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28 April '17

Crimean Banks have incresed loan portfolio, but they need capital top-up

Crimean Banks have incresed loan portfolio, but they need capital top-up

The banking network in the Republic of Crimea makes financial services available throughout the region and demonstrates steady growth of the main business development indicators. However, to increase their loan portfolios and thus meet the financial needs of the Republic of Crimea to develop its economy bank owners must find a way to top up the capitals of their loan organisations. This view was expressed at the III Yalta International Economic Forum by Anatoly Aksakov, Chairman of the State Duma Committee for the Financial Market and President of the Association of the Regional Banks of Russia.

He said that as of March 1, 2017 the Republic of Crimea banking network was presented by three lending institutions (ChBRR Bank, RNKB Bank and GENBANK) and six branches of lending institutions from other Russian regions working in the Republic of Crimea are 321 internal structural units and 2 representative offices of lending institutions. The Republic has more than 1,500 (1,552) cash dispensing machines and nearly 9,000 cash points in trade and service emporiums (8,757 POS-terminals).

The loan portfolio of all the lending institutions in the region amounts to 93 billion roubles. The total loan portfolio, less interbank credits, has almost doubled from 25 billion roubles as of March 1, 2016 to 48 billion roubles as of March 2017. Loans to legal entities amount to 33 billion roubles, which is 69% of the total loan portfolio, and loans to physical persons account for 15 billion roubles (31%).

The high quality of the loan portfolio of the region’s banking sector should be noted: the share of outstanding debts in the loan portfolio has dropped to 2.5%, which is half of the average Russian level (5.2%), Mr Aksakov said.

From the information of the President of the Association of Regional Banks of Russia, the most active loan policy in Crimea with regard to the economy and the population is pursued by RNKB Bank, GENBANK, the Simferopol branch of AB Rossiya bank, ChBRR Bank, Krym branch of Krayinvestbank, Tavrichesky branch of VVB commercial bank: 0.3 billion roubles, or 1%.

The amount of borrowed money increased by 1.4 times to 124 billion roubles between March 1, 2016 and March 1, 2017, of which deposits of physical persons amounted for 83 billion roubles (68%), those of legal entities to 41 billion roubles (32%). The lending institutions of Crimea attracted 72% of the total amount and the branches attracted 26%. The bulk of the resources has been raised by RNKB Bank, 58 billion roubles (47% of the total amount). RNKB Bank accounts for about half of all the deposits (41 billion roubles). GENBANK has attracted 27 billion roubles (22% of the total) of which physical persons have deposited 18 billion roubles. ChBRR Bank has attracted 3.5 billion roubles of which 2 billion roubles from physical persons, which accounts for 2.4% of the total amount of savings.

The financial performance of the region’s lending institutions in 2016 is as follows: 1.7 billion roubles in profits and 1.1 billion roubles in losses by branches.

“To address the existing problems and support the development of the banking sector in the Republic of Crimea what is needed above all is interaction between government bodies and lending institutions to expand lending to business entities at acceptable rates with the use of all available risk reduction mechanisms,” Anatoly Aksakov believes. “Possibilities should be considered at the federal and regional levels of offering state guarantees of financing vital projects for the Republic of Crimea (perhaps in the shape of Russian Ministry of Finance guarantees for socially critical projects) as well as the issue of allocation of budget guarantees to credit state and municipal unitary enterprises in the Republic of Crimea.”

The expert believes it is necessary to create a bureau of credit histories (BKI) in Crimea or else to use the capacity of federal BKIs taking into account the information on borrowers from Ukrainian banks which will be accumulated at the Fund for the Protection of Depositors under Federal Law of December 30, 2015 No. FZ-422.

The issue of creating a mortgage base is still a pressing one in Crimea. The issues of accelerating the processes of forming a mortgage base in the shape of real estate and land should be tackled in conjunction with Goskomregistr and with the participation of the ministries concerned, Mr Aksakov stresses. Among key tasks are the creation of a one-stop-shop office for credit organisations at Goskomregistr in order to expedite the documentation of mortgage property. It would also be useful to consider introducing amendments to Federal Law of June 9, 2003, No. 69-FZ On Introducing Amendments and Additions to the Federal Law On State Registration of Rights to Immovable Property and Transactions Therewith in the section dealing with the registration in the Republic of Crimea of mortgage with underdocumented land in order to expand the client base for loaning.”

The Chairman of the State Duma Committee for the Financial Market believes that more needs to be done in Crimea to issue loans for modernisation of defence industries guaranteed by the state and to develop the crediting of small and medium-sized businesses increasing capitalisation of guarantee funds to support small and medium enterprises. “A capital top-up of 300 million roubles for guarantee funds will enable banks to issue up to 1 billion roubles in loans,” Anatoly Aksakov said. “The 126 investment projects worth 146 billion roubles envisage the use of credit resources.”

He also proposed to consider establishing correspondent relations with foreign banks to ensure settlements on investment projects financed by the countries that are partners of Crimea.

“And finally, in order to increase Crimean banks’ loan portfolio and thus meet the Republic’s need for financial resources to develop the economy, bank owners must substantially top up the capital of loan organisations,” Anatoly Aksakov concluded.

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