Interbank crisis of confidence

The crisis
Signaled the beginning of the crisis was the withdrawal of license Sodbiznesbanka "May 13. Immediately after the Internet appears in several versions of "black list" containing names of the banks, which will soon be presented to claim the Central. The next was "Kredittrast, having common ownership with Sodbiznesbankom. Later, one after another to announce serious difficulties a number of small banks: "Dialog-Optim, Paveletsky, Promeksimbank, Meritbank, etc.: As of this moment the market began to MBC" frozen "- banks, fear of license from the contractors, do not willingly give each other in debt.
In June, the Internet is information about the alleged seizure of documents produced by the special services in several offices, "Guta Bank and the initiation of criminal cases against its leaders. Problems with law enforcement agencies from the bank actually occurred, but they datirovalis March 2003 presented in the Internet article did not specify the dates and were seen as a description of contemporary events. In the face of mounting crisis, the bankers did not clarify the truth of information - many banks closed limits "Gutu". Until that point, the crisis was an implicit phase and was perceived as a serious threat only to bankers - the general public to remain on the sidelines. Thunder gryanul July 1 - the media was informed that "Vneshtorgbank" will not give the group "Guta" credit of $ 400 million. The news led to a few large corporate clients, "Guta Bank began to withdraw their funds from the accounts. Indeed, the question of granting credit VTB "Gute" officially already considered solved. Therefore, the denial of credit was perceived as a very disturbing signal. All this has caused a new flow of cutting limits MBC, not only to "Guta Bank, but all credit to the organization at all. The crisis of confidence among banks reached a climax. Not knowing who is next on the withdrawal of licenses, bankers chose not to extradite each other loans. Market MBC shlopnulsya now each bank had to solve their own problems.
July 2, the depositors' Guta Bank began to prematurely close their deposits and withdraw money with credit cards. On the weekends, (3, 4 July) it was possible to see a queue at the ATM. The money from ATMs quickly ended, they were brought back, but it needed time. The time during which each owner of a plastic card uspeval tell your friends about the problem. And now the money has already been filmed, not only with cards issued "Gutoy, as with all issued by Russian banks. The crisis spilled into the streets, taking the face of mild panic and a nation of empty ATMs.
On Monday, July 5, depositors besieged office Guta Bank, stood queue of people trying to save their money faster. In a media information (and not subsequently confirmed) of the problems at Alfa Bank. " Now turn and appeared here. All Monday banks regularly gave money, working hours of some branches have been increased, done everything to bring down the panic. By the evening turns decreased, the situation has almost returned to normal. However, on the morning of Tuesday July 6 in Moscow, no one branch of Guta Bank has not started work. By the middle of the day "for technical reasons" were shut down all its branches in St. Petersburg, in the evening - in other cities. At the same time, the media has information on the possible withdrawal of the license of the "Guty".
July 7, reaches its climax the second stage of the crisis - all depositors besieged banks and ATMs, and recorded in the queue to withdraw money. Visa International is blocking the operation of plastic cards issued by "Guta Bank. Alfa-Bank is the staff of the holidays and increases the working day. At the same time, several aircraft and a lot of collector cars deliver cash in the offices of "Alpha". By the evening of the Alfa-Bank "takes an unprecedented decision - entered desyatiprotsentnaya Commission for early withdrawal of money from time deposits. In the media immediately began discussions on ethics and legality of this step, but it clearly is effective - the flow panikuyuschih investors recedes. By the end of the week number of those wishing to withdraw money urgently markedly reduced, and by the end of next Alfa Bank cancels commission. VTB has announced the purchase of "Guta Bank and the crisis ends. This is a landmark moment - as soon as FAS gives permission for the takeover, but it took less than one day (!), Officials immediately declare the resolution of the crisis.

