Deposit Insurance: Main Challenges and Objectives for Russia

Yury IsaevGeneral DirectorDeposit Insurance AgencyRussian Federation

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Global Challenges

• Crisis consequences are not over yet• Slow economic recovery• Sovereign debt burden limits ability of governments

to support national banking systems• Capital and liquidity shortage• Financial conglomerates and SIFIs• Shadow banking systems• Incentives and remuneration

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IMF`s 2013 forecasts

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International Response

• G20 and FSB– Growing role and capabilities– Coordination of policies– Financial regulation reform

• Core principles for effective deposit insurance systems• Key attributes of effective resolution regimes for financial institutions

– Peer Reviews• Deposit insurance systems – February 2012• Resolution regimes – April 2013

• Other standard setting bodies (BCBS, IADI, IAIS, IOSCO, IASB, etc.)

• IMF, World Bank

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G20 Agenda for 2013 (Russian Presidency)(1)

Three-dimensional growth agenda for the G20 proposed by the Russian Presidency

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G20 Agenda for 2013 (Russian Presidency) (2)

Strengthening Financial Regulation

• By the G20 Saint Petersburg Summit:– FSB report on the progress towards ending "too-big-to-fail“– development and monitoring of the "too-big-to-fail" regulatory

framework– peer review of the FSB's recovery plans and cooperation agreements for all global SIFIs – implementation of identification principles and prudential mea-

sures relating to domestic systemically important banks (D-SIBs)– adoption of policy recommendations to strengthen regulation of

the shadow banking sector

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Challenges for the Russian Federation

• Slow economic growth (2012 – 3.4%, 2013 forecast – 2.4%)

• High inflation pressure (6.0%)• Capital outflow (2012 - US$56.8 billion)• Price volatility for export goods• Currency volatility• Liquidity pressure• Regulatory inconsistencies

(forecast)

2010 2011 2012 20130

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Inflation

GDP Growth

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Challenges for the Russian DIS

• High concentration of the banking sector • Rapid growth of bank deposits• Interest rate race• Low quality of bank financial reports• Late supervisory actions• Deposit insurance fraud• Insufficient market discipline– Loans to affiliated parties– Stripping of assets– Improper incentives, etc.

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Prospects: DIS

• Expanding the scope of coverage – Individual entrepreneurs– Pensions – SME

• Quick reimbursement of insured depositors– P&A instead of payouts– Early access to problem banks’ records

• Increase of the coverage level– 1,000,000 rubles instead of 700,000 rubles

• Differential premiums• Public awareness, financial literacy and financial inclusion

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Prospects: Resolution Powers and Responsibilities

• Permanent nature of the existing bank resolution law• New resolution powers and tools

– Bridge banks– Bail-in– Asset purchase– Liability guarantees

• Investigation and challenging of actions that contributed to bank losses that triggered bank resolution– Liquidated banks– Bailed-out banks

• Involvement in recovery and resolution planning, and resolvability assessments– Systemically important banks– Other SIFIs

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The presentation is over.

Thank you!