Elvira Nabiulina: "We therefore created a new mechanism for sanitation"

The Chairman of the Central Bank of the Russian Federation explained why a new mechanism for the reorganization of commercial banks was needed, and is waiting for the government's decisions on taxes and budget to clarify the macroeconomic forecast of the Bank of Russia.
The government continues to keep the population and business in suspense. The Central Bank is no exception, Elvira Nabiullina says. She actively participated in economic meetings in the Kremlin, but it is not ready to assess future budget and tax changes. But an assessment of the events in the financial sector has given: banks, pension funds and other market participants have cross-circuited transactions - as a result, the Moscow pension and banking ring has grown. Its size is estimated at a minimum of tens of billions of rubles. To solve such problems, sanitation was created in a new way.

- In June, the Central Bank promulgates an updated macro forecast. Does the economic situation inspire you more optimism or pessimism?

- The economy is developing in accordance with our forecasts: it has emerged from the recession and is growing at a low and volatile pace. I quarter was slightly worse than our expectations. But it is not so much these deviations of 0.1 or 0.2 percentage points that are important, as much as dynamics and trends. I do not think that in June we will strongly update the forecast: the economy has reached a rate close to the potential, regardless of the price of oil. We see this for unemployment and for loading production capacity. As for inflation, we expect that by the end of the year it will start to rise and approach the target (4% - Vedomosti). Now our forecast is between 3 and 4%, and we do not see the risks of its excess. Some increase in inflationary expectations worries. We must see whether this is a trend or a monthly phenomenon. And of course, an important factor that can affect the monetary policy (DCT) - the government's decisions in the field of taxes and budget. We expect clarity.

- For you, probably, there is clarity already. You have participated in all or almost all of the meetings on economics in the Kremlin - both in the expanded and in the narrow composition.

- For the Central Bank, as for everyone else, clarity will come when these decisions are announced. Then we can take them into account in our forecasts. If this does not happen to the benchmark meeting at the rate of our board of directors in mid-June, they will remain a factor of uncertainty for us.

- The government in search of 8 trillion rubles. in particular, between the small easing of the budget rule, as proposed by Alexei Kudrin, and the increase in taxes. The rule, apparently, is unshakable, additional oil and gas revenues will not be wasted. And what was your position, what to choose?

- Still, this is a question for the government. Position on the budget rule I expressed repeatedly. With current oil prices and forecasts, it may seem tough. But I will remind you that when it was accepted, it did not look too harsh, the oil price set in it was $ 40 so it was not perceived. The perception of the rigidity or moderation of the rule varies with the price of oil. But in the long term, it is possible that they will descend to this level, and the rule should be precisely long-term. And one more factor needs to be taken into account: how investors will accept the change in the rule. A budget rule is trust and predictability. And if it is changed, then there must be very good reasons.

- But you do not need to change the cut-off price, you can play with the size of the budget deficit, introduce countercyclical mechanisms into the rule.

- When the rule was adopted, it was discussed that, perhaps, it should smooth out not only fluctuations in oil prices, but also cyclical fluctuations in the economy. But they decided not to complicate the rule - both for perception and for realization. As for loans, then, in my opinion, we have a backlash for raising them. But too, there are limits, loans can not be built up strongly and quickly.

- The government will increase loans to finance infrastructure, but, apparently, taxes will increase. It turns out that the budget removes resources from the weakened economy, so that the officials redistribute them.

- A set of solutions, where to take money to increase costs, is limited - to raise taxes, to spend oil and gas revenues, to increase loans, everyone has pros and cons. Well, the fourth - with what no one argues - to improve the efficiency of collecting revenues, taxes.

- What do you see as pluses in raising taxes?

- Tax increases are always bad for business, it needs to be compared with those effects for society as a whole, which will be obtained by financing additional costs.

- What do you expect from the increase in spending on infrastructure, health and education?

- That the potential rates of economic growth were above 2%, structural changes are needed. They include institutional changes, improving the investment climate, but, of course, you need and increase investment in infrastructure and human capital. The main issue is that they be effective, lead to the bottleneck of infrastructure bottlenecks, to the improvement of the quality of human capital. And this is not just take and spend 8 trillion rubles.

