Promsvyazbank problems. The hype around Promsvyazbank: myths and harsh reality
The discussion of ways to increase the capitalization of Promsvyazbank (PSB), regarding which negative information has been circulating on the market and in the media lately, continues: last week there were reports about the upcoming sale of one of the assets of PSB - Bank Vozrozhdenie. PSB denies this and says that the option of attracting a strategic investor is possible, but there is no talk of selling Vozrozhdenie. Earlier, representatives of the PSB stated that the additional capitalization would be carried out at the expense of the bank's profit. Theoretically, the sale of assets is also possible.
In early November, S&P Global Ratings downgraded PSB's long-term credit rating from BB- to B+ and transferred it to the list of ratings under review with negative expectations. The main reasons are the weakening of the bank's business position due to the negative information background, the tightening of regulatory requirements, the uncertainty of the strategy, the departure of a number of managers and the assumption that PSB will be forced to sell profitable assets to replenish its core capital. As of October 1, 2017, the N1.1 capital adequacy ratio of PSB was 6.49%, which satisfies the current requirements of 6.1% with a margin. However, from January 1, 2018, the minimum allowable level for systemically important banks will be increased to 7.025%. Accordingly, PSB needs to look for funds for capital injection. Literally two days before the S&P assessment, Moody's also downgraded the long-term rating of PSB from Ba3 to B2 with the possibility of further downgrade. The main reason was the cancellation of the merger between PSB and Vozrozhdenie, which was expected before the end of 2017.
“Unlike Binbank and Otkritie, PSB has good indicators in terms of profit, interest margin, and commission income,” notes the project manager of the Analytical Center “Expert” Sergei Selyanin. - Now all banks have problems, but it is impossible to put such different banks on the same shelf. Due to negative information, PSB experienced an outflow of customer funds of almost 60 billion rubles, which the bank replaced, it seems, with funds from the Deposit Insurance Agency. The problem of client panic is still the main problem of the bank, and it is in the interests of the Central Bank to solve it.”
“The credit rating has decreased due to the fact that PSB has a higher share of overdue loans than the average for the banking system,” explains Associate Professor of the Department of Regulation of the Activities of Financial Institutions of the Faculty of Finance and Banking of the RANEPA Yuri Tverdokhleb. Recall that the share of loans overdue for more than 90 days in the loan portfolio of PSB at the end of the first quarter of 2017 amounted to 8.3%, while in the banking sector as a whole, the share of overdue loans is 6.6% for loans to the non-financial sector and 7.5% - loans to individuals.
According to Sergei Selyanin, PSB lacks about 6 billion rubles to comply with the basic capital adequacy standard, but the bank may well meet the standard. The bank plans to increase the capital at the expense of profit - this is an honest answer, unlike banks that "draw" capital. The sale of assets, even problematic ones, may well help - according to the analyst, this will reduce assets, but will not affect capital, and the standard can be met.
Experts told what consequences the reorganization of Promsvyazbank will have for the banking system. And customers, meanwhile, are experiencing problems with payments.
Before the New Year, the Central Bank, unexpectedly, decided to surprise the market with another major bailout. Just yesterday, there were reports that the regulator demanded that the bank additionally accrue reserves for 100 billion rubles. The bank tried to challenge the amount, but the negotiations only led to the reorganization of the bank. Experts told what awaits all of us next.
How did the bank justify
The fact is that yesterday the bank hoped to resolve the issue peacefully and resolutely refuted the information circulated in the media about the additional accrual of reserves.
“We are talking about the results of the Central Bank’s audit, which ended in May this year. Approval of the verification act can take a long time, we are in dialogue with the Central Bank, and based on the tone of this dialogue, we do not see such high risks. There is a corresponding note about this in our 9-month IFRS financial statements,” the bank's press service commented.
Dmitry Ananiev, Chairman of the Board of Promsvyazbank, specified that the bank is in dialogue with the Central Bank, and they hope to come to a constructive solution together.
“The bank will be recapitalized by the main shareholders, and in a stressful time, Promsvyazbank, as a systemically important bank, will receive support from the regulator, which will allow it to ensure the continuity of its operations,” S&P analyst Ekaterina Marushkevich said.
In addition, analysts noted that the bank is able to accrue additional reserves if it is given enough time to do so. and the next day the Central Bank announced the reorganization.
“Our bank has recently gone through very difficult trials. A lot of work has been done, which resulted in obvious success in meeting the new requirements of the Central Bank of the Russian Federation for systemically important banks. Promsvyazbank confidently confirmed its leading position in many banking areas. Unfortunately, despite all our efforts, the bank needed government assistance. It is known that for a long time the regulator carried out work on the audit of our banking assets, which resulted in the decision of the Central Bank of the Russian Federation to accrue additional reserves and, as a result, to introduce a temporary administration into the bank.
In the current situation, we deeply regret the decision, but we cannot but accept it,” said the bank's owners Dmitry and Alexei Ananiev.
What do financiers say
The opinions of experts on the account of the impact of the reorganization of the next bank from the systemically important ones were divided. Thus, Kirill Lukashuk, senior director of ACRA, is sure that it does not bring short-term financial shocks to the Russian financial system.
