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Banking bailout was necessary to protect millions of accounts — Putin

The Russian president recalled the usual list of grievances addressed to the Bank of Russia in connection with the resolution procedures

MOSCOW, March 13. /TASS/. Bailing out Russia’s banking sector was necessary in order to prevent millions of clients from sustaining losses. The Bank of Russia is going to reintroduce the assets in question into the market after their financial recovery, Russian President Vladimir Putin told TASS in an interview for the project entitled "20 Questions with Vladimir Putin."

"I know, some people will just get angry, and say: ‘I suffered damages’. But the Central Bank's task was to prevent millions of people from suffering this damage, to prevent weak financial institutions from borrowing too much money from people, from the population, and then just flee, to reappear somewhere in London, as usual," he added.

Putin recalled the usual list of grievances addressed to the Bank of Russia in connection with the resolution procedures: "The Central Bank is being heavily criticized. For having taken too many financial institutions under its control, for having spent too much money, for having paid large dividends to the shareholders, and so on and so forth. It was actually not to the shareholders that most of the payments went. The shareholders were hardly paid anything. The bank was paying citizens to minimize their losses from this or that institution failure," Putin said.

He stressed that the Bank of Russia was not going to keep the problem banks’ assets forever. "They will be reorganized and reintroduced into the market. The Central Bank has a relevant plan, [Bank of Russia Governor Elvira] Nabiullina briefs me," Putin said.

Banking sector reorganization

After taking the post of Governor of the Bank of Russia in 2013, Elvira Nabiullina accelerated the process of clearing the banking sector of lending institutions responsible for suspicious transactions or those experiencing financial troubles. Many large banks were stripped of their licenses. The Deposit Insurance Agency paid their clients more than 1.5 trillion rubles in 2014-2017. A mechanism of financial reorganization was established for larger banks with the agency and other banks taking part. However, their resources were not enough to streamline the top 20 lending institutions.

On May 1, 2017, the Russian president signed a law to create a special managing company — the Banking Sector Consolidation Fund — commissioned to reorganize banks. The agency is fully-owned by the Bank of Russia. Otkritie and B&N Bank were the first ones to go through the BSCF’s reorganization procedures. In 2018, the commissioned managing institution launched the restructure of such major lending organizations as the Asian-Pacific Bank, Promsvyazbank, Trust Bank, Rost Bank and Sovetsky Bank.

According to the Bank of Russia, the reorganization of the Russian banking sector is now in its final phase. The process peaked in 2014-1016. The Bank of Russia has said that in 2019 licenses were revoked from 28 lending institutions and three of them were canceled.

Episode 13 of the video interview is available at https://putin.tass.ru/en.