"All the time there is a temptation to compare the current prices with what was 3-4 years ago"

- Let's go back to inflation, but not to the one taken into account by Rosstat. What is your subjective inflation?

- I'm probably in some ways subject to the same phenomenon as most of our citizens: all the time there is a temptation to compare the current prices with what was 3-4 years ago. But my subjective assessment of inflation is not much different from what statistics give. Of course, I think that the rate of price growth has slowed down considerably.

- How often do you go to the store?

- I often go.

- Everyday?

- No, probably, all the same not directly every day.

- That is, your inflation expectations at the end of the year - 3-4%?

- Yes.

- Inflation is quite steadily below the target. And the real rates are high. The Central Bank is periodically reproached for the excessively tough DCT, including officials.

- Now inflation is below our target. Partly it is caused by temporary factors, in part - by constant factors. Therefore, we mitigated the DCT. But, speaking about the level of real interest rates, I would like to note the following: we influence our interest policy on the behavior of people, they have the choice to save or spend. Put money on a deposit or go to the store. These decisions ultimately influence the demand for money and inflation. But, accepting them, people correlate deposit rates - as far as they are positive or negative - not with current inflation, but with inflationary expectations. And they are still high in our country.

By the way, in the inflation expectations of enterprises, qualitative changes have recently occurred. If last year, in the main, professional analysts believed that we would achieve the inflation target, recently the company's inflation expectations had improved. Already more than half believe that we will achieve the goal, and are guided by it, making a decision, saving or investing. But we still need to win the trust of the population, its expectations are much higher than inflation and targeting.

- Non-monetary factors of inflation play an important role. You sent proposals to the government on measures to reduce them. For example, the government is going to start building vegetable stores, and what about the rest of the proposals?

- We received comments, proposals from departments - we continue to discuss with them. The Central Bank has instruments to keep inflation close to the target. But for the economy it would be better if this policy was accompanied by work on non-monetary factors. First of all, these are the tariffs of natural monopolies. There was agreement with the government that they would not be indexed above inflation. If we want the whole economy to work on the basis of a target of 4%, we must start with ourselves, so that state companies adhere to it.

Secondly, we are very concerned about the volatility of prices inside the consumer basket, especially for food, because the rise in prices for it influences inflation expectations. Therefore, we pay attention to vegetable stores. The government is engaged in this, and we hope that all regulatory restrictions will be lifted so that, for example, pension funds can invest in vegetable stores.

"We want the priorities of bank lending to change"

- In the latest review of financial stability, the Central Bank writes that it sees no big risks in the consumer finance sector. But it grows much faster than nominal wages. Will not this create risks?

- We follow this segment closely. The rate of recovery is high, but consumer demand has not yet reached the pre-crisis level, the debt burden is still lower. We do not yet see systemic risks, although we have already increased the risk factor and, if necessary, we will take additional measures. In principle, you are right: having recovered to a certain level, consumer credit should grow no faster than nominal income. It is important not to allow an excessive increase in the debt burden, and the quality of loans is very important. Therefore, we will introduce indicators of the solvency of the borrower DTI and PTI (debt-to-income and pay-to-income. - "Vedomosti"), so that there are quality loans.

- Among the risks of the Central Bank in the review pointed to a slowdown in the devaluation of the loan portfolio. And he warned that if the increase in risk factors does not help, then other measures can be taken. What kind?

- Devalutation occurs - and the assets and liabilities of banks. While this is not enough, and we will continue this policy - without sudden movements, giving both banks and borrowers the opportunity to adapt to these changes. Now we raise the coefficients for foreign currency loans for all borrowers - up to 130%, for borrowers-exporters - up to 110%. Earlier, the coefficient was 100%, but we believe that in order to reduce the risks of financial stability, it [an increase in the coefficients] is necessary for all borrowers. On loans for real estate, we increased to 150%.

- Something else is being discussed, what other measures can be encouraged to devalutize?

- We are discussing different measures, but at a very early stage. Including the standards of mandatory reserves, but there is even a fundamental decision is not made - there are pros and cons. Although such a tool is possible - to make the norms of mandatory reserves for foreign currency liabilities higher.

