. Let me remind you that since 2004, when the deposit insurance system was created and the audit of banking licenses actually took place, that is, in ten years, 338 banks have lost their licenses. We clean and clean everything. This can't last forever. It seems to me that the approach itself needs to be qualitatively changed. After all, the regulator has in its arsenal a whole line of tools for implementing preventive influence on banks about which the slightest doubt arises.

BG: At the beginning of the year, the ruble exchange rate weakened significantly. Whose interests, in your opinion, are behind the depreciation of the ruble?

G.T.: Changing the ruble exchange rate, in my opinion, is a completely natural process in the foreign exchange market. The exchange rate of the national currency largely depends on the economic situation, factors such as the level of GDP development, production, inflation, and foreign trade balance. Strategically, I am a supporter of a free floating exchange rate and am not going to criticize the Central Bank for having once approved and implemented this policy. Another thing is a question of tactics. I think we need to be more careful and careful in statements, in particular about the fact that the Ministry of Finance is going to buy foreign currency. Such declarations only add to the excitement among speculators in such a nervous market as the foreign exchange market. Incomprehensible leaps begin.

BG: Do you think Elvira Nabiullina (Chairman of the Central Bank of the Russian Federation - BG) has the character to withstand the pressure of hedge funds and other large speculators who play against the ruble?

G.T.: The burden on her shoulders is now enormous. But it seems to me that she has enough character and will. Mrs. Nabiullina makes a very positive impression on me. There is no show off about her, she is in a working mood.

BG: What will happen to banking secrecy, is the regulator coming to tighten its approach to the market, and how will clients feel this?

G.T.: Recently, bank secrecy has become a subject of manipulation. We see that as soon as law enforcement and other regulatory bodies fail to fulfill their competence, they immediately turn to the government with a request to expand their rights and opportunities. They say that only with such measures can iron order be established. For example, there are proposals to allow arrests of businessmen without court sanctions. Our experience shows that broad rights are accompanied by widespread abuses. If banking secrecy is eliminated, every member of society will suffer. Now, under the guise of protecting personal data, some are trying to slow down the development of the credit history institution. But information about your credit behavior is not your personal property. This is a matter of honor and reputation. Another thing is that credit history, like bank secrecy, should not be publicly available. Moreover, strict penalties should be introduced in case of information leakage.

BG: The Ministry of Finance is preparing a bill limiting cash payments. How do you feel about this initiative?

G.T.: As a representative of the banking community, I support this idea. Cash payments create costs and risks for all parties to transactions. It’s not entirely safe when a person buys a car for a million in cash or an apartment for five million in cash. Moreover, often a Russian buyer can only pay in cash, since the seller does not want to make payments via non-cash payment. But I am not a supporter of strict administrative prohibitions and fines. It seems to me that the transition should be smooth and largely with the help of economic incentives. We have a positive example from our neighbor Georgia, which in just a few years has introduced a very high level of computerization of everything, including the ability to minimize cash payments.

I want the rules of the game by which the market operates to be clear and logical, so that our State Duma is not called a “mad printer”

BG: What changes may occur, in your opinion, in the conditions for issuing loans? Where will consumer loan rates go?

G.T.: In 2012, consumer lending increased by 39.6% compared to 2011, and overdue loans increased by only 7.5%. But already in 2013, compared to 2012, the market grew by only 28%, and overdue payments already increased by 40%! Such a jump indicates a high risk of non-returns. And it’s better to anticipate it in advance. Therefore, the desire of the Central Bank to slow down the pace of development of lending to the population is quite understandable. But, on the other hand, consumer lending is one of the main drivers of demand necessary for economic growth. Some experts believe that our economy lost up to 3% of GDP last year from the slowdown in lending growth. Thus, extremes in credit policy can lead to both economic stagnation and negative social consequences. Balance is achieved only through jewelry tuning. The basic components that determine the lending rate are inflation, funding costs, risk margin, administrative burdens, and overhead costs. Apart from household deposits, the vast majority of banks have no other long-term sources. The reduction in rates will be facilitated by low inflation, computerization of banking technologies, and a healthy business climate. But we do not have a normal competitive environment. For a limited number of large players, resources from government sources are available and cheap, but for everyone else they are expensive and inaccessible.

BG: What laws do private banks lack, in your opinion?

G.T.: I am by nature more an ascetic than a sybarite. And I never demand anything more, better conditions. But I want the rules of the game by which the market operates to be clear and logical, so that our State Duma is not called a “mad printer.” It is very important that regulatory documents, especially legislative acts, do not contain any obvious contradictions. For example, according to Part 10 of Art. 6 of the bill “On Credit Histories”, the validity period of the subject’s consent to provide a credit report is tied to the conclusion of the loan agreement. This does not take into account that the strictly targeted nature of the request to conclude a loan agreement has already been cancelled. Unfortunately, during the formation of the legal field in the banking market, our classic Viktor Stepanovich Chernomyrdin is increasingly remembered, who formulated the following aphorism: “We have never had such a thing. And here we go again."

Sergey Artemov

“We clean and clean everything.”