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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

Wednesday, Oct. 22


English teachers can expect to receive a few useful pointers today from Evgeny Kalashnikov, the British Council regional teacher, during the EFL Seminar this afternoon hosted by the British Book Center. The topic of todays seminar is Grammar Practice.


Young Petersburgers will get the chance to jumpstart their careers at Professional Growth, a job fair and forum featuring more than 40 major Russian and international companies vying for potential candidates for future positions. The forum not only is a chance to network but also to learn more about the modern business world and to understand what it takes to get the job you want.



Thursday, Oct. 23


AmChams Public Relations Committee meeting is scheduled to meet this morning at 9 a.m. in their office in the New St. Isaac Office Center.


Sportsmen get their chance to stock up on all kinds of gear at the Hunting and Fishing 2014 exhibition starting today at Lenexpo. Everything from rods and reels to boats, motorcycles and equipment for underwater hunting will be on sale so that any avid outdoorsman can always be prepared.



Friday, Oct. 24


SPIBAs ongoing Breakfast with the Director series continues today, featuring Tomas Hajek, Managing Director of the Northwest Division at Danone Russia. Hajek will be discussing collaborations between businesses from different cultures. The meeting is at 9 a.m. at the Domina Prestige St. Petersburg hotel and all who wish to attend must confirm their participation by Oct. 23.


Get your gong on at Sounds of the Universe, a concert at the city planetarium this evening incorporating six different gongs to create relaxing songs that will transport you upwards into the stratosphere. Tickets are 700 rubles ($17).



Saturday, Oct. 25


AVA Expo, the eighth edition of the event revolving around all things pop culture, returns to Lenexpo this weekend. Geeks, nerds, dweebs and dorks will have their chance to talk science fiction and explore a variety of international pop culture. Tickets for the event can be purchased on their website at avaexpo.ru.



Sunday, Oct. 26


Zenit St. Petersburg returns home for the first time in nearly a month as they host Mordovia Saransk in a Russian Premier League game. Currently at the top of the league thanks to their undefeated start to the season, the northern club hopes to extend the gap between them and second-place CSKA Moscow and win the title for the first time in three years. Tickets are available at the stadium box office or on the clubs website.



Monday, Oct. 27


Today marks the end of the art exhibit Neophobia at the Erarta Museum. Artists Alexey Semichov and Andrei Kuzmin took a neo-modernist approach to represent the array of fears that are ever-present throughout our lives. Tickets are 200 rubles ($4.90).



Tuesday, Oct. 28


The Domina Prestige St. Petersburg hotel plays host to SPIBAs Marketing and Communications Committees round table discussion on Government Relations Practices in Russia this morning. The discussion starts at 9:30 a.m. and participation must be confirmed by Oct. 24.



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