- More than once it was already mentioned about crediting banks with M & A deals - that this process should be limited. Banks, including government, criticized this idea. Tell us, what exactly do you offer?

- We want banks to create more reserves for crediting M & A transactions. Now we are discussing exceptions with banks. We are not going to introduce restrictions at once in the hard version. But we want the priorities of bank lending to change so that banks more lend to the operational activities of companies. Most likely, we will not allow these credits to be assigned to the highest quality categories - to I and II categories. Perhaps raising the category in the presence of some justification - this is what we are now discussing with banks. But, as a rule, it will not be higher than III category.

"Based on the premise that sanctions will not be lifted, they will not soften ..."

- In April, US sanctions were sharply tightened, under the secondary sanctions can be almost any company and bank. How will the Central Bank take this into account in its policy? Perhaps the government asked for help to the victims?

"We are building our policy, proceeding from the premise that sanctions will not be lifted, they will not soften, and perhaps, sanctions pressure and will intensify." Therefore, the DCT is conducted with a certain degree of conservatism, and we are pursuing a policy of devaluation. Although - and this is an important qualitative characteristic of our economy - its sensitivity to external factors, including changes in oil prices, and sanctions, has decreased due to tight DCT, responsible budget policy and the introduction of a budget rule. As for our reaction to the latest wave of sanctions - we allowed banks not to tighten requirements for businesses under sanctions. We gave the banks time to adjust to the new situation, but this is a temporary measure. This does not mean that they should turn a blind eye to possible risks of deteriorating the financial condition of borrowers.

- Did someone use it?

- Very little. By the way, it shows that the banks are not in bad condition. When at the end of 2014 we gave regulatory relief, many of them used it.

- There were indulgences not only for reservation, but also for compliance with the H6 standard (the amount of risk per borrower and a group of related borrowers). Is there an understanding of which banks will take advantage of and will there be many who wish?

- I think that some, maybe they will.

- It was decided to classify a part of the data in the reports of banks in order to avoid sanctions risks. Why is it considered that secrecy of information can help in this? Everyone knows who owns and who keeps something. In the end, there are archives.

- Knowledge of knowledge, but there is disclosure of information, and this is a process with legal consequences. We are now looking again at the amount of information that is being disclosed. We want investors and counterparties to obtain enough information to evaluate the company, therefore minimum disclosure standards in accordance with IFRS are necessary. You can make this a voluntary story - if the company wants to disclose more than the minimum provided, it can do it.

- On the basis of Promsvyazbank, the OPK bank is being created - just to reduce the risks of secondary sanctions. All this was said about this mechanism. But it is unclear how the scheme for transferring loans with capital from balance to balance will be implemented. It was said about subordinates, but Promsvyazbank needs basic capital, and this is not about subordination. Will these loans be transferred at a discounted price, so that Promsvyazbank could reflect, respectively, profit and take it into account in the capital? Can you tell us how the scheme will be implemented?

- The scheme is being worked out now. At a lower price, it is not intended to transfer loans. It is assumed that the loans will be transferred together with the reserves.

- Approximately the same as it should have been done between the sanatorium and the sanated bank?

- You can draw such an analogy. But the details are now being worked through.

"The role of GDP for assessing the level of the country may decrease"

- What do you see as external risk factors?

- They are connected primarily with the reaction of the markets to the normalization of the DCT in the US - investors are reoriented from emerging markets to developed ones. Surely the process of normalization will be accompanied by a period of volatility. We are also closely following the situation in the EU, for example in Italy (after a political crisis the government included a large number of eurosceptics.) - Vedomosti.

- The world economy emerged from the crisis, but the situation is contradictory, many problems are preserved and even increased, there was no V-shaped rebound. What prevented it?

- The world economy reached a pace close to the potential, they were just lower than expected. I think that one of the problems is that with the crisis struggled with cheap liquidity and therefore the crisis did not play the purifying role that often plays - there were no incentives to increase labor productivity. The money went into risky and non-risky assets, into efficient and inefficient ones. This is a consequence of the way in which the developed countries have chosen the fight against the crisis.

- Not only developed, we also chose it in 2008-2009, by increasing budgetary assistance.

