The Share of State-Run Banks in the Total Volume Has Increased

On Thursday, October 16, 2014, the Central Bank of Russia withdrew the licenses of three credit institutions. That regular measure taken by the regulator is worth mentioning because the number of credit institutions which were deprived their licenses to carry out operations from the date Elvira Nabiulina took the office of the Chairman of the Central Bank of Russia – that is, from July 2013 till the present day -- has amounted to 100.

So, on average, licenses were withdrawn from over 6 credit institutions a month. As of the last date before the withdrawal of license, the total volume of assets of those credit institutions exceeded Rb 700bn.

Two-thirds of institutions from that list (75 credit institutions) worked with retail customers and attracted households' deposits. As of the time of closure, the total volume of deposits with those banks amounted to over Rb 350bn. The value of the insured deposits amounted on average to about 80% of the total volume of loans.
So, the Deposit Insurance Agency had to pay over Rb 280bn to depositors of those banks. As of October 1, 2014, the volume of the mandatory insurance fund less provisions for loss occurrence payments fell to Rb 82.5bn.

Cleansing of the banking sector has resulted both in a drop in customers' confidence in small and mid-sized banks and growth in the share of state-run banks on the market of banking services. So, from July 1, 2013 till September 1, 2014 the share of state-run banks in the total volume of assets, individuals' deposits, loans to households and attracted corporate customers' funds rose by 1.2 p.p. (to 56.1%), 2.3 p.p. (to 60.5%), 3.6 p.p. (to 54.9%) and 1.3 p.p. (to 53.3%), respectively.

Mikhail Khromov, Director of the Structural Research Center