Prosecutor Takes a Bite Out of Russian Standard
The actions of the Prosecutor General's Office in regard to the Russian Standard Bank have been reflected in the bank's accounts. It has estimated that not collecting supplemental commissions for consumer credit, as the prosecutor demanded, has reduced its profit for the first half of the year by 6.2-6.7 billion rubles. If the prosecutor continues its campaign by handling other banks on the consumer credit market the same way, some banks' profit may be reduced to zero.
Russian Standard Bank said that the reduction in its profits, by international accounting standards, amounts to 33 percent of its estimated net profit for the year (20.4 billion rubles), and 46 percent of net profit for last year (14.5 billion rubles).
Analysts note that Russian Standard Bank has an exceptionally high level of income on its capital, over 50 percent, compared to 31 percent for Sberbank last year, so the lowered profit is not expected to affect the bank's ability to pay debts. The bank's shareholders are more likely to feel the crunch, however. The bank is taking steps to remedy the situation, however, by developing less risky forms of credit with collateral (mortgages, auto credit) and raising the interest on risky credit (express credit in stores, credit cards, cash on credit).
The Prosecutor General's Office has instructed the Central Bank to audit the second largest provider of express credit on the market Home Credit and Finance Bank. The prosecutor is also auditing regional crediting leaders. The profit indicators of those banks are much lower than Russian Standard's. While Russian Standard made a net profit of 10.2 billion rubles in the first half of this year, Home Credit and Finance earned 500 million rubles, for example, and has a profit level on capital of 9 percent.
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All the Article in Russian as of Sep. 05, 2007
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Photo: Alexander Miridonov