- There was active support of the economy. And already, probably, almost immediately after the crisis, when the recovery period was over, by 2011-2012. it was obvious that we reached a potential growth rate. Quite low. Already in 2012, a recession began, and it was clear that we can not grow even at a high oil price, that we need to change the growth model.

- How do you explain this phenomenon - low productivity growth in the world with a technological boom? Is it possible that statistics simply are not capable of traditional methods to take into account these changes?

- Perhaps the statistics do not take into account these changes. When such serious structural, technological changes occur, the statistics do not have time to learn to take these effects into account. We measure the productivity of labor in those sectors that we are accustomed to observe on a sectoral basis. But the efficiency of the overall economy can grow at the expense of distributed effects associated with better access to information, the best spread of public goods. And these effects are difficult to measure. On the other hand, despite the development of technology, we can not say that they completely changed the face of the economy. There was no complete renewal of the technological structure of the sectors, which occupy a large share in GDP.

- Now the GDP index itself is being criticized. It is often said that it does not reflect real economic progress. For example, free information services are a deduction from GDP.

- The deduction from the economy is statistically, but it is, of course, an improvement in welfare. While the GDP index plays a major role in statistics, because it allows for cross-country comparisons and the economic history of the country. But, probably, along with GDP, more accurate indicators will appear, allowing to measure those effects that are not taken into account in GDP. And in this sense, its role in assessing the level of the country may decrease. But such general indicators have not yet been proposed, although the index of happiness is measured and the level of inequality, which also reflects the degree of well-being. I think that when assessing the level of development and progress of the country, even now we need to use large sets of indicators.

"These banks are not just too big to fail"

- Last year, the banks of the category too big to fail went to the sanation. There was a common joke about the Moscow banking ring, which in actual fact turned out to be a joke with a great deal of truth. And, probably, it would be more fair to talk about the Moscow pension-banking ring. Is there a Moscow pension-banking ring? What is the amount of cross-investment between large private pension groups and banks? And why it was required to cut this ring?

"I hope the last question was rhetorical?" Indeed, banks, pension funds, and some other financial institutions carried out mutual operations - not necessarily looped, they were sometimes two-sided. This was done in order to bypass our regulation, camouflage the risks that they really have. If you look at each operation, it will absolutely comply with our regulations and laws. But the risks were accumulating, and when one of the institutions experienced problems, the problems responded to those who carried out this cross-investment. The problem of cross-investment was, and it had to be solved: these banks are not only too big to fail, but also too big to stay as it is. We therefore created a new mechanism for sanitation - to solve such problems - and immediately applied the new law. To a large extent, these problems have already been solved - just among these large financial organizations was the concentration of this problem. If something is left, it is much smaller. And we are working to ensure that such cross-hiding risks are even less - we have consistently tightened the requirements for pension funds. Now all means of pension savings in the banking system are 25%, and two years ago there were 44-45%.

- All the same, what are the figures referring to cross-investment?

- At least tens of billions of rubles. A double account is possible. One of such deals is already known to you - the substitution of loans with bonds for bonds of the structure connected with the pension group by 30 billion rubles on the balance sheet of FC Opening.

- Still investments of pension funds in the capital of Promsvyazbank - two groups of pension funds acquired 10% of the bank's shares. Correct, if not: it seemed that the pension funds invested real money, but when they got to the bank, the funds went through the chain and returned to the owners of the pension funds. Was there such a story?

- Yes, there was such a story. This money was returned to the owners of the pension funds. And it was hard enough to prove that this is an improper source of capital for the bank. Although formally it is proper. This is worth saying - you yourself have said this many times: you need a lot of evidence to go to the courts.

- The reform of the pension system is being prepared. Everyone says that PKI is the only true direction. But this is new money for the system, and the state of the APF market, in which it is now, raises some doubts. Is not this a risky idea - to launch new money into the system, when the quality of the players raises questions? Will the APF market change by the time the IPC system starts working? How?

