A Russian policeman bans taking photos of the Bank of Russia, Neglinnaya St.
Photo: Pavel Kassin
| Other Photos |
 |
|
 |
Russia’s Small/Middle Banks Won’t Survive 2007
Russia’s Cabinet sealed Thursday amendments to the current laws, toughening capital adequacy from January 1, 2007, RIA Novosti reported.
Pursuant to revised Laws On Banks and Banking Activities and On Insolvency (Bankruptcy) of Credit Institutions, starting from January 1, 2007 the Bank of Russia will have to de-license any bank with the capital adequacy below ten percent during two months.
Capital adequacy standard is determined as the ratio of the aggregate capital to the total of own assets of the bank. Today’s standard sets forth 10 percent for the banks with the capital at least ˆ5 million and 11 percent for the banks with the capital less than ˆ5 million. The bank license is recalled if the capital adequacy sinks below 2 percent.
The 5-fold increase in the capital adequacy will enhance stability of the bank sector and raise investment attractiveness of Russia’s economy as a whole, Interfax quoted Russian’s Finance Minister Alexey Kudrin as saying. Such move will allow to maintain high growth rates for bank system’s capitalization and bank financing.
However, the amendments are not hailed within bank community. For instance, they are generally opposed by Association of Russian Banks (ARB), M3-Media reported. According to ARB, this move will give a death blow to bank activities. On fears for adequacy reduction, the banks will hold in their loans. Decline in credit operations will wane efficiency and plunge down the profit due to be reinvested in the bank capital, sending dramatically lower attractiveness of Russia's banks to foreign investors.
www.kommersant.com
|
|
|
