In eight years, the number of regions where there is either only one regional bank, or none at all, has tripled: now there are 50 of them. This situation needs to be changed, according to the Association of Russian Banks (ARB). She proposed at the level of the law to introduce the concept of “regionally significant bank” by analogy with systemically important credit institutions, as well as to provide such banks with a number of preferences.
The ARB stated its initiative in a letter to the chairman of the Central Bank Elvira Nabiullina (RG has it). The Central Bank confirmed receipt of the letter.
According to ARB, banks registered outside Moscow that have no claims from the Central Bank to their current activities can be considered “regionally significant”. Regionally significant banks must use 50% of operating assets in the region and have a rating from a Russian rating agency.
ARB also proposes to introduce a number of preferences for regionally significant banks: automatic participation in all federal programs in the region, the right to service clients of all categories without restrictions on the territory of the region, development and implementation of a special regional program for IT support of regional banks, adoption of special forms of supervision and regulation, which differs from the norms for large banks, and the use of a capitalization mechanism with the help of federal loan bonds.
The Russian banking sector is becoming more and more “state-owned”: the largest federal players are actively exploring the regions, offering clients at first more favorable conditions, and then reducing them to market conditions. Higher rates on deposits and lower rates on loans do attract customers at first, but all these “bonuses” are short-lived, as practice shows: the “bait” works when a major player enters the region, as the business grows, the “benefits” for clients go to “No”. The process itself raises concerns: large players are squeezing local banks out of the regions. As the ARB clarified, now in 25 regions there is one regional bank, in 23 regions – two or three. There are no local banks in 25 regions. Thus, in 86% of the constituent entities, the number of regional banks is minimal or they simply do not exist.
The top 5 largest Russian banks account for three quarters of all loans issued
According to the Expert RA rating agency, the total number of regional banks over 8 years has decreased more than 2.5 times – from 381 to 148. The Central Bank also noted a high concentration of the state in the financial sector: the first five banks in 2020 accounted for 76% lending services and 70% of fundraising operations.
The Bank of Russia received a letter from ARB and will respond to it in due course, the press service of the Central Bank told RG. The Bank of Russia recognizes the reduction in bank branches, but notes that it is offset by the growth of digital channels of access to financial services, and not only payment services, but also lending services (including mortgage loans), insurance, and placement of free funds.
“After many years of work carried out by the Central Bank to clean up the market, those banks that, in spite of everything, retain licenses and are willing to work within their regions, deserve all the preferences that are possible to maintain their competitive niche. And to an even greater extent, regional banks need such preferences. small and medium-sized businesses in the regions, which have always had reliable partners in their banks, “says Andrey Yemelin, Chairman of the National Council of the Financial Market. “Regional banks can be supported through greater involvement in various programs to support small and medium-sized businesses,” says Mikhail Doronkin, Managing Director of the NKR Rating Agency