Central bank sees no trend in Sodbusinessbank case

In the future, the Central Bank does not expect any similar incidents to what occurred with the commercial Sodbusinessbank, said Abdrey Kozlov, the Central Bank's first deputy chairman.

"Anyway, such acute cases will not repeat themselves," he added. "This is not an indication of a trend."

In the opinion of Mr. Kozlov, trust in the Central Bank after Sodbusinessbank's problems were settled has not diminished. "I do not think confidence in the Central Bank has decreased. On the contrary, it has increased because the bankers and their clients have witnessed the government's resolve and professional approach."

"The current trend is to rid the banks of the burden of their past and there is obvious progress in this direction. We are optimistic about the future," Mr. Kozlov said noting that the current economic situation was favorable for the development of the banking system.

Garegin Tosunyan, the president of the Russian Banks Association, reported that a number of Russian banks were willing to assist Sodbusinessbank depositors. He indicated that this can be legal and organizational aid.

Mr. Tosunyan did not specify any banks but noted that the RBA praised the initiative of private banks to support Sodbusinessbank depositors. "We want to localize the Sodbusinessbank problem and minimize the losses for the depositors," said Mr. Tosynyan.

Mr. Kozlov welcomed the bankers' initiative to help settle the depositors' problem, especially such tasks as filling out forms, accomplishing different procedures and getting legal advice.

According to Mr. Kozlov, in the best scenario and under the most favorable conditions, the Sodbusinessbank depositors will be able to retrieve their funds within two or three months.

He mentioned two forms of closing down a bank - closing through court (compulsory liquidation) and by bankruptcy. The Central Bank has applied at the Moscow arbitration court for the compulsory liquidation of Sodbusinessbank. Hearings on this case are scheduled for June 24.

Mr. Kozlov said that he hoped that the court would decided to liquidate the bank so that the depositors could get their money within 18-24 months of the court's decision.

Mr. Kozlov also estimated the Sodbusinessbank credit portfolio at 4 billion rubles ($1 is approximately 29 rubles), with 70% of its worth being loans to insurance companies.

Experts said that Sodbusinessbank employed a so-called salary scheme and paid wages as tax-free insurance.

If the bank's assets are not sufficient to meet its liabilities, a bankruptcy procedure will be conducted. "In case of bankruptcy, the depositors will get 70% of their money within 70 days of the court's decision on bankruptcy," Mr. Kozlov said. He added that the remaining money would be paid off after the bankruptcy procedure was over.

Sodbusinessbank had 2.3 billion rubles in liabilities

Mr. Kozlov said that the only known figure of the bank's assets was the 400 million rubles in the Sodbusinessbank accounts in the Central Bank. There is no information about any other assets. "The interim administration is now busy calculating the bank's assets," said Mr. Kozlov.

The Central Bank still lacks information about the real owners of Sodbusinessbank. The six firms named in the accounts have not responded to our appeal, said Mr. Kozlov.

Mr. Tosunyan noted that the Central Bank's increased requirements about the actual owners of a bank is a break from the way the banking system was privatized.

Mr. Tosunyan said that in the 1990s, a multi-tier ownership system was created and that the exposure of end owners called for too much accountability.

Mr. Koslov emphasized that the Central Bank would continue to insist on the exposure of real owners. "There is no possibility for compromise," he concluded.

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Author`s name: Editorial Team