Deposits in “unfriendly” currencies were proposed to be withdrawn from the insurance system
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Bankers have found a way to solve the problem of frozen foreign currency deposits by offering to lift the Central Bank’s $10,000 restrictions in case the deposit is closed. As part of the course taken towards devaluation, insurance of deposits in “unfriendly” currencies should be stopped. What are the potential benefits and threats for foreign currency investors are these initiatives, understood “MK”.
“In order to solve the problem of the population’s foreign currency deposits frozen since March 9, 2022, we propose to allow banks, if there are sufficient funds in dollars and euros at the cash desk, to issue foreign currency on deposits,” its president Garegin Tosunyan said at the congress of the Association of Russian Banks (ARB). . If there is a shortage of currency, it is possible to issue in rubles at the exchange rate of the Central Bank of the Russian Federation on the day of issue. After the implementation of this plan, in his opinion, deposit insurance in “toxic” currencies should be discontinued.
Recall that, according to the Central Bank, as of December 1, 2022, deposits in foreign currencies accounted for 21% (8.4 trillion rubles) of all household deposits (40.1 trillion rubles). At the same time, only 3.5 trillion rubles were in Russian banks at the end of the year. The remaining 5 trillion were held by citizens in foreign credit institutions. At the end of March, the volume of household deposits in foreign currency decreased significantly. However, deposits in dollars and euros still remain an attractive and reliable asset in the eyes of many citizens. Now, according to the Banki.ru marketplace, rates on foreign currency deposits vary from 0.01% (for Sberbank) to 5% per annum (for VTB).
In March, the Central Bank extended for six months, until September 9, 2023, the ban on banks from charging a commission for issuing currency from accounts and deposits of individuals and extended the restrictions on withdrawing foreign currency in cash. If a citizen opened a foreign currency account or deposit before March 9, 2022, then he can withdraw from it no more than $10,000 or the equivalent amount in euros. The remaining funds can still be received in rubles at the exchange rate of the Bank of Russia.
Why do some banks want to get rid of foreign currency deposits? As Mikhail Volkov, First Deputy Chairman of the Board of Prio-Vneshtorgbank, told MK, Western sanctions against leading Russian banks, a ban on the export of euros from the EU to the Russian Federation and an absolutely logical reaction of the Central Bank, which introduced restrictions on foreign currency depositors, led to the fact that many banks have formed quite large reserves of currency, which are actually dead weight in vaults. Moreover, for this cargo, banks must pay deductions to the FOR and DIA. “Today, when a bank issues a foreign currency deposit in rubles, it actually buys these dollars from a citizen. Those. the credit institution is forced to open a long currency position. But many banks, especially regional and medium ones, which do not play in the foreign exchange market, do not want to have currency risks in the current situation. I have enough dollars in my vault to give them to foreign exchange savers and forget about “toxic” dollars
and the euro,” Volkov said.
“Today, many banks that lend to the real sector of the economy and do not engage in currency speculation (preferring to have an open currency position near zero) find themselves in a difficult situation,” said Sergey Burtsev, a member of the ARB Council, the chairman of the board of Chelyabinvestbank. – The balance of deposits in foreign currency is frozen. They cannot be issued to depositors, even if there is more currency in the cash desk than liabilities on deposits. At the same time, deposits are insured, banks bear the costs by transferring contributions to CERs. The Bank of Russia raises deductions to the mandatory reserve fund, arguing with the fight against dollarization. But it is obvious that banks do not have a single tool to legitimately motivate the reduction of balances on citizens’ deposits in “unfriendly” currencies.
In his opinion, the requirement to issue the currency received after September 9 at the internal rate of the bank cannot be considered successful either. For example, if a depositor put funds on a deposit at 3% per annum for a year, then in a year the currency may still not be withdrawn, and the internal rate may be 5% lower than the exchange rate. “Thus, the conditions have been formed for deceiving the depositor, who will earn minus 2%,” summed up Burtsev. He believes that in this difficult situation, several initiatives suggest themselves. Among them are to allow banks to introduce commissions on foreign currency balances on citizens’ deposits, to change the procedure for calculating the amount of deductions in the FOR, so that frozen balances (within the balances on hand) are excluded from the calculation, to issue any currency from the repayment of term deposits at the exchange rate of the Central Bank. “In addition, it is possible to allow any currency that is in cash desks to be sold at exchange offices while maintaining the obligation to issue currency to depositors within $10,000 (for balances formed
until March 9, 2022),” the banker added.
According to Mikhail Volkov, it is also advisable to withdraw the currencies of hostile countries from the protection of the DIA: “Now in active operations, banks practically do not have the opportunity to use these liabilities. At the same time, they are required to pay an annual insurance premium of 0.48% (0.12% per quarter) to a special fund managed by the DIA.” “Of course, all changes must be announced in advance. For example, from January 1, 2024, insurance on deposits in currencies of unfriendly countries is terminated. Accordingly, before this period, the depositor must decide whether to leave everything as it is or convert it into rubles, another currency, ”Volkov noted.
“The regulator and the government talk a lot about de-dollarization, but no one is in a hurry to create conditions for deposits in foreign currency to become inconvenient and unprofitable. If dollars and euros are recognized as “toxic”, then why are they insured by the DIA? Is it really only to ensure that banks continue to replenish the Fund of the Compulsory Deposit Insurance System?” Burtsev concluded.
The reaction of the regulator to the initiatives of the ARB is not yet clear: the Central Bank ignored the corresponding request from MK. “DIA provides deposit insurance within the framework of the current legislation,” the press service of the state corporation diplomatically explained.
However, not all market participants supported these ideas. “The array of foreign currency deposits in CERs is not so large. Moreover, a significant part of deposits in dollars and euros are opened by very wealthy people who have special relationships with bankers. The majority of the population has long preferred ruble deposits. If these initiatives are implemented, a wave of distrust may arise, which will bring citizens more harm than good,” said Sergei Khestanov, macroeconomic adviser to the CEO of Open Investments. In his opinion, the devaluation of the financial market is already in full swing and in different directions. “Many banks are reluctant to open foreign currency deposits, because the demand for loans in dollars and euros has drastically decreased, a number of players have introduced “horse” commissions for maintaining foreign currency accounts. Then why rock the boat?” Khestanov concluded.
Newspaper headline:
“If dollars are recognized as “toxic”, then why are they insured in the DIA?
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