17 Oct 2012 17:13

Gref proposes doubling transfers from risk-taking banks to Deposit Insurance Fund - Gref

MOSCOW. Oct 17 (Interfax) - The President of top Russian bank Sberbank German Gref has proposed doubling transfers to the Deposit Insurance Fund for banks engaging in risky practices, a source on the financial market told journalists.

He said that Gref is worried about competition on the part of other commercial banks and has proposed increasing transfers for risky banks to 0.3%.

"Gref proposed much higher transfers, up to 0.3% of the average quarterly deposits," he said.

He added that First Deputy Prime Minister Igor Shuvalov will chair a meeting next week where participants will discuss transfers to the fund and boosting the size of deposits with insurance coverage.

The deputy head of Russia's Deposit Insurance Agency, Andrei Melnikov, told Interfax that the Finance Ministry, the Central Bank, and the DIA are discussing a proposal for a 40% increase in transfers to the Deposit Insurance Fund for banks engaging in risky policies and raising individual deposits at high rates.

Banks currently pay in 0.1% of the amount of deposits raised per quarter to the Deposit Insurance Fund. If the new regulations are introduced than banks raising high rate deposits will pay in 0.14% per quarter. If a bank has even just one deposit with a rate that the Central Bank of Russia considers risky than it will pay in the additional funds to the Deposit Insurance Fund for the quarter "from the entire deposit base," Melnikov said.

At a meeting chaired by Prime Minister Dmitry Medvedev in early October, a principle decision was made on raising the level of insurance compensation for retail deposits from 700,000 rubles to 1 million rubles. Departments were asked to identify mechanisms to discourage particularly risky banks from significantly raising interest on deposits.