On 20 April, the discussion of issues faced by the banking sector of the Republic of Crimea was held as part of the “Banking Sector: Crimea's Economic Growth Driver” session.
Vitaly Nakhlupin, Deputy Chairman of the Council of Ministers of the Republic of Crimea, began his talk with statistical data. He noted that currently, over 150 investment contracts had been concluded for the total amount of over 160 billion rubles. Of 823 residents, 80% are small and medium business entities.
He listed “lack of credit history and general mistrust of the banking system” as the main problems borrowers face. Mr. Nakhlupin addressed the banking community with a proposal “to develop original banking products adapted to the needs of enterprises based in the Republic of Crimea,” which, he believes is connected to the impossibility of offering state bank guarantees.
Then the speaker dwelled on the problem in the mortgage lending, noting that Crimea’s banking sector is “undercapitalized.”
In conclusion, he said, “Crimea’s banking system is developing actively, and today, we are mostly talking improving services quality.”
Alexey Simanovsky, Member of the Board of Directors of the Central Bank of the Russian Federation, believes that structural transformations are required. Since the region’s banks are created “from scratch,” “the development dynamics of Crimea’s banking system doubled last year. All the prerequisites are in place for Crimea’s banking system to catch up with the general Russian indicators in two-three years,” the speaker said.
At the same time, Mr. Simanovsky noted that risks limited the system’s development possibilities and that the Regulator’s task was to protect banks. “When the Regulator understands that risks are underestimated,” the speaker said, “it makes adjustments, which minimizes the risks.” He continued by saying that currently, “The Bank of Russia continues to work through risk assessments, and if the option is found, the Bank of Russia will alter the established standards.” Mr. Simanovsky concluded by saying that “judging by the state of Crimea’s banking system, some kinds of unique solutions are less and less in order.”
Irina Yabluchanskaya, Manager of the Crimean Branch of the Central Bank of the Russian Federation, dwelled on the issue of sufficiency of banking services provided. Currently, “sufficiency index is 17 units per 100,000 people, which is not enough.” Subsequently, she quoted the following figures, “The population of Crimea took out 1.2 mortgages for the total amount of over 2.5 billion rubles. The volume of monies raised was over 127 billion rubles. As of 1 April 2017, the volume of the lending portfolio was over 50 billion rubles. The share of past-due debts is lower than in Russia as a whole.”
Andrey Melnikov, Minister of Economic Development of the Republic of Crimea, said, “Even though Crimea’s banking system is developing locally, since no foreign actors are represented here, it is nonetheless a success.”
The speaker quoted the following figures: the region’s three principal banking institutions work in the following sectors: 30 major borrowers account for 50% of the loan portfolio; retail sector accounts for another 30%. It means, Mr. Khorobrov continued, that banks do not pay enough attention to working with small and medium businesses. Lending resources should be sought for precisely these economic agents.
Mortgage lending is the second segment the speaker dwelled. Mr. Khorobrov said that Crimea would stimulate development in this area.
Oleg Sivakov, Deputy Director General of the Federal Corporation of Small and Medium Business Development, said that the SME Corporation had been established to create the systems of organizational, financial, personnel, and information resources.
The Corporation’s main products are direct guarantees for working capital financing and for executing governmental contracts. In 2017, the volume of guarantees and sureties was 34.9 billion rubles.
In conclusion, the speaker said that the Corporation had financed a project that was greatly in demand: the compilation of the Small Business Register of the Republic of Crimea.
Anatoly Aksakov, President of the Association of Regional Banks of Russia, Member of the Russian State Duma’s Committee on Financial Markets, believes that conditions should be created in Crimea for decreasing lending risks and interest rates on loans. The head of the ARB of Russia thinks that for that purpose, the approval systems must be simplified and they should offer “one-stop” services. In May 2017, the appropriate draft law will be submitted to the Duma for consideration. He also suggested that remote identification system might be launched in Crimea in the pilot mode. In addition, the speaker touched on the problem of collateral, noting that today, the customers’ assets were three times greater than the lending volume.
The ARB President told the section participants about a new project: the SME Business Navigator Portal that offers entrepreneurs a range of opportunities. For instance, the SMB Business Navigator can be used to learn which business areas are particularly promising specifically in Crimea.
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