Russia’s Deposit Insurance Agency: banks have coped with the crisis so far
Russian banks came under severe stress during the financial crisis, which revealed some of the weaknesses in the system, and particularly the high number of small banks with low capitalization.
But talking to RT, Andrey Melnikov, the deputy head of the Deposit Insurance Agency, explains that unlike previous economic troubles in the country, such as at the end of the ’90s, this time Russians maintained faith in their local banks.
AM: “Last year we saw significant growth in deposits in Russian banks. The funds raised from the population grew 26.7% – nobody could have imagined it at the beginning of last year. Although our estimates were close, we predicted growth around 20%, it could be viewed as a troublesome indicator. It means people are saving more than spending, but the positive view is the population is adopting a more cautious position concerning their budget planning. We expect deposits to grow another 20% in 2010. In absolute figures it will be around $50 billion as in 2009.”
RT: What is the situation with bad loans?
AM: “We consider the situation not as easy, but not a desperate one. If we talk in figures, the level of bad loans for the middle of next year is expected to be 12%. It's not a critical level for the banking system. The system is capable of handling the problem – government help will not be necessary. There will be casualties, but they will be the weakest banks in the system.
The current level of bad loans is around 5.2%. So the figure of 12% is the ceiling for that indicator. December traditionally sees a rise in deposits in Russia, and even the crisis did not change that pattern in Russia."
RT: What is the main strategy of the agency right now and where is the fund investing?
AM: “We pursue a conservative strategy. We hold around 11% in cash in accounts held by the Central bank, 38% is in government securities, 44% is in corporate bonds, and 8% is in blue-chip shares. That is the risky part of our package, but it gave us significant growth during the last year.”