“Since a soft bailout mechanism has been chosen through the Banking Sector Consolidation Fund and there is no moratorium on satisfying creditors' claims, there will be no short-term financial shocks to the stability of the financial system. In fact, only holders of subordinated instruments remain at risk, but there is a small volume. And these are both Russian and foreign investors. Therefore, this is not the volume that could pose a risk to the stability of the financial system of the Russian Federation,” he said.
The head of the Association of Russian Banks, Garegin Tosunyan, also expressed confidence that the interim administration would not find financial holes in the bank.
“Reorganization is associated with the Otkritie and Binbank model, but here, when the interim administration works, God forbid, if it turns out that, together with the owners, financial recovery can be more simplified. That is, a model of financial recovery is possible due to the fact that the bank will work in full, and the Central Bank will provide some financial support, and the owners themselves will also provide financial support. And God forbid that an even softer regime is implemented than reorganization, when at an early stage of problems the Central Bank comes and sees that help is needed, provides this help, and the owners also do everything in their power and, as a result, with the help of the regulator, restore normal life jar. Including taking into account the high requirements for reserves offered by the Central Bank. And then the bank continues to operate normally. I think that this option is also possible,” says Tosunyan.
The Ministry of Finance also expressed its opinion on the reorganization. The ministry does not expect a "domino effect" in the banking sector and sees no threats to social tensions for the population or risks for the banking sector as a whole.
“It (the bank) fulfills all its obligations to creditors, so we don’t have any domino effect there,” said Deputy Finance Minister Alexei Moiseev, answering a question about a possible domino effect in the banking sector due to the situation with Promsvyazbank.
Anatoly Aksakov, head of the State Duma committee on the financial market, spoke about the calmness in the Russian market. “As far as I understand, the Central Bank and Promsvyazbank have been actively interacting for some time. And, in principle, all procedures and processes related to the improvement of the organization have already been launched in a soft, implicit form. Now it's all formalized. The banking sector will not even sneeze, as nothing will change for customers. Everything will be in a smooth, calm mode,” Aksakov told TASS.
Press Secretary of the President of the Russian Federation Dmitry Peskov once again stressed that the Central Bank is an organization not controlled by the Kremlin and acts regardless of the opinion of the Government. However, the president's attitude to the Central Bank's policy has not changed after the news about Promsvyazbank.
"[Putin's] attitude towards the Central Bank has not changed [due to the reorganization of Promsvyazbank], President Putin is very consistent in his rather high assessments of the Central Bank's performance," the press secretary of the head of state emphasized.
Calm before the storm
Although experts and authorities are desperately trying to calm the population, their attempts are largely in vain. After the reorganization of the bank, the first victims have already appeared. First of all, the reorganization hit the pockets of investors - the bank's securities fell by almost 87%.
But the most important thing is that bank customers experienced interruptions in payments throughout the day. Considering that now is the end of the year - an active financial time for both individuals and legal entities, for many this has become a disaster.
“I can’t log into the Internet bank not through the application, not through the computer? When will it work? - writes Evgenia Filchagova in the bank's VKontakte group.
“Promsvyazbank, when will the mobile bank start working? Push notifications do not come. And the salary will arrive on time, I hope, today? I get it on your card,” asks Kristina Yakovleva.
Promsvyazbank, of course, hastened to reassure users by issuing an official message:
“Dear customers, if you notice that the waiting time has increased when entering the mobile and Internet banking, as well as when calling the contact center, don't worry. This is due to a high load on resources, and not to interruptions in the bank. We are working as usual,” the banks said in communities on social networks.
Hello! My name is Ludmila. Until recently, I was a client of Promsvyazbank PJSC for many years until the bank cleared all my accounts. Now more.
On 09/17/2016 on Saturday I received an SMS that my SIM card was being replaced. I immediately called MTS with a request to block the SIM card, they assured me that everything was in order and the SIM card was blocked. After that, about an hour later, I came to the MTS office to find out what was the matter and replace my blocked SIM card. As soon as I inserted a new SIM-card into the phone, I received a notification from PSB-Retail: "there was a change in the settings, enter the code." I immediately called the bank and became the happy owner of the information that all my accounts, or rather my My Benefit deposits, were closed and money in the amount of 1,380,183 rubles 76 kopecks was transferred by payment orders to third parties to third-party banks (Tinkoff, HKF bank, VTB 24).
About an hour later I was at the office of Promsvyazbank PJSC at the address: Moscow, Prospekt Mira, 116A with a police patrol. The funny thing is that in the bank I met a friend in misfortune, who, according to exactly the same scheme, money was debited from the deposit the day before. All the formalities on my part at the bank were completed, a statement to the police was written. My request, supported by a statement, to immediately stop the transfers, was refused, motivated by the fact that everything had already gone ...
I want to note that it was Saturday, and payments to third parties made from my accounts remained on correspondent bank accounts until Monday, which is confirmed by payment orders, which indicate that the debiting of funds was made on Monday 09/19/2016. I contacted all the banks that the transfers went to.