- Firstly, the state of APF is much better now than it was before we let them into the guarantee system. A significant number of funds we did not let go, and those who were allowed to improve the quality of assets. And they will continue to improve them - we will see to it that there is no concentration in some problem areas. We are strengthening supervision, for example, this is stress testing for a rather tough scenario. It stipulates that the quality of NPF assets should be ensured taking into account the long-term liabilities of funds and unfavorable scenarios. Secondly, the system of guaranteeing pension savings works. And it protects the rights of those who save themselves for retirement. As for changes in the market as a whole, there may be some consolidation of APFs.

- Is it possible to say that the sector will move towards nationalization?

- No, I do not think so. I do not see the reasons for this now.

- Why not restore the mandatory funded system?

- I sincerely believe that the concept of PKI is better than mandatory pension savings. Even if there was an opportunity to return them. PKI is a more flexible mechanism, and this is citizens' money, rather than budget money that can be frozen. This is the property of citizens, the possibility of inheritance, the opportunity to spend on solving health problems if they arise. Deductions to the IPC system a person can reduce, can increase - this is a much more convenient and understandable system. PKI allows you to completely solve the problems that are taking into account the freezing of savings. Many PKI will also be used by people with average incomes.

- Counting on the fact that many citizens will use the PKI, what place do you assign to the circumstance that for refusal they will need to physically reach the accounting department or personnel and register a zero rate of deductions? Not all will rise and go.

- Initially, there was a proposal that there should be an auto-subscription. Now other options are being discussed. For example, to make a facilitated form of registration that does not require going anywhere, stand in lines and receive permits, with full respect for the legitimate interests of citizens. Such a system will somewhat reduce the number of people who will enter the system by accident or by ignorance. But if the IPC system is made convenient for people and create an interest among employers who are already developing corporate pension programs, this will work. It's no secret that there were disputes between us and various departments on the issue of the IPC. If it is decided in principle that we are going this way, the legislation may appear by the end of 2018 - early 2019. But we must prepare for this moment the central administrator - who they will be, the discussions are still going on. It is unlikely that the PKI will fully work before 2020.

- The law on sanitation NPF is not ready.

- He is not ready, but this issue is not as acute as the issue of sanitation of insurers. Still, there is a mechanism of guarantees in the pension system, the rights of pensioners are protected. But it would be better to have such a tool in case the sanation is justified, for example, if it is a large-large pension fund with large pension reserves. It is unlikely that the law will be ready this year, maybe we will offer it by the end of the year.

"The mechanism of sanitation works the way we expected"

- On bank sanations. "FC Opening" - until now nothing is known about what kind of work the CB is conducting with the ex-owners of the bank. We do not hear anything about this.

- First. We appealed to the law enforcement agencies for FC Opening. The amount of loss for which the appeals were made amounted to 20.467 billion rubles. And the total amount for banks, sanated through the FCS [Fund consolidation of the banking sector], - 260 billion rubles. The second is the work of a bank of non-core assets, one of its tasks is the search and return of assets.

- How many of the former owners of sanitized banks transferred assets?

- Assets were transferred only by the former owner of Binbank, and our valuation of these assets is different from its valuation. We believe that he transferred about 100 billion rubles. The owners of Promsvyazbank and FC Otkritie did not transfer assets.

- Everyone is very concerned about the division of assets between the families of Shishkhanovs and Gutserievs. It is unclear why the best quality assets remain with the Gutseriev family, which distanced itself from the history with Binbank. Does the Central Bank have the opportunity to reach assets that have real value?

- We act only in the legal field. We can reach only those assets, the road to which lies in the legislative plane. Therefore, we have always raised the question of the subsidiary responsibility of the persons controlling the credit institution. First question: are the relatives a controlling person or not? This is very difficult to prove. Now there is a change in the law, according to which damage can be brought to the controlling owner and in case of bank rehabilitation - earlier this was only available in case of bankruptcy of the bank. We are going to use this norm.

- And on what occasions will you use this rule?

- For those sanations that we have now, for all four.

- What amounts can be charged?

- I can not say right now.

- Will you show according to Binbank?

- If the grounds are, then we will file.

- About the advantages of sanation on the new mechanism has been said many times. But why did the Central Bank decide to take this process under its control?

- If we say that we sanify banks immediately through capitalization, then the one who gives the capital becomes the owner. Maybe it's different?

- Theoretically yes. This could be continued through the DIA.

