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Small Banks Beg State for Respite

Published: April 7, 2009 (Issue # 1463)


MOSCOW Executives from hundreds of small banks flocked to Moscow on Friday to lobby against a new law that could force them to close by the end of the year, but Finance Minister Alexei Kudrin insisted that the government would not budge.

At an annual conference of the Association of Russian Banks, the small banks begged lawmakers and state officials to amend the law requiring them to increase their net worth to 90 million rubles ($2.6 million) by Jan. 1 and to 180 million rubles by 2012.

Our colleagues have announced, and with good reason, that this law will lead to the closure of many successful small banks and bring harm to many honest small and medium enterprises, the associations president, Garegin Tosunyan, said in his opening remarks.

Small banks with less than 100 million rubles in capital make up 28 percent of the associations membership, which includes 760 of the countrys 1,200 financial institutions.

This strain is coming at a time of crisis ... and so our members propose that the time period for coming up with the minimal capital requirement is extended by two years, Tosunyan said.

The government has said Russia has far too many banks, and Pyotr Aven, head of the largest private bank, Alfa Bank, has predicted a wave of failures on bad assets several times in recent weeks.

At the conference, the chiefs of the biggest banks called for lower refinancing rates and more direct government support for banks. But the looming capital requirement was the main concern of most conference attendees.

The only speaker of the day who managed to draw midspeech applause from the banking crowd was former Economics Minister Andrei Nechayev, a sharp critic of the capitalization minimum.

In the base-case scenario, it is stupid to require the banks to have 90 million rubles in capital by Jan. 1. In the worst-case, it is sabotage, Nechayev said. Let the market dispose of these banks in market terms. ... Why should we do it artificially?

Kudrin, who took the stage after Nechayev, said the law would weed out banks that contribute little to Russias economic growth and criminally active banks that have increased their money-laundering operations during the crisis.

We believe that it is necessary to increase and consolidate banking capital to create developed institutes that are able to provide for economic growth, Kudrin said.

What are 90 million rubles? Most of you in the crowd understand what this sum is worth. ... If a bank doesnt have 90 million rubles, it is a very small bank, rather, it is a minibank, Kudrin said.

Kudrin said that while there are still honest banks in this small-cap category, there are also many banks engaged in money laundering, banks that exist not to lend but to protect the owners or someone elses money.

This law will increase control over banks. There will be less banks but much more supervision, he said.

Kudrin predicted that about 150 banks would not have enough capital to meet the requirements by Jan. 1.





 


ALL ABOUT TOWN

Thursday, Oct. 2


The celebration of the bicentennial of the birth of Mikhail Lermontov continues with todays free exhibition in the citys Lermontov Library at 19 Liteiny Prospekt. Titled Under the Rustling Wings, the temporary exhibition will feature the costumes and scenery used in the 1917 production of Lermontovs play The Masquerade, which he wrote in 1835 when he was only 21 years old.



Friday, Oct. 3


Learn more about how to manage and evaluate employee performance during SPIBAs Human Resources Committee meeting this morning on Employee Assessment: Global and Local Trends. Starting at 9:30 a.m., the discussion will touch on such topics as the partnership between HR and business, reliable assessment strategies and more, with Tatiana Andrianova, the head of the SHL Russia and CIS branch in St. Petersburg, as the featured guest. Confirm your participation by Oct. 2 by emailing office@spiba.ru or calling 325 9091.


AmChams Procurement Committee Meeting is at 9 a.m. this morning in their office in the New St. Isaac Office Center on Ulitsa Yakubovicha.



Saturday, Oct. 4


Wine and cheese lovers will get their chance to revel during Scandinavia Country Club and Spas Wine Market Weekend. Going on today and tomorrow, wining diners can listen to live music, take part in culinary classes and, of course, sample a variety of fine wines from around the world. The cost of admission is 400 rubles ($10.30) for adults and 200 rubles ($5.15) for children.



Sunday, Oct. 5


Look for the latest fall fashions at the Autumn Market today in Freedom Anticafe at 7 Kazanskaya Ulitsa. The minimarket plans to offer clothes more flattering than the puffy jackets that are a staple of the citys cold-weather fashion, while offering the same amount of protection from the biting winds blowing off of the Baltic.



Monday, Oct. 6


SKA St. Petersburg, the citys KHL affiliate, welcomes Slovakian club HC Slovan in a match-up tonight at the Ice Palace near the Prospekt Bolshevikov metro station. The puck drops at 7:30 p.m. and tickets can be purchased on the clubs website or in person at either the arenas box office or the clubs merchandise store on Nevsky Prospekt.



Tuesday, Oct. 7


Learn more about Russias energy industry at the St. Petersburg Energy Forum that begins today and runs through Oct. 10. Attracting industry experts and political and business representatives, the forum plans to welcome more than 350 plus companies and their representatives to discuss the future of Russias largest economic sector.



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