‘It turns out that it is possible to lend only to pensioners, divorced and unmarried women’

Five Tatarstan banks can get special status

Against the background of going through the “sanctions” crisis, regional banks can get carte blanche. The ARB proposes to give them the special status of regional significant banks as supporting institutions for lending to SMEs and the population in the territories of their presence, Pavel Neumyvakin, the executive vice president of the association, said at a conference in Kazan. In this case, credit institutions will receive preferences that they could not even dream of. This gives the right to automatic participation in all federal programmes that operate in the region, the right to service clients of all categories without restrictions, and all kinds of state support measures (i.e. everything that only a large federal bank with a universal license could get, regional banks, due to insufficient capital, operate under a basic license — author's note). This special status, coupled with preferences, can be obtained by five independent Tatarstan banks (there are 13 of them in total).

The upcoming initiatives to liberalise the banking system were discussed at the conference “Regional banks and the country's economy in the current conditions: opportunities and risks”, which was held in a well-known luxury hotel in Kazan. The meeting was moderated by the head of the ARB, Garegin Tosunyan. Do regional banks need a special status? The manager of the branch — the National Bank of the Republic of Tatarstan, Marat Sharifullin, who presented a general picture of banks in the Republic of Tatarstan, reasoned on this topic. Yury Lokottsov, a member of the Board of Directors of the National Bureau of Credit Histories JSC, made a speech in the discussion. The interests of regional banks in the discussion were expressed by Deputy Chairman of the Board of Energobank JSCB Bulat Khairullin and President of Avtogradbank JSC Pavel Sigal.

Disappearing as “Ice Age mammoths”

But at the very beginning, the head of the ARB, Garegin Tosunyan, had to admit that regional commercial banks were gradually leaving the Russian market, yielding to large state-owned banks. Moreover, they do not just leave, but already disappear as “mammoths of the Ice Age”. It turned out that not a single regional bank remained in half of the country's constituent entities.

“There is only one local bank left in 26 regions, there is not a single regional bank in 25 regions," stated Garegin Tosunyan with regret.

If there are 361 banks in the country now, the number of regional banks has decreased to 161. At the same time, they account for only 5% of the total volume of lending, since federal state banks have concentrated 95% of assets in their hands.

“For the first time in 10 years, this process has stopped. The share of the top 15 banks in assets has decreased from 85,9% to 84,6%," he said.

But, in his opinion, the concentration still remains very high. Due to the sanctions pressure, banks are suffering losses. According to him, as of September 2022, the loss amounted to 1,5 trillion rubles. “About a quarter of the total number of Russian banks is unprofitable — about 82 credit institutions, and we are talking mainly about large banks," Tosunyan said.

Federal banks work with the top layer of business

“If we lose a layer of regional banks, then there may be a collapse in terms of the distribution of finances throughout the chain," Alexander Saraev, the director for rating activities at Expert RA, supported the introduction of the special status.

According to him, the current inverted system of banks is flawed by that it does not have support from below. “No matter how many branches the federal players open in the regions, they still work only with the top layer of business," he believes. According to Saraev, the scale effect gives an advantage to large banks, but now it can exhaust itself. Energobank is the leader in lending to legal entities and the public, ranking second after ABB. What are regional banks? These are banks that have a local source of capital.

“The share of local banks in lending to the economy does not exceed 5%," Bulat Khayrullin, the deputy chairman of the board and member of the National Assembly of Energobank JSCB, took the floor.

Such a low contribution can be explained by that the concentration of federal banks is growing from year to year and it is difficult to compete with them. “We cannot always win in competition with federal banks: they have a higher rating and more capital," he said. So far, all attention has been focused on federal banks, while regional banks have been denied access to many federal lending programmes. “This year, for the first time, we have achieved and entered the programme No. 1528, which provides for subsidising the working capital of agricultural producers, 6 years ago we spent our capital, sacrificing our profits and worsening our performance," he said. At the same time, there is still a large list of programmes where the bank cannot get into.

Rosfinmonitoring watches over regional banks

Then the speaker told about his own experiment, which showed the biased attitude of Rosfinmonitoring to the bank's customers. “The main headache of any bank is that Rosfinmonitoring gives a lot of comments on customers (blocks their transactions as suspicious according to 115-FZ). I asked the client to conduct his operations in a federal bank, but not to close an account in our bank, he moved to a large bank — and not a single comment comes," he exclaimed. The same experiment was conducted with the second client. “All the comments go in one direction in order to narrow the market and concentrate even more customers in the hands of state banks," Khayrullin believes.

In addition, he complained about the bias of credit ratings. “From year to year we are rated, we spend money and time on it, we go through all the stages. The bank's indicators are improving, but this does not affect the ratings. Last year we took the first place in profitability (the bank's performance indicator), but despite this, our rating has not changed," he complained.

Banks do not know whether the loan of the mobilised will be repayable

Pavel Segal, the president of Avtogradbank JSC, drew attention to that the Central Bank's regulatory easing in the formation of reserves does not contribute to the growth of new loans. According to him, the bank can apply relief in respect of loans issued before February 24, and after that date they are not valid, which means the bank will be cautious when issuing. He also fears that banks will tighten the issuance of consumer loans to the mobilised due to the risk of their death during the special military operation.

“Banks do not know whether such a loan will be repayable or they will have to write it off as the worst. In the event, God forbid, of the death of the mobilised, his loans and his wife's loans are written off at the expense of the bank. As a result, it turns out that it is safe to lend only to pensioners, divorced and unmarried women," he noted.

Segal called on the state to cover these obligations to banks.

“The state should not shift losses on us that arise through no fault of our own, and we cannot influence them in any way," Pavel Segal concluded.