MOSCOW, February 9. /TASS/. A three-tier system of banking regulation in Russia makes possible to maximize satisfaction of demands of banking services consumers in Russia, Chairperson of the Bank of Russia Elvira Nabiullina told TASS in an interview.
"A three-tier system is created for the economy to have financial institutions capable of maximizing satisfaction of consumer needs. Regional banks are working with small and medium enterprises locally, know their history and have more opportunities to interact with borrowers on an individual basis. Major banks are often losing in respect of this category clients: by virtue of operating techniques of large banks and scoring models," Nabiullina said.
Identification of several tiers in the banking system is a fairly common approach in the global practice, she added.
Financial rehabilitation of Russian banking sector may take several years more, the Central Bank chief said.
"The period of proactive recovery of the banking system will continue for some more time. We hope to reach a situation when there will be very few revocations of licenses annually. However, this will take several years more," she said.
The floating ruble rate does not merely provide for absorption of external shocks but it also balances interests of different market participants:
"I am absolutely confident the rate should be floating. Further to the opportunity of the floating rate to absorb external shocks, it also balances interests of different market participants. When it is said the economy needs weak [ruble] rate, the assumption is made on the basis of the opinion of commodities exporters. However, enterprises exist that want to purchase imported equipment for upgrade; they are interested in strong ruble. Therefore we believe the rate should be a market one and balance diverse interests," Nabiullina has stressed.
The Bank of Russia estimates the oil price range to be $40-55 per barrel in recent years, Nabiullina told TASS:
"We believe now the average price can be above $40 this year. This is largely the consequence of the agreement with the OPEC. The range of fluctuations in coming years can be estimated as $40-55 per barrel. The oil price will depend on many factors, including the US policy on the energy market, the response of shale oil producers to a new market situation, and on prospects of extending the agreement with the OPEC. The demand response, particularly in China, is also highly important in terms of oil prices growth. We will thorough evaluate these factors in the next outlook."
The Bank of Russia intends to implement the three-tier system of the domestic banking sector since January 1, 2018 and complete the system setup by early 2019:
"We plan to introduce the three-tier system since January 1, 2018. A one-year transitional period will start since then, when the banks should determine the category they want to work in. Thus the three-tier system of the banking system is to be established by the beginning of 2019," Nabiullina said.
The regulator suggests identifying three tiers of credit institution within the framework of the new regulation mode:
"[These are] systemic credit institutions, which will continue working under existing rules. [They are followed by] universal banks, which can perform all kinds of operations, including international ones, but are regulated in full scope in line with Basel standards. Minimal requirements to the equity of universal banks are increased to 1 bln rubles [$16.9 mln]. The third type comprises banks with basic licenses, whose equity may start from 300 mln rubles [$5 mln]; they will mostly service individuals, small and medium business," she said.
The Bank of Russia suggests significant simplification in regulation for such banks because the level of risks assumed by them will be lower and they will not have the need to perform complex transactions, particularly the international ones, Nabiullina said.
Finance Ministry's interventions
Russia’s Central Bank estimates the impact of the Finance Ministry interventions on liquidity of the banking sector as neutral, Elvira Nabiullina said.
"Of course, when we manage liquidity of the banking sector we will take into account purchase and sale of currencies by the Finance Ministry. According to our estimates, the impact of these operations on liquidity will be neutral," she said.
According to her, the Finance Ministry carries out the purchase of currency as part of application of the transitional fiscal rule and these activities should not be regarded as foreign currency interventions aimed at influencing the ruble nominal rate.
Nabiullina said that the structural surplus liquidity of the banking sector was achieved thanks to the fact that the Finance Ministry is financing the budget deficit from the Reserve Fund.
The head of the Central Bank noted that the transition to the liquidity surplus is not steady and a lack of liquidity still may occur on the market.
According to Nabiullina, this will depend on the rate of budget spending and the banks strategy to replenish reserves.
She promised to the bankers that the Central Bank will respond flexibly to the situation with liquidity.
Earlier this month, the Finance Ministry announced currency purchase operations using 113.1 bln rubles ($1.9 bln) in February. The currency will be purchased using extra oil and gas revenues. Daily volume of currency purchases will be 6.3 bln rubles ($105.9 mln) from February 7 to March 6.