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Russian President Vladimir Putin held a meeting on measures to support the Russian economy in terms of bank lending. Vladimir Putin noted that in addition to the threat to human life and health, the coronavirus epidemic has a dangerous impact on the economy, so the most important task is to reduce the inevitable socio-economic losses.
In this regard, a number of decisions were made to support employment and income of citizens, to assist individual entrepreneurs, the SME sector, and system-forming companies. According to the President of the Russian Federation, the banking community plays an important role in implementing these decisions by providing a number of anti-crisis measures: holidays on mortgage and consumer loans; housing mortgages at the rate of 6.5% per annum, preferential loans to businesses for working capital, and salary payments. However, it is important that all these measures be implemented smoothly and be as accessible as possible.
It is also necessary to ensure the stability of the banking system itself, for which a number of tools are provided, including guarantees from the Ministry of Finance and VEB for preferential loans and other banking products. In turn, according to Vladimir Putin, the ability of banks to ensure a steady increase in the availability and volume of credit for citizens and companies will be the most important factor in the recovery and further development of the Russian economy.
First Deputy Prime Minister of the Russian Federation Andrey Belusov noted that banks, due to their functional role in the economy, accumulate risks that arise in the real sector as a result of falling economic activity. And, despite the safety margin of the banking system, there is a deferred effect of accumulated risks. Today, the total loan portfolio of legal entities is estimated at 42 trillion rubles, where most of the amount falls on the most affected sectors. "The volume of loans subject to restructuring may amount to 4-5 trillion rubles, that is, up to a third of the portfolio of problem industries, which will require appropriate reserving and capital formation of the banking system, and in an extreme case may affect the reduction of credit investment lending by banks to the Russian economy," said Andrey Belusov.
Today, the volume of investments in debt securities of banks is 12 trillion rubles. The risk category also includes an increase in government borrowing - an additional 1.5-2 trillion rubles. Six credit programs from the government's anti-crisis portfolio will also serve as a burden for banks: three for individual entrepreneurs and small and medium-sized businesses in the affected industries, one for large enterprises, and two for construction (subsidizing mortgages at 6.5% per annum and subsidizing loans to developers), with a total loan portfolio of 1.5 trillion rubles.
As Andrey Belusov noted, banks are forced to take on the main part of the risks associated with the pandemic. And, despite the stability of the banking system at this stage, you must create support mechanisms in conjunction with the Central Bank: for the government, it is to guarantee the adoption of part of the risks to the budget; for the Central Bank, it is to weaken the regulations.
As a result of providing support to the most affected companies and industries, individual support programs are only now being launched for the main clients of banks – large system-forming enterprises. The portfolio of liabilities requiring restructuring is almost 200 billion rubles.
The Chairman of the Central Bank of the Russian Federation Elvira Nabiullina also noted that it is necessary to use the margin of safety accumulated in the banking system to help the economy in a difficult period. "As for capital, we estimate that the accumulated capital safety margin is now about 5 trillion rubles. As for liquidity, we currently have a liquidity surplus in the banking sector of about 2.5 trillion rubles. In addition, banks have free collateral on hand, which also amounts to almost 8 trillion rubles, and banks can always get money either on the market or from the Central Bank. Thus, banks can now both restructure loans and continue lending, " Elvira Nabiullina said.