High demand for Russia’s Deposit Insurance Agency funds

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/11

Some 838 banks currently participate in Russia’s deposit insurance scheme. The arrangement covers the deposits of a private individual up to 1.4 million rubles (about €17,500). Every bank participating in the deposit insurance scheme pays a quarterly insurance premium equal to 0.1 % of their total household deposits. Russia’s largest deposit-taking bank, state-owned Sberbank, generates nearly half of the total amount of insurance payments.

During 2015, a total of 93 financial institutions lost their operating licences. Of those, 77 were participants in the deposit insurance scheme. Russia’s Deposit Insurance Agency (DIA) last year paid out a total of 369 billion rubles (€4.6 billion) on deposits of bank customers. The DIA had to pay out so much that it turned to the CBR for additional funds. The CBR granted the agency two loans for a total of 250 billion rubles (€3.1 billion) last year. Deputy finance minister Alexei Moiseyev said he expects the DIA to soon request a new CBR loan of 170 billion rubles (€2.1 billion).

The DIA also participates in bank restructurings, on which it last year spent about 490 billion rubles (€6 billion). The number of banks experiencing restructurings has been on the rise. At the beginning of February, the DIA had 30 banks under restructuring. In addition, the DIA assumed responsibility in December 2014 over a programme for recapitalisation of large banks. Under that programme, the capitalisations of 25 banks have been boosted by a total of approximately 800 billion rubles (€10 billion). Restructurings and bank recapitalisations are financed with support from the CBR and the government.

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