The winter of 2013, and after it the whole of the following 2014, were marked by experts as complex for the country's economy. At the same time, inspections of commercial institutions by the Central Bank were tightened, as a result, many financial organizations lost their license. Numerous violations of the legislation of the Russian Federation by commercial banks were revealed, and some of them were closed forever.
Panic began to grow among the population, and citizens, frightened by the situation, began to massively withdraw deposits. Due to this, those banks that had never before experienced problems with either legislation or liquidity were affected. In this regard, the state remembered such a measure as reorganization. What it is? Let's try to figure it out.
"Remediation": definition, meaning, translation
Translated from Latin, sanatio means "recovery." In the banking sector, the word “reorganization” means a set of measures taken to improve the financial position of the bank. Simply put, this is the prevention of bankruptcy of a financial institution.
Remediation measures consist of ridding the bank of illiquid assets, reducing the number of employees, restructuring the organization's accounts payable and attracting investors.
Which banks fall under the procedure?
The reorganization procedure is strictly regulated by the legislation of the Russian Federation. Financial recovery is carried out to avoid bankruptcy, when it is really feasible.
The grounds for reorganization are as follows:
1. The Bank plays an important role in the state economy. Significance at the regional level is also taken into account, in most regions or republics there are local structures that have more weight than federal ones.
2. The bank works stably, its affairs are transparent, and temporary difficulties are not a system. Such situations are possible when investors, being under the influence of the media, begin to panic and provoke an outflow of assets. As a result, a financial institution is faced with a lack of liquidity for reasons beyond its control. In such cases, the state takes measures to save the bank so that it does not lose the license, and depositors - their money.
Who is a sanatorium?
The Central Bank of the Russian Federation, together with the Deposit Conservation Agency, decides on the need for financial rehabilitation of the institution. Then the management of the bank’s operational parallel is transferred to the DIA. This is a temporary measure that is carried out during the search for a sanatorium for a financial institution. The latter at this time is given permission to restructure payables.
Who is a sanatorium? Let's try to give a definition to the concept. Remediation involves the transfer of control of the problem institution to the selected investor, while the DIA will withdraw its authority. An investor is a sanatorium, the head of a bank for a period of crisis. Sometimes the Agency itself becomes such a leader.
Strict requirements are imposed on the future sanatorium, it is preferable that this organization already has experience in financial recovery. Its reliability is an indispensable condition. As a result, a bank in need of salvation receives assistance from three organizations at once - DIA, the Central Bank and a private investor. The Central Bank additionally provides the bank with a stabilization loan at a minimum rate. The total loan repayment period is about 15-20 years.
What is bank reorganization for its competitors?
This is primarily to ensure that customers do not lose confidence in credit organizations.If one bank does not receive the required assistance and becomes bankrupt, the next one automatically receives the same problems with assets due to an increase in panic among the population.
In addition, the bank, which became a sanatorium, receives a share in the authorized capital of the victim, the reins of government after reorganization pass into his hands, like all clients.
How long does it last?
The timing of remediation measures is 18 months. The procedure may be extended by decision of the arbitral tribunal, but not more than six months.
What is the advantage of the procedure?
The reorganization procedure gives a financial institution the opportunity to put its affairs in order, despite the low solvency. Clients most often do not experience any inconvenience and continue to use the services of the bank in the previous mode. With third-party financial support, banks continue to pay interest on deposits and provide loans to the public.
Since the bankruptcy process does not start, the jobs in the institution are saved, and no reductions occur. Sometimes the bank nevertheless simplifies the administrative apparatus, but only after a thorough analysis, which proves that the staff is unreasonably “bloated”.
What is reorganization for the Deposit Protection Agency? This is a way to save money and time. DIA also wins due to reorganization. Bank bankruptcy DIA is not profitable, since in this case it is the Agency that has to pay the amount of insurance indemnities to the affected depositors.
How does this affect the bank?
This issue worries many customers of banks that have undergone rehabilitation. What will happen to their funds when the recovery activities are over? Suddenly, the reorganization will not lead to the desired result, and the bank will go bankrupt?
First of all, the decision to conduct reorganization is taken in those cases when prevention of bankruptcy is recognized as possible. Then the bank is allocated as much funds for rehabilitation as it takes to put his affairs in order. Today, all financial institutions that have undergone recovery have successfully coped with temporary problems and continue to function.
But since an investor is most often attracted for reorganization, and as a result becomes a new owner, after the completion of financial rehabilitation measures he has the right to dispose of the bank at his discretion. He has the right to change the concept of a business model, make changes to the brand, product line, and even change the team.
How to behave to the client?
What is bank reorganization for its customers? What does a person need to do if it becomes known about the reorganization of his bank? As a rule, this issue most concerns investors.
No worries. The bank will not be liquidated, and deposits and accounts will not go anywhere. Rather, on the contrary, if a financial institution has embarked on a path to recovery, then bankruptcy will certainly not happen to it. Even in the case of freezing all assets, and therefore customer deposits, you can not worry about money. They will not go anywhere and will definitely return to the client after a while, when the bank will put things in order
Moreover, often after the reorganization is completed, the institution has a new owner who offers his bank development strategy, makes suggestions about the services provided and changes the approach to customers. Therefore, do not panic and try to change the financial institution, because after the completion of events, customers often only win.
In our state, they rarely remember what sanitation is. Bank rescue measures are used to fulfill its obligations to customers. You should not be afraid of reorganization, but it is important and necessary to show interest in the main bank, in which funds and savings are stored.