- Probably, it is possible. Only what is the plus here? This is now also our structure - why make another link?

- What are the minuses in the new sanations you marked for yourself? Do I have to correct something in this process?

- There were certain adjustments to the mechanism - in the autumn amendments were made to the legislation, first of all in order to simplify corporate procedures. Otherwise, the temporary administration would have been longer as a control body in the sanitized bank, which is not very good. It is better to have normal management bodies as soon as possible, who can make business decisions. The interim administration does not have the competence to make decisions, for example, to support lending or not. The second and third readjustments were already faster. We do not see any major flaws, on the whole, the mechanism works as we expected.

- How do you assess the work [of the predecessor of FC Opening?] Of Mikhail Zadornov? We are told that there are certain disagreements.

- There are working discussions - on the strategy of the bank. I do not see any disagreement. It is still too early to assess Mikhail Mikhailovich's work - this will depend on the performance of the delivered KPIs. First of all, on how the bank will be put on the market. He has two KPIs - bringing the bank to the market with the appropriate efficiency and dealing with problem assets, this is the recovery rate.

- 2.1 trillion rubles will be transferred to the fund of bad debts. How much of this figure falls on assets that are more like an obligation, and how much - on the so-called strategic assets with which you can work?

- This is a preliminary assessment, it will be further specified as you work with assets: 50-60% are assets that you can work with. The rest of the assets need work for recovery and liquidation.

- How did you reach the recovery rate in 40-60%? The figures look very optimistic.

- We are talking about the methodology of the account, we will clarify it. We were guided that the recovery rate should be higher than the amount of satisfaction of the claims of creditors in liquidated credit organizations, which the DIA now has just over 40%. We must have a difficult task and a good refund. But the assessment will be further refined.

- How will the work of people who deal with these assets be controlled? Any work with assets, including those that are problematic, liquidated, is often associated with corruption issues - in the broadest sense of the word.

- This is an important question. The first upper level control is the establishment of the KPI for the recovery rate. You are talking about the transparency of this work - all the opportunities should be used to sell these assets most effectively, and not by arrangement or in their own hands. Especially considering that the nominal value of assets is one, and the market price still needs to be determined. There should be transparent competitive procedures. We are now talking about the fact that within the fund of non-core assets these procedures should be developed. There must be trust. Major transactions will be submitted to the board of directors of the fund - there will be representatives of the Central Bank, and representative of RFPI, and independent directors. There will be control over the procedures. There will be work not only for the sale of assets and liquidation, but also to attract strategic investors to manage part of the assets. There will be accounting, and its audit. We will definitely work on disclosing information - the public interest is justified.

- Does the Central Bank plan to return to the issue of introducing a bail-in for senior creditors?

- We already have some elements of bail-in for owners and managers of sanitized banks. We will discuss the issue of senior creditors later. My position is that the owners are primarily responsible for the financial situation. On them should be the maximum responsibility. With senior creditors, there are pros and cons. The main disadvantage is that we still need to keep creditors' confidence in the banking sector.

We do not mind that banks buy the "Renaissance"

- A few days ago we [VTB president] Andrei Kostin heard a statement that the Central Bank asked VTB to return to the issue of acquiring the "Renaissance". Can you comment on this story?

"It's not in our rules to talk about specific banks and their transactions, on the whole I can say that we do not object to the banks purchasing shares of the Renaissance.

"Kostin was very clear about it."

- No, it does not matter to us who exactly will buy, our interest is only in the fact that the "Renaissance" had responsible owners.

- Previous potential owner - Bonum Foundation even introduced its representatives to the Board of Directors. This deal is not?

- We did not receive any documents for approval of this transaction.

"I can not say that I am completely satisfied with the supervision"

- Do we really have only one bank in the system that works under the plan of self-restoration of financial stability?

- Yes.

- Why so few?

- We have different plans to restore financial stability. There is a financial recovery plan when the bank violates standards and takes upon itself some obligations to restore its stability. There is a plan that should be made by systemically important credit organizations. Plans of the second type are much larger. The first type of plan is one. So little, because the recovery plan in this case is public information, and perhaps this requires legislative changes. This information can affect the customers of banks, so banks are not very active in this regard.

