UPDATE: Cbank: Load on deposit insurance fund to rise with small business

(Adds details in last paragraph)

ST. PETERSBURG, Jun 8 (PRIME) -- The load on the deposit insurance fund will increase as the government extends the insurance coverage to small business, Central Bank Chairwoman Elvira Nabiullina said at a briefing on Friday.

“A certain load will surely grow but as regards small business, we’ve calculated that beforehand and the draft law is already in the State Duma. Concerning socially sensitive situations, they are quite rare but very useful for the people who receive large amounts on one account, from housing sales, inheritance or so on. The amounts are small, the issues are sensitive, the burden from that will not rise greatly,” Nabiullina said.

The central bank will continue a policy of strict foreign currency loan regulation as it believes that the measure will have a long-term positive effect, Nabiullina said.

“As regards strengthening of the foreign currency credit regulation, we are and will conduct this policy,” Nabiullina said. “It will have a long-term positive effect on the financial stability and on the banking system stability.”

She said that the central bank’s activities will make the Russian banking system less vulnerable to external risks.

The central bank is now worried about the possibility of some banks to set overly low deposit rates, the chairwoman said, adding that the authority can set a minimum threshold for deposit rates after discussion with the market, she said.

The central bank offers a 2% stake in the capital of the non-core asset and bad debt fund to Otkritie Financial Corporation (FC) Bank and a 1% stake in the Russian Direct Investment Fund (RDIF), Nabiullina said.

The establishment of the fund was announced in April, banks undergoing bailout by the central bank will cede 2.07 trillion rubles of assets to the fund.

Nabiullina also said that the Russian system of non-government pension funds is stable in general. The authority is discussing a bailout mechanism for the sphere but sees no urgent need in it.

First Deputy Chairman Sergei Shvetsov said that introduction of the minimum deposit rate would require splitting deposits by types. “We’ve listed this as a matter to discuss rather than a solution in the roadmap (of financial market competition development). So before saying how many groups there will be, we have to decide whether we will do that or not.”

(61.8125 rubles – U.S. $1)

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