Banks Short-Received nearly Rb 800bn of Private Depositors’ Funds

Within a month, the volume of households' bank account and deposit balances decreased by 3.1% with taking into account the revaluation of funds in foreign currency. That was a more dramatic reduction than in January 2009 (-2.4%) in the midst of the crisis devaluation of the ruble. However, the panic of depositors was calmed thanks to a large-scale state support to the banking sector and raising of the maximum insured amount of individuals' deposits with banks. It is to be noted that from that time that value has remained unchanged at the level of Rb 700,000.

At present, there is still an unstable situation on the banking market, but the Central Bank of Russia has so far failed to formulate articulately the plan of actions to put things in order in credit institutions which it supervises.

Fairly justified concerns of private depositors over the safety of their funds with Russian banks (large deposits which exceed the insured amount of Rb 700,000) emerged in autumn when licenses were withdrawn from such large banks as Pushkino and Master-Bank. As a result, in November 2013 on the deposit market the following two trends prevailed: the overflow of customers from small and mid-sized banks to large banks, primarily, those controlled by the state and slowdown of the general dynamics of individuals' funds.

So, within three months, from November 2013 till January 2014 the volume of households' funds with Russian banks rose by the mere 1.9% or Rb 312bn (with adjustment to revaluation of the foreign currency component). In the previous two years, in the same period deposits increased by 6.9%. Late in 2013, a 6.9% growth would have meant an increase of over Rb 1.1 trillion in households' balances with banks. So, in the past three months the banking sector short-received about Rb 800bn which could have replenished its resource base.

For comparison, within the same three months banks debts to the Central Bank of Russia increased by Rb 984bn, while the volume of loans to resident-legal entities, by the mere Rb 24bn. So, runs by depositors resulted in a slowdown of lending to the economy and growth in the banking sector's dependence on refinancing by the regulator.

М.Yu. Khromov, Leading Expert of the Structural Research Center