- Does the regulator actively go to this?

- When there is a problem, we work with banks. The plan must be justified, it must be realistic. There must be sources of capitalization, if it's about replacing assets, then it must also be proven.

- When is it planned to introduce individual standards for banks? And what sanctions are possible for the violation?

- We assessed the internal procedures for assessing the capital adequacy of 19 banks - the audit was carried out in 2017 This was the first verification. We sent letters to the banks where we see problems, so that they can correct the situation. Based on such estimates, it is possible to establish capital allowances, although we have not yet applied this. But if we apply, the measures will be the same ones that we are now applying for violation of the standards. This is the same capital adequacy ratio, it is simply determined on an individual basis. We warned banks that such a procedure would be introduced. Perhaps, we will introduce such standards next year - if necessary. But, maybe, it will not be, if the banks fulfill all our recommendations.

- Many times the problem of fictitious capital was discussed. We wanted to ask you to estimate: you have been running the Central Bank since 2013, how far did the system reduce fictitious capital in the system?

- It is difficult to estimate in the figure. But there was less fictitious capital - a large number of banks were withdrawn from the market with a loss of capital. For many, capital was fictitious. And last year's sanitation - that these holes were formed means that the capital was drawn. Further we will continue this work.

- There passes the reform of supervision, announced a year and a half ago. Are you satisfied with the way it goes? Are you satisfied with the quality of supervision that is now?

- The process of reorganizing supervision requires much more time - this is not one year. There have been improvements in the system of supervision, I believe that we know the situation in banks better now and we can react sooner. But the reform is not complete - it is not limited to reorganization changes, they have already passed, changes in the culture of supervision are needed, and the competence of the employees needs to be improved. We really want to move to advisory supervision of banks - for those players who behave constructively, provide reliable reporting. So far we have not been able to achieve this. Therefore, I can not say that I am completely satisfied with the supervision.

"In general, the insurance market is developing normally, it is stable"

- The law on the reorganization of insurers has been adopted. The first on it will go Rosgosstrakh? Will he have his own sanation plan?

"It is very good that the law is passed." It gives us an additional tool for solving the problems of large insurance companies, revoking licenses that may have consequences for the market. Rosgosstrakh does not need rehabilitation: the company is in the perimeter of FC Otkritie. When we gave the bank funds, we considered that we need to improve the quality of this asset. There will not be a separate rehabilitation plan for Rosgosstrakh.

- How do you assess the situation in the insurance market as a whole? What for this market is now a problem, risks that need to be addressed?

- In general, the insurance market is developing normally, it is stable. He has enough capital. They pursued a policy of recovery - some of the weak insurance companies were withdrawn from the market. Of course, there are problem points, especially this is OSAGO. Much has already been done, we see a positive effect from the introduction of a natural reimbursement and from electronic compulsory motor TPL insurance. The expansion of the corridor of tariffs for OSAGO is being considered - first of all, in order to solve the problem of unprofitability in some regions and increase the availability of this service. A promising zone, beyond which it is necessary to look for it to develop on legal grounds, is life insurance. We see a rapid growth of life insurance. But it is very important that life insurance products are sold exactly as life insurance products. There are some points that concern us. Sometimes there are facts of unfair selling, when people offer these products in exchange for deposits and talk about a higher level of profitability with the same degree of security as deposits. We would like it to be sold as an investment life insurance [COLI]. Now we are working with the Union of Insurers to ensure that these products are sold properly so that customers do not have a disappointment from this product.

- What are the growth rates you expect for the COLI?

- High. But, maybe, they are not as high as they are now, they are now double figures. We do not see much risk if this product is actually sold as a COL. We develop behavioral surveillance. Many products have already introduced mandatory information to consumers - for example, about its cost - this is the same mortgage with the cost of annual payments. On investment products, on shares or other products that are sold in the premises of banks, we wrote letters of recommendation, which indicated what should be disclosed in the contracts. With the level of financial literacy that is now, some products should be banned from being sold to the public - this is my conviction. For example, it is subordinated loans.

- Banks complain that they do not always know who is the holder of their subordinated debt.

- I think that this problem is solved.