UPDATE: Official: Fin min opposes extension of bank cap raise via OFZs

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MOSCOW, Jun 25 (PRIME) -- The Russian Finance Ministry sees no need in prolonging a banking capital increase through state OFZ bonds after 2025 albeit banks are returning the money slowly, Deputy Minister Alexei Moiseyev told PRIME in an interview released on Monday.

“So far only Alfa-Bank has returned the bonds. I have not heard proposals to return the subordinated loans from none of the other banks yet, unfortunately. Sure, we would like banks to return them to us before maturity, but have not set this as a goal. Though the program was created to stimulate banks to return them fast,” Moiseyev said.

He said that a higher burden on capitals of banks by new regulatory measures and a lack of sources of borrowing make it impossible for banks to return the bonds.

The government placed about 800 billion rubles of OFZ bonds with banks in 2015 in order to help them out during the financial crisis.

Moiseyev said that Russian banks have no serious deficit of capital and do not require state injections similar to the 2015 program.

The Finance Ministry stands for limiting banking deposit insurance coverage for small business to 1.4 million rubles, the official said.

Only retail loans are insured under the current law. The State Duma, parliament’s lower chamber, can approve a bill introducing small business deposit insurance until July in order to start implementing the measure from January 1, 2019, Moiseyev said.

Moiseyev said that the ministry supports raising the insurance coverage of retail deposits from 1.4 million rubles in certain cases but not for all deposits.

The measure was earlier proposed by Central Bank Chairwoman Elvira Nabiullina. She said that the coverage must rise when a depositor cannot calculate the risk for objective reasons or receives ‘socially sensitive’ income, such as inheritance or revenue from an apartment sale.

Moiseyev said that the Finance Ministry is against raising banks’ contributions to the Deposit Insurance Fund (DIA) from the current 0.15%.

According to Moiseyev, the Finance Ministry is expecting interim dividends from several state companies for 2018 but will not insist on dividend payments by state banks.

The ministry opposes direct prohibition for state banks to acquire private banks because this is a good alternative to bailout by the central bank.

The official separately said that foreign currency revenue return is becoming harmful for the Russian economy. “Already a year ago, when the sanctions did not hurt too badly, foreign currency control was of no use, while it is now becoming dangerous. When one of our largest exporters becomes an SDN (is on the U.S. blacklist) we surely cannot influence it with foreign currency control and kill it.”

(63.2396 rubles – U.S. $1)

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