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Big Banks Have Bad Debt
The Central Bank of Russia released data yesterday showing that banks ranked 6th-20th by size of assets experienced a tripling of overdue debt from individual borrowers in 2006. Analysts say that Russian Standard, Rosbank and Home Credit and Finance Bank have the highest level of bad debt, which will guarantee them closer attention from regulators in the future. Their outstanding debt rose from 6.3 billion rubles to 21.9 billion rubles in the course of last year, or from 2.7 percent to 4.2 percent of credits to individuals.
Banks ranked 21st-50th, which had experienced growing bad debt earlier, saw the rate of that increase slow in 2006. Their joint bad debt grew from 5.4 billion rubles to 10.2 billion rubles, but remained steady at 4.7 percent of all credit. Bad debt among the top five banks amounted to less than 1 percent of the total.
Analysts link these results to the aggressive crediting policy of the larger banks. The credit portfolio of bank in the second group grew by 124 percent last year, compared to 90 percent in the third group. Experts have identified three banks - Russian Standard and Rosbank in the second group and Home Credit and Finance Bank in the third – as the main culprits in the situation. “Russian Standard and Home Finance account for 80 percent of all overdue credit in the country,” Mikhail Matovnikov of the Interfax Economic Analysis Center said. Alfa Bank senior economist Natalia Orlova added Rosbank to that list as one of the leaders in express crediting.
“The scale of overdue credit at individual banks is so large that it cannot be turned over to debt collectors because the collections market is not big enough, so they keep the bad debts on their balance,” Orlova observed.
www.kommersant.com
All the Article in Russian as of Mar. 13, 2007
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