On 29 December, in
a television interview with RIA’s news show “Russia 24”, Herman Gref, the CEO
of Russia’s largest bank, Sberbank (ОАО «Сбербанк России»), stated that the
bank expects to show a profit for 2012 of 350 bln RUB (€ 8.7 bln), the largest
in the history of the bank. Mr. Gref
also expressed his approval of legal changes due to enter into effect in Russia
in 2013 that will require banks that offer higher interest rates on deposits to
pay higher premiums into the deposit insurance fund.
Sources:
Video of interview: Герман Греф об итогах года и
планах на 2013 год (2012-12-29)
On 31 December it
was reported that ATMs at banks in Irkutsk Siberia , had run out of cash due to unexpectedly
vigorous pre-New Year’s spending. The
banks began running out of cash on 27 December, leading to large crowds and
long lines, and the time-consuming process of frequently replenishing ATMs with
cash – carried out under police protection – could not keep up with
demand. Particularly hard hit was Sberbank , Russia
Source:
In earlier news, on
29 December a man robbed a bank in Ekaterinburg. On Saturday morning a man entered the Shchorsa Street
The suspect was eventually
hunted down and cornered by police, and a bomb squad was called in to defuse
the device that was strapped to the suspect while three neighboring houses were
evacuated. In the end the device was
found to consist of red and black wires, a cell phone, some large batteries,
and 18 bars of soap. The suspect, born
in 1994 and a sophomore at the faculty of electrical engineering at Ural Federal University, claimed that the
previous night – Friday – he had gotten drunk on whiskey with some friends, who
had dressed him up with the makeshift “suicide vest” and sent him off to
“storm” the bank, and these claims were later corroborated.
The suspect, who
made off with at least 45,000 RUB (€ 1,100) in cash, will be charged under Art.
207 (knowingly providing false information about a terrorist act) and Art. 162
(robbery) of the criminal code.
Sources:
Also on 29
December, the private rating agency Expert RA (Рейтинговое агентство «Эксперт
РА») confirmed its rating of “A” for the commercial bank “Radiotechbank” (ОАО
НКБ «Радиотехбанк»; headquartered in Nizhny Novgorod, east of Moscow; total
assets as of 1 December: 1.956 bln RUB).
The decision to confirm the rating, with an outlook of “stable”, was
influenced positively by the bank’s high capital adequacy ratio (ratio of own
funds – “N1” – of 18.9% as of 1 December) and its high liquidity (instant
liquidity ratio – “N2” – of 57.9% as of 1 December), but was negatively
influenced by the bank’s low ROE (5.0% in 3Q 2012) as well as low interest
income and commission income.
On the same day,
Expert RA also assigned a rating of “B++” to the commercial bank “Necklace Bank”
(ООО КБ «Нэклис-Банк»; headquartered in Moscow
Sources:
In earlier news, on
28 December the bank-news site Banki.ru published a Russian translation
of an article that had appeared on 27 December on the website of the Daily
Mail in the UK
Webpage title: Ernst & Young: Banks 'have
billions more in toxic debt than they have admitted so far' Mail Online
Global banks 'have billions more in toxic debt than they have admitted
so far' warns accountancy giant
By James Salmon
Banks in the Western world are on the hook for even bigger losses on
toxic loans than they have admitted so far.
This is according to a bleak report from accountants Ernst & Young.
It said lenders across many developed markets are ‘unwilling, or unable’ to write down asset values to more
realistic levels and accept credit losses.
This raises the grim prospect of banks taking more huge hits in the new
year as they cope with the fallout from reckless behaviour before the credit
crunch.
It comes after the Bank of England last month warned that banks may
require up to £15billion of extra provisions to cover bad loans.
Lenders have billions of pounds tied up in troubled economies across the
eurozone, including Spain Italy
Banks in Western economies are also poorly capitalised, in stark
contrast to their counterparts in
developing markets, the report said.
It also raised fears that the benefits of a European banking union
could be eroded by disagreements about
how it should be implemented.
This includes whether funds should be released to bail out troubled
lenders in Ireland Spain
The story, with its
alarming headline, was picked up by hundreds of news aggregator websites in
English, and the Banki translation has found its way onto more than 30
Russian websites. Unfortunately the quotation
given in the headline itself does not come from the Ernst & Young report
referred to, and the report itself is much more bland than implied, being anything
but “bleak”.
The report, published
on 18 December by Ernst & Young, is entitled Time for bold action:
Global banking outlook 2013–14. Not
only is the phrase “have billions more in toxic debt than they have admitted so
far” nowhere to be found in the report – a Google search of the Internet finds
this phrase appearing only in the Daily Mail article by James Salmon and
its repostings elsewhere – but in fact the text of the report does not use
either the word “billions” or “toxic”.
Leaving aside the frightening commentary added by Mr. Salmon, it is true
that the report does contain the following passage:
Banks across many developed markets remain undercapitalized and are
unwilling, or unable, to write down asset values to more realistic levels and
accept credit losses. Many of those same banks will also face the challenge of
weaning themselves off central bank liquidity support before the repayment
deadlines. The economic recovery will alleviate some of these problems, but
further bank restructuring is likely in the short to medium term.
as well as the following:
Unfortunately, the benefits from these positive steps could be eroded,
with disagreements over the construct of the banking union and whether the ESM
can be used for legacy issues at banks in Ireland Spain Europe remains muted.
Nevertheless the
report – like its immediate predecessor, Making the right moves: Global
banking outlook 2012-13 – is far from taking any strong positions or even
being particularly informative, but is written at the level of pabulum. The content is extremely generic, an
alternation of sweeping statements that appear to say something bold followed
by qualifying phrases that subtract a large amount of the force from what
preceded. It reads almost like a
horoscope, and could perhaps be rewritten as a horoscope without losing anything
of value: “Sagittarius: Decisive, pro-active planning for regulatory changes in
2013 can place your bank in a position of strength, but exposure to problem
loans risks making the year difficult for you.
You may need to make major decisions during the year, particularly
regarding entry into new markets and your pricing model for retail customers,
but be ready for surprises. A bank close
to you will go through resolution this year.”
Sources:
Global
banks 'have billions more in toxic debt than they have admitted so far' warns
accountancy giant (2012-12-27 22:14 )
Ernst & Young: Time
for bold action: Global banking outlook 2013–14 (2012-12-18)
Ernst & Young: Making
the right moves: Global banking outlook 2012-13 (2012-03-28)
Mark Pleas
[contact]
