Sberbank and VTB will transfer assets to a defense bank

Vladimir Putin instructed to create a scheme for transferring defense credits to Promsvyazbank (PSB). Loan repayment will occur at a discount and will be accompanied by a transfer of capital. At the same time, the PSB will not be the only authorized bank for the state defense order.
Origin source
President Vladimir Putin instructed the government, together with the Central Bank, to provide for the transfer to the Promsvyazbank (PSB) of loans that Russian banks gave to the enterprises of the military-industrial complex, as well as the balances of accounts on transactions within the framework of the state defense order, in the amendments to the law on the state defense order. The transfer of loans should be carried out together with the instruments of capital, as indicated in the copy of the document (RBC has it, its authenticity was confirmed by the source of RBC, familiar with the contents of the instruction). The term on behalf of - July 6, 2018.

The need to create a defense bank, which was chosen as a sanitized PSB, was caused by an increase in the sanctions pressure on Russia from Western countries, primarily the United States, and the possibility of spreading harsh sanctions on Russian banks. The total amount of loans that a new defense bank can receive, First Deputy Prime Minister, Finance Minister Anton Siluanov estimated at 1 trillion rubles.

Controversial capital

The draft amendments to the law on state defense order (the document is from RBC) suggests that the rights of claims to defense enterprises executing state defense orders Promsvyazbank will be redeemed at a book value at a discount to the minimum reserve size set by the Central Bank (from zero to 51% for various loans, debts). At the same time, banks will transfer to PSB the capital "sufficient to cover risks on loans". Parameters of transfer of capital in the draft amendments are not specified.

The authenticity of the document was confirmed by the source of RBC in the banking market. Another source of RBC, familiar with the approval process, confirmed the authenticity and relevance of the provisions contained in the draft amendments, at the moment, but stressed that it will be finalized. "This is not a final or even a semi-final option, rather a group stage [of agreement]," he said.

The list of transferred credits will be set by the government, follows from the text of the amendments. In order to transfer capital, the banks will not be more than six months after the transfer of the loan, the text of the document says. At the same time, the transfer process should be completed in 2018. The government should also determine the procedure for writing off the bad debts of defense companies when they are transferred to Promsvyazbank. According to the amendments, a list of monetary obligations will be drawn up, which cease completely or partially.

Promsvyazbank will not be the only authorized bank for state defense order - as it follows from the document, the main executors still have the opportunity to be serviced by banks from the list of already existing authorized banks. Currently, the list is classified, but according to the latest published (as of November 1, 2017), authorized banks included VTB, Sberbank, Rossiya bank, Gazprombank, St. Petersburg bank, Novikombank, RRDB, Rosselkhozbank.

RBC sent inquiries to the Central Bank, the Finance Ministry, the Ministry of Industry and Trade and the largest banks involved in the state defense order - Sberbank, VTB, Gazprombank and Rosselkhozbank. Sberbank and the Ministry of Finance declined to comment, the rest did not respond to the request.

Amendments to the Law on the State Defense Order, which determine the scheme for transferring defense credits and capital from other banks to the SDS, must be adopted by the State Duma in the current session, by July 26, and the transfer of claims on loans was made before January 1, 2019. In order to be in time, the necessary amendments to the legislation are planned to be made not by a separate bill, but in the form of amendments to the second reading to one of the draft laws already under consideration by the State Duma, told RBC a source in the banking market and confirmed a source familiar with the progress of the document.

Unaccompanied by the Treasury

The latest version of the amendments does not provide for the transfer of executors of the state defense order to treasury support. In the previous version of the draft law, such a point was, said two sources of RBC, familiar with the discussion. Against the participation of the Treasury in the mechanism of financing state defense orders were made by the Defense Ministry, the Central Bank and banks, explained the source of RBC in the banking market. At the same time, the issue of compulsory treasury support for the state defense order is still open, the source of RBC, who is familiar with the approval process, says.

About the offer to oblige the executors of the state defense order to transfer personal accounts from authorized banks to the Treasury in March told the head of the Federal Treasury Roman Artyukhin. According to him, the personal accounts of the chief executors should be opened in the Treasury, unless another procedure is established by the Ministry of Finance and the Ministry of Defense. "The head contractor has a contract with the state customer, he opens an account with the Treasury, receives an advance and further" disperses "it through the chain of operations to a basic bank (Promsvyazbank - RBC)," Artyukhin described the proposed mechanism.

Now the Treasury already accompanies the funds in rubles, received in the state defense order calculations, but only serves orders that do not go through authorized banks, and such a minority, wrote RBC.

Wild Plan

In the previous version of the bill, which was told by the sources of RBC, the scheme was tougher - to ensure the transfer, together with loans, of capital in the amount of 30% of the transferred loans. And the scheme of transfer of credits was not registered. Then Sberbank and VTB opposed this approach. "The original plan was, in my opinion, wild," VTB CEO Andrei Kostin said in an interview with RBC television channel, noting that it is not a very correct approach to demand transfer of capital together with loans from banks. "You know, it would not be a shame to share it if VTB and Sberbank had sources of replenishment today, as they were before," complained Kostin. - Now these sources are closed due to sanctions, so the only source of capital is our own profit. Probably, it will be unfair that we should actually share this profit with others. "

On the unpreparedness to transfer capital to the PSB under the previous scheme at the meeting of shareholders of Sberbank in early June, and said its head German Gref. "This is simply unrealistic," he noted, emphasizing the absence of legal mechanisms for such a transfer. At the same time Gref allowed the transfer of subordinated loans.

"The basic principle is to transfer exactly as much capital to Promsvyazbank as it will be necessary for the bank to put it on the balance sheet without attracting its own capital," said Deputy Minister of Finance Alexei Moiseyev in an interview with RIA Novosti. "In my opinion, each loan will have its own scheme," he noted.

Non-market schema

Experts find it difficult to assess the consequences of a new version of the amendments to the law on state defense order for banks that transfer defense credits to Promsvyazbank. "The key question: how will banks transfer capital to the PSB. Without an understanding of this mechanism, it is impossible to assess what impact this will have on them, "says Alexander Danilov, senior director of the group on financial organizations analysis of Fitch Ratings.

There are different companies working in the defense industry, but mostly they are good borrowers, and it's clear that banks do not see the expediency of giving them back with capital, says Ekaterina Marushkevich, leading analyst of S & P. "This is a completely non-market scheme for transferring loans," she said. In particular, for VTB and Sberbank - joint-stock companies with a large number of minority shareholders - the transfer of capital raises questions, as it should be approved by shareholders in one form or another.

As for the PSB, it now has a certain capital reserve: what the PSB received from the state helped it close the hole and generate capital to service the current balance with a sufficient buffer (the norm of 1.1 for June 1 was 15.266% with the minimum allowable the value of 7,025%), believes Marushkevich. "But if the main portfolio of the DPM will be formed precisely due to defense credits transferred to it from other banks, it will need additional capital, including first-tier capital," the expert concludes.