The Central Bank of Russia increases control over high-street banks

The Central Bank of Russia establishes a new department, aimed to control the most important credit organizations, in order to prevent possible shocks in the financial system of the country, where a problem in the one of high-street banks may spur a chain reaction and bring on a crisis. The new institution begins to work from October 1st, 2013. It was the case of late meeting of the board of directors of the Bank of Russia.

Definitely, the Central Bank, as a financial super moderator, having concentrated on itself not only supervisory role over credit system of the country, but also since recently over organized securities market, doesn’t divest itself of power to have control over other banks. However, the Central Bank will keep a wary eye on the most important institutions.

As expected, the list will include about twenty credit organizations. It will be certified in the beginning of the next year, and one of the main criterion to qualify a bank as a key one is obviously the number of its assets and borrowings, including private deposits. These banks, in case of force-majeur, may claim for government support and financial recovery, which is generally speaking, has become a common practice in the EU and the USA, as a result of financial crisis in 2008. Following the international experience, this policy of the Central Bank of Russia seems to be reasonable. It is destined to give positive signal not only to the citizens, but also to the business, and to enhance confidence to all the banking system of the country.

The CredInform information agency is preparing to implement an independent index of banks, which will reflect the degree of their financial capacity and reliability, and also let the concerned persons estimate the risks of partnership with banking institutions.