The Central Bank decided to change the system of rehabilitation of troubled banks

The head of the CBR Elvira Nabiullina

A bill to create a Fund consolidation of the banking sector will be introduced in the state Duma in the autumn session, said Monday, June 30, the Governor of the Bank of Russia Elvira Nabiullina at the XXV International financial Congress. According to her, the Fund would be reorganize troubled banks, and then sell them on the market.

The bill will be introduced in the context of changes to the system of rehabilitation of credit organizations, which is now the Bank of Russia is inefficient due to the use of banks-sanatory problem of banks for lending to your own business and making their balance sheets of bad assets, said Nabiullina.

“The Bank of Russia will be the main organizer of the process of rehabilitation. The transition to the new model will create conditions for optimization of the banking sector”, — said Nabiullina. According to her, the Fund will focus on improving the financial performance of the troubled Bank, the replenishment of its capital, after which commercial banks will be in the shop working and capitalize the banks.” Rehabilitated banks after capital recovery would be to perform regulatory standards, said Nabiullina.

The head of the Central Bank said that the new scheme of reorganization may lead to the risk of “nationalization of the banking sector”. “But it does not occur for two reasons. First, the importance of the rehabilitated banks for the sector is small. Secondly, the result of the scan should be selling banks. The second risk is that a conflict of interest, but we will build a Chinese wall between supervision and the Fund”, — Nabiullina has promised.