Causes

Speaking on the causes of the crisis, first of all you need to indicate in its principal difference from the events of 1998. If ninety-eighth decline in the banks was due to budgetary crisis, the the state could not pay the debts, then this time it was just about the banking crisis, and therefore not such a global and disabilities caused by a young Russian banking system.
Remember how, in general terms, is banking business. Bank accumulates funds, taking money on deposit, then gives the money in the form of loans. Creditors returned the money with interest, and the bank pays to investors, earning the difference in interest rates. This scheme is highly simplified, but represents the essence. Obviously, the bank sets the line between the dates on which he returned the money and end dates of term deposits, and also takes into account the risks of a non-credit and early termination of the deposits. The Bank holds some of the "cushion" of cash and highly liquid assets in case of need for urgent payments. In the case of a sharp (unscheduled Bank) an increase in the number wanting to withdraw money, the bank takes the credit on the interbank lending market (ICB). At the same market bank "sells" surplus funds, reducing the size of his pillow. " To do otherwise (to keep the case without a huge "cushion" of liquid assets), the bank simply can not - because starting with a certain amount of "cushion" the profitability of banks is reduced to zero and even became negative in real terms. In fact, MBC reliable banking system to insure against unexpected "distortions" and local crises. The bank, suddenly found themselves cut off from the mechanism of ICB, in danger of falling victim to balance the gap - that is, fail not because there is nothing to pay at all, but because there is nothing to pay now, the money will be tomorrow. After all, the investor can collect the money before the end of the contribution, but the bank can not be issued by the borrower to return the loan ahead of schedule (for Russia in the general case, this is the case). That was what happened in early July - paralizatsiya market MBC has left the banks alone with panikuyuschimi investors who obankrotili some of them.
But what happens if suddenly a huge number of contributors (including the crisis of corporate clients) across the country want to withdraw money from accounts in Europe or the U.S.? In developed countries there is a system of the Central Bank overdraft lending commercial banks. At each commercial bank has a limit value is determined by the degree of reliability and many other parameters. In critical situation, the bank can get instant loan from the Central Bank (or the Fed in the case of States) to prevent the balance gap. The very existence of this scheme calms investors, reduces anxiety in the bad moments, and then - almost eliminates the likelihood of a crisis. In Russia, such a scheme does not work happened that, and the Central Bank spent a lot of time on the day the decision on granting the loan, thus exacerbating the crisis. This reason is likely to be resolved is not yet very soon. This is a matter of civility financial environment - banks must become more transparent, and state agencies more open and reliable. And in the end must be corresponding changes in the legislation.
Another reason relates to the current situation in the country. Since the arrest of Khodorkovsky, and as untightening situation with Yukos, began the flight of capital from Russia. Over the past six months have left the country for more than 15 billion dollars (according to the Center for Development "Sergei Aleksashkina), which is four times more than during the same period in 2003. This has created an exodus of funds from accounts in size and brought the crisis.
Interesting wording, explaining the reason for revoking the license of the Sodbiznesbanka:: failure of federal laws regulating banking activities, and regulations the Bank of Russia, as well as repeated violation of the law "on combating the legalization (laundering) of proceeds." In fact, this phrase has become a signal to top "freezing" the market MBC. Given the fact, taken from where the capital of banks registered in the period between 1990 and 2000, which meant that following the withdrawal of licenses for each may be - in Russia is virtually impossible to find a bank that is not suspected in the legalization of income.
It is impossible not to draw attention to the serious mistake of Viktor Zubkov - Chapter FCFM (Federal Service for Financial Monitoring). Commenting on the media situation with Sodbiznesbankom ", he stated that he FCFM have similar claims to have more banks. Hence the cause for the proliferation of fictitious "blacklists", which seems to not exist, and inflame the market MBC.
Another possible reason, which worsened the situation for "Guta Bank - is a strong drop in Russian stock market in recent months. There is reason to believe (opec.ru), that the bank had invested heavily in the shares of Yukos, which over the past two months before the crisis have lost the price up to 50%. In addition, June 16, the RTS has published a list of seven companies - participants in emergency section FORTS, which are not fulfilled obligations iyunskim futures. This list has been and Guta Bank. The situation with Yukos shares and futures can be a serious mistake risk management bank. It is unlikely that it could bring so much damage that there is a risk of bankruptcy, but in a tense situation, it was another reason for closing the limits on MBC "Gutu".
There is another reason for the crisis. In the media to actively (and the reasonable) mussiruetsya major topic of interest (and especially the public) banks in this crisis. There could be a coincidence that the information on the refusal "Gute" to grant a loan "Vneshtorgbank" soaked to the press in those days. And nothing could be so casual quick approval from the Federal Antimonopoly Service for the purchase of VTB 85.8% shares in Guta Bank, immediately after which the crisis was officially over. " According to the manual "Alfa Bank" ( "Russian Newspaper"), is confident that much of the information on Alpha, tsirkulirovavshaya in the media during a crisis - it is "proplachenny black PR." Ultimately, the state-owned banks have benefited, but all commercial losses to some extent.
All this suggests that state agencies are likely to deliberately ignore the crisis at its early stage. And as soon as the situation is resolved in a scenario, favorable gosbankam, have taken the necessary measures.

