Report: Cbank yet to decide on merger of top 3 bailed out banks

MOSCOW, Dec 25 (PRIME) -- The central bank has not yet decided on a merger of three top banks that are undergoing bailout procedures initiated by the regulator – Otkritie Financial Corporation (FC) Bank, B&N Bank, and Promsvyazbank, Central Bank Chairwoman Elvira Nabiullina said in an interview to Rossiya 24 television channel broadcast on Monday.

“We are discussing further development of the banks’ business models. Having a synergy effect between these banks is possible, but it is also possible that they may have to sell some assets that are not to enter the perimeter of the banks. We are discussing whether we should merge them or not, these issues have not yet been finished,” she said.

The regulator’s goal is to create an efficient business model of the banks, to return them to the market, and return a significant part of the money spent on the bailouts, she said.

The major reason for introduction of the bailouts is a low quality of risk management. Some banks got too deep in financing their owners’ businesses. “When a man finances his own business, he tends to underestimate the risks. But they come true in the end. This is why our goal for the future is to eliminate the problem of banks investing too much in businesses connected with owners of the banks,” she said.

“The second thing here is that some banks grew too fast and in a non-organic way without backing the expansion with capital and managers. The main reason here is a not-too-high quality of bank management.”

The authority had to carry out these bailouts to maintain financial stability of the banking system.

“This year was a breakthrough for us also because we have bailed out three large banks for the first time. We were able to do it because we have received an instrument for solution of these problems this year – the fund for consolidation of the banking sector. It is obvious that we had to bail out these large banks so that we don’t lose depositors and creditors. It allowed us to maintain financial stability of the banking sphere,” she said.

This year was also a breakthrough for the banking oversight as the regulator has slowed down its revocations of banking licenses having purged the majority of unfair and unstable players from the market. The authority recalled 50% less licenses this year than in 2016, she said.

The regulator will continue to remove unfair players for about two or three years, she said.

End