The RF Central Bank Continues to Revoke Licenses

In October, the rate of revocations of bank licenses remained rather high. A total of 9 credit institutions were deprived of the right to pursue their banking activities.

Their aggregate assets amount to Rb 44bn, of which Rb 35bn belongs to just one bank – Narodny Credit Bank, which became second in size among those banks that lost their licenses in 2014, and fourth among those that had fallen victim to the 'purge' of the banking sector launched in the summer of 2013. Out of the said 9 credit institutions, 5 had their licenses to individual deposits revoked. The total amount of money placed as deposits with these banks amounts to Rb 20bn, where Narodny Credit Bank's share was once again the biggest - Rb 17bn. The aggregate responsibility of the Deposit Insurance Agency (DIA) to the depositors of those banks whose licenses were revoked in 2014 amounts to Rb 17bn.

On the whole, over the period from January through October 2014, 74 bank licenses were revoked, including 50 licenses to attract individual deposits; since July 2013, a total of 103 credit institutions were deprived of the right to carry on their operations, including 75 banks operating in the individual deposit market. The aggregate responsibility of the Deposit Insurance Agency for the period from January through October 2014 had exceeded Rb 170bn, and that accumulated since mid-2013 rose to nearly Rb 300bn. As of 1 November, the amount of the compulsory insurance fund had shrunk to Rb 94.2bn, and when taken less the amount of compensation paid in connection with insured events that had actually happened, it shrinks further to Rb 74.9bn.

During October 2014, the amount of the banking sector's aggregate assets increased by 2.9%. The 12-month growth of bank assets, which at the end of September nearly hit its four-year local record low of 12.8%, over the course of October rose to 14.6%. The main source of available bank assets in October were the funds allocated by monetary authorities; besides, banks decreased the amount of their investment in ruble-denominated assets. The main way of asset use became investment in foreign assets alongside a slowdown in the credit portfolio's growth rate. Besides, October 2014 saw a nearly 1.5 increase in the volume of bank operations with derivative financial instruments (representing both their financial assets and financial liabilities).

Mikhail Khromov – Director of the Structural Research Center