The CB threats senior executives of failed non-governmental pension funds and insurance companies with long-life disqualification

The Central Bank of the RF (CB of the RF) offers to extend the mechanism of long-life disqualification to senior executives of failed insurance companies and non-governmental pension funds (NPFs).

As a reminder, at the beginning of September of the current year the representatives of the committee on budget and financial markets of the Federation Council (FC) put forward an initiative to forbid the executives of failed banks to hold key positions in active banks for life term. In such a way the civil servants hope to root out a common enough practice, when the so called «criminal management» passes from one bank to another.

There are no official rules of disqualification as of today. However, according to the instruction of the CB № 109-I Russian banks are obliged to coordinate with the main regulator the candidate of their executives, deputies and members of Executive Board, chief-accountant and their deputies. In agreeing on persons the CB uses «black list of bankers», who is threatened with long-life employment ban. The agreement procedure lasts for one month, by that the regulator as well can deny to approve the appointment of a person from the black list, as also can allow.

As a rule, those executives are shortlisted into the black list of the CB, who is suspected of involvement in bankruptcy, transfer of assets out of a bank, book-cooking and other serious violations. According to the data of the CB as of June 2014, 2828 persons are in the black list, for comparison there were 2745 surnames in 2013.

At the same time, the civil servants note that in spite of the control on the hand of the CB someone succeeds to circumvent this procedure. According to experts, if the suggested initiative will be enshrined in the law, then banks won’t commit such infringements for fear of risking the license.

The representatives of the CB endorsed initiative of the FC, but spoke in favor of introduction of long-life disqualification only for those executives, who made bankrupt not just a one bank.

At the same time the CB offers to draw on experience of prevention of participation of bad-faith bankers in management and control over banks for other financial organizations, first of all for NPFs and insurance companies. By this, as well as in cases with banks the regulator offers to introduce long-life disqualification only if an organization will be made bankrupt once more.

They also assured in the CB that there are no black lists of executives of insurance companies and NPFs, but information received by the CB within regulatory and supervisory measures is examined and factored into decision making.

By this they haven’t made the final call in the administration yet, concerning the appointment mechanism of chairpersons of insurance companies. Today the agreement procedure of candidates for executive positions in insurance companies, carried out by the CB, is for indication purposes, in opposition to banks and NPF.