Regulators propose Central Bank to relax the rules of reservation of secured loans in case of bankruptcy of the mortgagor. Despite the moratorium on bankruptcy on the backdrop of a pandemic, the crisis has put on the brink of survival many companies. Bankers fear that in the event of mass bankruptcies, the creation of reserves can cause the pressure on the capital. But, experts say, similar indulgences, for their part, pose for unscrupulous banks loopholes to cover the balance of the holes.The Association of Russian banks (ADB) approached the Bank with the request to develop standards to reduce the reserve generated by the banks on secured loans when the mortgagor starts the bankruptcy process. Changes are proposed to the Bank of Russia regulation №590-P, which regulates the order of formation of reserves for possible loan losses.Relevant project modifications, the Central Bank issued in mid-July, but the issue in the document was not included. The Central Bank told “Kommersant” that “the received proposals of the Association, study them.” Earlier the Director of Department of Bank regulation of the Central Bank Alexey Lobanov said that the representatives of the supervision is ready to return to this thread when you request, to discuss the technique and details.Now the presence of collateral allows banks to reduce the amount of reserve for possible losses on the loan, if the financial situation provided the Deposit is estimated not worse than the average. However, the availability of collateral plays no role when the debtor applied the bankruptcy procedure. That is, the value of collateral in the current version of the regulation №590-P is reduced to zero, says ADB Vice-President Alexey Volokhov. This position of the regulator, he adds, can create risks for the banks and further pressure on capital, as in bankruptcy borrowers ‘ reserves on their loans accrues quickly: “If the individual banks within two to six months to face the fact that 20% of borrowers (forward-looking assessment taking into account the influence of the crisis— “b”) will be bankrupt and the Bank would have to repay those loans with 100 percent reserves, not to violate the norms of the Central Bank capital will be difficult. Given that a sufficient number of borrowers may not survive the crisis and go bankrupt, especially small business, the issue is of extreme urgency.”The number of corporate bankruptcies in the first half, by contrast, fell by 26% and in the first quarter by 11%, while the second – almost 40%.In addition to the General downward trend in the number of bankruptcies, this is due to limitations of the courts, which in April-may is considered only for urgent matters.In June, the courts returned to work full time, and the bankruptcy case were to be considered active, as evidenced, for example, the growing number of decisions on bringing to susbidiary responsibility of controlling entities. N�� the number of bankruptcies affected by the moratorium, which is valid till 4 Oct – after that it is expected a sharp increase in applications to courts with applications for bankruptcy from creditors (debtors a moratorium does not prohibit to file for your bankruptcy).The head of internal audit service of the absolute-Bank Elena Bukina at a recent webinar, Deloitte noted that financial experts expect bankruptcies 20% of enterprises in the sector of small and medium enterprises (SMEs) and in the presence of security in the form of real estate “I would not want to somehow artificially inflate the risks.” The issue will allow us not to create artificial reserves and not to dissolve them in the future, says Mrs. Bukin. And, adds Mr. Voilukov, to avoid “contamination” of the banks future financial problems of the borrowers.At the same time, the current approach of the regulator makes it easier to monitor the adequacy of risk assessment for borrowers in a bankruptcy stage, emphasizes the Deputy Director of the group ratings of financial institutions of an ACRE Mikhail Polukhin: “the Current version 590-P specifies that the Central Bank does not need to divert attention to collateral such borrowers expect that the Bank-the lender will look for some loopholes in this matter. That is, the supervision does not need to take additional steps to force the Bank to form required on this loan reserve”. According to experts, the question may arise in respect of “smaller and not always conscientious players.” Potential risk in fact, he adds that the pledges for loans of SMEs are not always highly liquid assets.It is necessary to take into account impairment of collateral at the end of the crisis. “There is a tendency to discount the valuation of the collateral in the amount of 20-30% of the market value of the property, 20-50% on movable property,— says Advisor of the law Bureau “Egorov, Puginsky, Afanasiev and partners” Oleg Buiko.— According to statistics, the property of debtors in most cases are implemented in the course of the public offer with average prices falling more than 50%”.Olga Serenkova, Anna Zanina
