Russia's Central Bank knows who initiated national banking crisis rumour

The management of the Central Bank of Russia is in the know who has initiated the rumour of a national banking crisis.

"We know who has done it. As the proverb goes, murder will out", first deputy chairman Andrei Kozlov told the expanded collegium of the Federal Antimonopoly Service on Wednesday.

"Actually, no crisis is in place. The idea was circulated in order to protect some unscrupulous capitals and discredit the authorities, above all the Central Bank", Kozlov said.

"It is a clear instance of unscrupulous competition", he is sure.

Andrei Kozlov stressed that the Antimonopoly Service should together with the Central Bank introduce a new professional ethics in the banking sector.

"We are working with banks toughly and thoroughly. We know enough about bankers to demand mending the set-up", Kozlov said.

"The current fault-mending tendency is not only our merit. It is also the merit of bankers who understand that things cannot go on like and the banking ethics should be changed", he added.

Kozlov also spoke up on the Credittrust bank scandal.

"There were no economic conditions to explain its current problems", he stressed. "Yes, there was non-transparent property but no economic reasons".

The Credittrust problems are rather due to the rumour spread in the press, he believes.

"A week of the Credittrust press coverage actually ruined it", Kozlov

stated.

Too much attention given to Credittrust led to a situation when "during a week two billion roubles (1 dollar approximately equals 29 roubles) were taken out of it and the bank collapsed", he said.

"It is the case when the word 'fire' is not to be shouted at the theatre", the Central Bank first deputy chairman stressed.

The Central Bank is working with Credittrust to mend the situation.

As reported earlier, Credittrust has applied to the Central Bank for self-liquidation and simultaneously asked for a stabilisation credit.

At the same time, the Central Bank is not going to allow weak banks into the deposit insurance system, Kozlov said.

"We don't want weak banking structures to be part of the future system of attracting public deposits and deposit ensurance. We must prevent unscrupulous banks from entering it", Andrei Kozlov said.

The banking system is being remade owing to competition and the state "showing intolerance to the unscrupulous behaviour of banks on the market".

A case in point is the withdrawal of the Sodbiznesbank license for its violating the money-laundering law.

The Central Bank spokesman said that the Sodbiznesbank situation has revealed gaps in the bankruptcy legislation and the Criminal Code. The Central Bank has already sent to the government proposals to be made in legislation, Kozlov said.

Amendments to the bankruptcy law and the Criminal Code will help prevent the situation when representatives of the Central Bank could not for a week be let into a commercial bank. The Federal Financial Markets Service is now preparing the amendments, Kozlov said.

The Central Bank is going closely to team up with the Antimonopoly Service and draw up for it a paper outlining the procedure of considering cases involving "the bad antimonopoly behaviour of banks on the market".

Now, banks are getting new motives for the non-competition behaviour. As competition tightens on the market, some banks will have to merge or get absorbed, leave the market or resort to unscrupulous competition, Andrei Kozlov explained.