Consequences
There is reason to believe that we will see a continuation of the crisis in August and September. At this point, to be published financial statements of banks. And be aware of the value of losses incurred as a result of the July events. This can cause a narrowing of the new market MBC. At the same time, Central Bank will begin to study the information provided to it by commercial banks to participate in the system of deposit insurance. That's when the Central Bank is likely to begin to withdraw the license:
Will this second wave of crisis or will be relatively mild - is now difficult to predict. Most likely, it will look like a series of reviews of licenses with subsequent acquisitions. For investors it will be safe, because absorbing the bank will fully assume the obligations of uptake. Perhaps this procedure extend for six months and more - in order not to cause panic, while the collapse of several banks. And it may be triggered by a new crisis, as repeated attacks on non-resistant major banks - such as a "Guta Bank, and what remains" Alfa Bank. "
Ethics (and the legitimacy) of action of CB is in doubt, but ultimately this is a bit ozdorovit the Russian banking system. Indeed, Russia has to date more than 1300 commercial banks - the figure of at least an order of magnitude exceeds the "norm" for the economic development of the state.
Gosbankami absorption of small banks - although aggressive, but in general, is useful for Russia. Worse is that the absorption of large banks with an extensive branch network (like "Guta") might lead to monopolization of banking services "Sberbank and Vneshtorgbank. Given that holding to the terms of the commercial banks will bear the loss ( "Alfa Bank", according to various estimates, have lost during the month from 10% to 20% of the depositors and to 10 million dollars of direct losses), this will further increase the share of market attributable to the banks in which significant stakes in state-owned.
Regarding the legislative side, the following consequences. A law on payments to the Bank of Russia on deposits of individuals recognized in the bankrupt banks not involved in the system of compulsory insurance of individual deposits in Russian banks. " The law gives the government guarantees to depositors ruhnuvshih banks retroactively - on deposits, open since December 27, 2003. Another law makes changes to the law on the Central Bank and on banks and banking activities. " According to him, the Central Bank can now limit the amount of the interest rate commercial banks on time deposits. This should reduce the risks in the banking sector (of course, at the same time reducing the yield). Since 2006, will start in normal mode, the system of insurance of individual deposits. Banks are not logged on to take deposits from the population can not, then this is another way to reduce the number of banks, while reducing the risks of investment.
Furthermore - and I think Central Bank will, through legislation, to prevent Russia in branches of foreign banks, at least until 2006. On the one hand - it would effectively develop the Russian banks, on the other hand - would strengthen the monopoly and make the integration of Russia into the international banking system.
For ordinary investors, all this means: first, that the banking system in Russia in the next two - three years to become much more reliable, and secondly, that within the next year is possible "echoes" the last crisis, which may be destroying the nerves, but will represent a serious threat to the banks rather than investors.

Anton Plyasunov
(EA United Markets)