Reorganization of insurers, pension funds and financial infrastructure approved in the fall

Reorganization of insurers, pension funds and financial infrastructure approved in the fall

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Photo: Natalia Seliverstova / RIA Novosti

Idea to sanitize not only banks but also other financial institutions are very close to implementation. The Bank of Russia plans to make appropriate amendments to the laws for consideration during the autumn session of the state Duma. Participants of the market warn about the growing conflict of interests of the Bank in the event megasale

What will happen

Amendments to legislation introducing a resolution mechanism for insurance companies and other financial market participants, the Central Bank of the Russian Federation proposes to submit for consideration in the autumn session of the state Duma, said the Agency “Interfax” with reference to the speech of the Chairman of the Bank Vladimir Chistochina at the International legal forum in St. Petersburg.

“When we are faced with the instability of the same credit institutions often see that they are members of large financial groups. The question of instability applies not only to banks but also to other team members. It could be insurance companies, and pension funds, and some professional participants of the securities market. Of course, in this sense, it would be more correct to apply a common resolution mechanism to the whole group if we believe that the group is worthy to sanitize”, — quotes “Interfax” Chistochina.

There

Now the process of rehabilitation (rehabilitation at the expense of the Central Bank and investors) spelled out in the bankruptcy law only against the banks. As a result, in practice, the Russian finrynka there were cases when the Bank participants in the financial group of the Bank were saved, and non-Bank rehabilitation at the expense of public funds was not subject regardless of this testimony.

As an example, when the reorganization of the non-banking financial market participants could really come in handy might be the case of group “URALSIB”, indicate market participants. Assets of the insurance company “URALSIB” was problematic, but salvation by law, at the expense of the Central Bank was subject only to the Bank (the turnaround “URALSIB” Vladimir Kogan got to rescue the Bank 81 bn). To improve the financial condition of the insurer, the new owners are doing on their own.

Someone important

The potential rehabilitation of insurers, the special interest of the Central Bank. “First of all I’m talking about insurance companies”, — said Vladimir Chistyukhin.

The desire of the Central Bank legislation to introduce a recapitalisation, in particular insurers, not surprisingly. At the end of last year it became known about the plans for the transfer of control over who became troubled insurer “Rosgosstrakh” financial Corporation “Opening”. As reported then RBC, financial market participants have interpreted this move as a covert reorganization. In their comments they did not excludethat the transaction can carry forced to “Rosgosstrakh” in a difficult financial situation due to loss of CTP segment where he is the biggest player.



Vladimir Chistyukhin

Photo: Gennady Gulyaev / Kommersant

However, from the point of view of Chistochina, “no less relevant” is the reorganization of the pension funds and systemically important infrastructure. What he did not elaborate, but, as suggested by the financiers, we can talk about exchanges, depositories, etc.

Not a new question

The idea is to extend the resolution mechanism for insurers and other financial organizations is not new.

Representatives of the Bank of Russia began to make official statements about it a few years ago. In particular, in 2015, in an interview with RBC Chistyukhin said: “the Reorganization of insurance companies will be built on the same model that the Bank bailout. We plan to change bankruptcy laws accordingly. In General, the rehabilitation process should take place with the assistance of the investor, which will be transferred to the portfolio and provided financial support on a returnable basis”.

Now this idea closer to practical realization. However, a full understanding of how it will be decorated non-Bank rehabilitation, yet not. According to Vladimir Chistochina, this can be used as a new mechanism improvement (recapitalization of troubled players at the expense of the Central Bank through its controlled Fund and management company) and the old scheme, as the funds from the Bank bailout was allocated by the Central Bank of the sanatory the loan through DIA. This scheme was recognized by the Bank of Russia is ineffective and proposed to be replaced by a new mechanism of direct capitalization.

The opinion of the market

The participants of the financial market the idea of the so-called megasale generally supported.

“The market is NPF, I appreciate this innovation positively. This will help in case of any problems in the NPF not to leave the market. Besides, it will positively affect the reliability of the market. Unlike the banking market, the reorganization of the NPF needs to be easier because on the market pension funds substantially less than the banks,” — said Advisor to the National Association of pension funds (NAPF), Valery Vinogradov.

However, there is another opinion regarding the reorganization of the NPF: to sanitize their image banks is incorrect, this must be a special mechanism, said member of the Board of Directors of JSC NPF “Consent” Andrey Neverov. “We can talk about the term “sanitation” only if the NPF is not a very large deficit and it can be covered through proper management of its assets. This is a rare practice. Of course, you need to install the mechanism. But it is important to clearly define where to sanitize, and where to revoke the license. If the NPF is managed properly, the loss of even 5-7% of assets does not entail the need to give it under reorganization. Banks have a fundamentally different structure of liabilities and assets. So I’m not sure that you can distribute banking practices in the NPF. Need a new integrated approach,” he says.

“The main question: how to test a new mechanism of financial recovery. Time will tell how it will be in practice”, — says the Director for Bank ratings S&P Sergey Voronenko. However, he said, “we do not expect that the government and the Central Bank will continue to allocate a substantial amount on the procedure of financial rehabilitation. In addition, the continued Voronenko, the Bank of Russia in this case there is a conflict of interests, as it acts as a regulator and at the same time megacentral. “If the financial institution is brought to the state when you need rehabilitation, the question arises why the organization in such a situation” — sums up Voronenko. According to participants of the market of non-Bank players in the reorganization will be subject to only the largest systemically significant organizations.