Bank recapitalization using entire 1 trln rubles in OFZ may not be needed - Siluanov
MOSCOW. Dec 19 (Interfax) - Banking sector recapitalization using the entire 1 trillion rubles in federal loan bonds (OFZ) may not be necessary, Finance Minister Anton Siluanov said in the State Duma on Friday.
"I reiterate that the trillion rubles is a lot of money. It may not be necessary to use all of it. Our goal is to ensure banking system stability," he said.
The Finance Ministry will exchange 1 trillion rubles worth of new OFZ into subordinated bonds or deposits, which will bolster the capital of second-tier banks and enable banks to lend to the economy.
The OFZ will be included in the capital of the Deposit Insurance Agency, which will invest the money in the banks.
Central Bank Deputy Governor Mikhail Sukhov told reporters banks would pay for the recapitalization at a rate equal to the coupon on government bonds. That ought to filter banks that ask for help.
Sukhov said a large group of banks was fairly comfortably off, with capital adequacy of more than 13%-14%. "I'm not certain their shareholders will be reaching out for this money," he said.
Most demand for the funds can be expected from developing banks with CAR of 10%-15%.
"These banks will need capital anyway because sooner or later they'll apply the new market rate and develop their business," Sukhov said.
Russia has a lot of banks with high capital adequacy ratios, and they are unlikely to be in need of capital, he said.
"Not all the owners of banks will be inclined to ask the state for money. Around 70 of our banks are foreign-owned. But they'll have equal opportunities, there'll be no discrimination. But if you're part of a major banking group it'd be cheaper to get money from the parent bank than receive added Russian interest-rate risk," he said.
Sukhov said the allocation of the 1 trillion rubles would create some competition, which was appropriate when disbursing government money. This will be enough for the borderline banks with minimum capital adequacy and whose investors don't have enough money to top up equity with private capital.
