Deposit Insurance: Main Challenges and Objectives for Russia

1. Deposit Insurance: Main Challenges and Objectives for Russia YuryIsaev General Director Deposit Insurance Agency Russian Federation

2. Global Challenges • Crisis consequences are not over yet • Slow economic recovery • Sovereign debt burden limits ability of governments to support national banking systems • Capital and liquidity shortage • Financial conglomerates and SIFIs • Shadow banking systems • Incentives and remuneration

3. IMF`s 2013 forecasts

4. International Response • G20 and FSB • Growing role and capabilities • Coordination of policies • Financial regulation reform • Core principles for effective deposit insurance systems • Key attributes of effective resolution regimes for financial institutions • Peer Reviews • Deposit insurance systems – February 2012 • Resolution regimes – April 2013 • Other standard setting bodies (BCBS, IADI, IAIS, IOSCO, IASB, etc.) • IMF, World Bank

5. G20 Agenda for 2013 (Russian Presidency)(1) Three-dimensional growth agenda for the G20 proposed by the Russian Presidency

6. G20 Agenda for 2013 (Russian Presidency) (2) Strengthening Financial Regulation • By the G20 Saint Petersburg Summit: • FSB report on the progress towards ending "too-big-to-fail“ • development and monitoring of the "too-big-to-fail" regulatory framework • peer review of the FSB's recovery plans and cooperation agreements for all global SIFIs • implementation of identification principles and prudential measures relating to domestic systemically important banks (D-SIBs) • adoption of policy recommendations to strengthen regulation of the shadow banking sector

7. Challenges for the Russian Federation • Slow economic growth (2012 – 3.4%, 2013 forecast – 2.4%) • High inflation pressure (6.0%) • Capital outflow (2012 - US$56.8 billion) • Price volatility for export goods • Currency volatility • Liquidity pressure • Regulatory inconsistencies (forecast)

8. Challenges for the Russian DIS • High concentration of the banking sector • Rapid growth of bank deposits • Interest rate race • Low quality of bank financial reports • Late supervisory actions • Deposit insurance fraud • Insufficient market discipline • Loans to affiliated parties • Stripping of assets • Improper incentives, etc.

9. Prospects: DIS • Expanding the scope of coverage • Individual entrepreneurs • Pensions • SME • Quick reimbursement of insured depositors • P&A instead of payouts • Early access to problem banks’ records • Increase of the coverage level • 1,000,000 rubles instead of 700,000 rubles • Differential premiums • Public awareness, financial literacy and financial inclusion

10. Prospects: Resolution Powers and Responsibilities • Permanent nature of the existing bank resolution law • New resolution powers and tools • Bridge banks • Bail-in • Asset purchase • Liability guarantees • Investigation and challenging of actions that contributed to bank losses that triggered bank resolution • Liquidated banks • Bailed-out banks • Involvement in recovery and resolution planning, and resolvability assessments • Systemically important banks • Other SIFIs

11. The presentation is over. Thank you!