Ways to prevent bankruptcy of commercial banks in Russia
During the years of the crisis, which has lasted since 2014, the financial and economic sector has been severely shaken. After the introduction of restrictive sanctions, the deterioration of the life of the population, constant jumps and the growth of currency rates, reduction of gold and currency standards by 80 billion dollars, the efficiency of banks has sharply decreased. Unable to withstand the economic pressure, about 120 banks closed over two years and today their number was about 714. But with the remaining banks, the situation is also not easy, some of them have been restricted to receive funds for deposits, while others are forced to send a report on its activities to the Central Bank. The profitability of the largest banks in Russia fell by a few percent. According to forecasts, in the next few years, only 500-600 banks should remain.
Today in the country there is a large outflow of capital from the country, which should amount to about 100 billion dollars. Inflation is now 9%. The head of Sberbank, German Gref, according to his forecasts, notes that GDP should be reduced by 1.2%. Meanwhile, the head of the department of international capital markets of IMEMO, Ran, Jacob Mirkin, the fact that if the country’s economy continues to be under the influence of external stresses, in 2-3 years the situation will lead to a chain reaction of social risks. Experts TsMAKP argue the following: to save the banking system from death, the state needs to allocate about 900 billion rubles, and next year, will have to pay another 500 billion rubles.
The following largest organizations that are in the top ten by the size of capital have the lowest probability of closing.
Bank reliability rating by assets for 2016
Place Bank Capital, mln. Rub.
1 Sberbank of Russia 1945905833
2 VTB 948588518
3 Vnesheconombank 368584340
4 Gazprom 333854635
5 Agricultural Bank 217650802
6 VTB 24 178226766
7 Alpha – Bank 175492362
8 Bank of Moscow 161241774
9 Unicredit Bank 129894505
10 FC Opening 120347672
According to the above list, Alfa-Bank was recognized as one of the strongest commercial organizations, since it is among the top three banks in terms of cash turnover at ATMs after Sberbank and VTB, so the probability of closing is unlikely in the near future. But one can never argue that even huge banks will not have serious problems that could lead to bankruptcy or deprivation of their license.
State control over the number of commercial banks and their work processes should be considered as the most important part of the macroeconomic planning of the development of the country’s financial sector. To build an efficient operation of commercial banks, one should adequately take into account banking risks. To prevent the threat of bankruptcy, a special tool has been developed.
The most basic measure is sanation, which in Latin means “recovery”. Its main feature is direct lending to banks that have serious problems in solvency.
The second measure is the appointment of a temporary administrator, whose maximum appointment period is not more than 7 months. The manager is obliged to make a financial analysis of the credit organization and preserve its property, as well as to identify creditors and notify them of the introduction of supervision.
Finally, reorganization is the last measure to prevent bankruptcy. Its main feature is the maximum savings of bank assets. Lenders have the opportunity to save most of their funds, and at the same time the threat of liquidation of the payment system of the state is not detected.
The very word “bankruptcy” frightens any person, since in his view it means ruin and failure. But in 80% of cases, bankruptcy helps to avoid bankruptcy and it is fairly easy to solve the problem, since it is the official way of recognizing insolvency. Bankruptcy has its advantages, in that it is official, manageable and safe. Since bankruptcy is official, the closure of the organization does not occur, and there will also be no evasion of debt repayment.
Thus, lately a large number of banks have gone bankrupt in our country due to the surging crisis. Its influence fell not only on the banking system, but also on the whole country as a whole, which strongly shook the financial system. Today, ways have been developed to prevent the bankruptcy of commercial banks, which change the previous financial policy of the bank to a completely new and progressive one. Of course, in order to avoid negative banking risks, it is necessary to intensify the work of commercial banks themselves, improving the list of services provided according to current market needs, improving the tools of banks’ working methods, improving the quality of services provided.