A participant of the rally staged in front of Alfa Bank's headquarters by Sodbusinessbank depositors. The depositors claim Alpha Bank has misappropriated their funds.
Photo: Dmitry Lebedev
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Finance Ministry Toughens Bank Requirements
Russia’s government is to decide on the amendments to the bank laws put forward by the Finance Ministry. If sealed, the Bank of Russia will have to de-license any bank for violations in the capital adequacy standard. Moreover, it will have to impose financial recovery procedures for a raft of banks, sticking to such regulation. Backbone banks are among potential victims.
Capital adequacy is determined as the capital-to-asset ratio and will amount to at least 10 percent. The Finance Ministry insists on introducing financial recovery for the banks with the capital adequacy from 10 percent to 12 percent. This idea is backed up by the Bank of Russia.
Under today’s laws, the bank will be de-licensed if its capital adequacy falls below 2 percent. However, the current regulations set forth at least 10 percent capital agency for the banks with the equity capital above 5 million euros and at least 11 percent for the banks with the capital less than 5 million euros, otherwise, the bank will face supervisory procedures.
The bankers fear that amendments will trigger general de-licensing, which may adversely affect even the sound banks. The situation is more tense as the banks are to meet standards every day. Financial recovery procedures brought in against the banks with the capital adequacy within 10 percent – 12 percent are another area of concern as they may materially affect the bank system. First time in Russia’s history, the Bank of Russia will introduce supervisory procedures for the banks formally, fulfilling bank regulations. Kommersant found out as much as 45 banks had capital adequacy within 10 percent – 12 percent as of October 1, 2004, including such giants as Sberbank, Gazprombank, the Bank of Moscow, MDM-Bank, Promsvyazbank, Impexbank, Ak Bars, BIN-bank, Moscow Industrial Bank, Probusinessbank, etc.
www.kommersant.com
All the Article in Russian as of Feb. 17, 2005
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