1. Home credit. Contact was made on Monday. The money was cashed by the recipient on Monday morning.
2. Tinkoff. Received a claim over the phone on Sunday. The further fate of the money is unknown.
3. VTB-24. On Monday, the office accepted a statement with a recommendation to contact the police. The further fate of the money is unknown.
I also want to note that I have not used the online bank since the opening of deposits (i.e. more than 2 years)!
Outcome. MTS - replied with an unsubscribe in the style of "itself is to blame." Promsvyazbank - after 30 days sent an SMS "Dear client. Additional time is needed to consider your review. We apologize. Your PSB." Those. response times are not specified. The police seem to be investigating. Yesterday I wrote an application to the Central Bank, so far I have not received a response. The only thing left is to sue all this brethren. When the story ends, I will definitely write. I will also try to keep all the happy owners of deposits and potential depositors of Promsvyazbank PJSC informed about what is happening.
Vladimir Putin said that the head of the Central Bank is working well. The next day, the reorganization of Promsvyazbank began, which could cost hundreds of billions of rubles.
Svetlana Kholyavchuk/Interpress
Promsvyazbank did not make controversial large-scale mergers, like Otkritie and Binbank, pursued a moderate credit policy, but, having got into the same “prophetic” list of the Alfa Capital analyst with them, it still fell under the reorganization of the Central Bank. And against this background, the experts have much more questions for the regulator than for the bankers: where were Elvira Nabiullina's subordinates and how was this allowed?
President Vladimir Putin, when asked about the collapse of one after another large Russian banks and the actions of the regulator, confidently stated that “you can ask him again and again about the Central Bank,” but he still believes that “Elvira Sakhipzadovna (head of the Central Bank Nabiullina) is working Okay". Probably, his confidence was reinforced by a recent meeting, where, when asked how the banking system feels there, the head of the Central Bank also confidently reported: “The banking system and the financial system as a whole feel stable. According to the main indicators of profitability and sustainability, we reached the level of 2014, after a rather difficult 2015–2016.”
And on the morning of December 15, the Central Bank announced the launch of (PSB) - the 9th largest credit institution in the country, included in the list of systemically important ones. Its total number of clients is more than the entire population of any city in Russia outside the Mother See and the Northern capital - more than 2.73 million. The St. Petersburg branch has 20 branches that serve more than 200 thousand private clients, 16 thousand legal entities, more than thousand people receive their salaries on bank cards. For many years, the institution was profitable, unlike Otkritie and Binbank, it did not indiscriminately buy up “fallen” competitors and the main cause of the current problems, and here is such a collapse.
“Our bank has recently gone through very difficult trials,” the bank's owners, the Ananyev brothers, came forward with a statement (the day before they went to negotiate with the Central Bank). “Unfortunately, despite all our efforts, the bank needed government assistance. It is known that for a long time the regulator carried out work on the audit of our banking assets, which resulted in the decision of the Central Bank of the Russian Federation to accrue additional reserves and, as a result, to introduce a temporary administration into the bank.
In early November, the international agency S&P downgraded Promsvyazbank's long-term credit rating to B+ with a negative outlook.
In early November, a number of media published information about a series of dismissals of several leading top managers of Promsvyazbank at once. In addition, in the fall, several international agencies downgraded his credit ratings. According to analysts, one of the causes of the personnel crisis could be problems with the outflow of some client funds in the face of a negative information background around this bank, as well as the recent downgrade of its credit ratings. Details - in the publication "Federal Press".
Problems from where they did not expect
As it became known to FederalPress, Vladimir Shatalov, the deputy chairman of the board of Promsvyazbank, who is responsible for the block of small and medium-sized businesses, was dismissed from his post on November 10; Earlier, Deputy Chairman of the Board of Promsvyazbank Vladimir Mamakin, who oversees the financial block, resigned.
The issue of the sufficiency of own funds of this credit institution is also being actively discussed. According to some information, the indicator of basic capital (own funds) of Promsvyazbank as of October 1 this year was only 6.49%, while the Central Bank rate was 6.1%, while from January of the new year this indicator will be increased to 7%.
“Promsvyazbank's capital adequacy ratio was 6.5%, which exceeds the minimum allowable value of 6.1%. Another thing is that the bank belongs to the backbone, and from January 1, 2018, the capital adequacy ratio for such banks will be increased to 7%. This means that the bank must have time to increase its own capital by the end of the year, ”the deputy director of the analytical department of the Alpari company explained in a commentary to FederalPress. Natalya Milchakova.
“We expect that Promsvyazbank may be forced to sell some profitable assets in the coming months in order to meet regulatory requirements for core capital,” S&P analysts said. – As of October 1, 2017, Promsvyazbank’s H1.1 ratio was only 6.49%, while it is expected that from January 1, 2018, the minimum allowable level for systemically important banks will increase from 6.1% currently to 7.025% ".
Salvation Association
However, representatives of the financial institution claim that Promsvyazbank fulfills all the standards of the Central Bank of Russia with a margin. According to the bank's official information, as of October 1, 2017, Promsvyazbank showed an increase in the values of all standards. Thus, the basic capital adequacy ratio H1.1 of the bank as of October 1 of this year amounted to 6.486% against 6.512% as of September 1, 2017, the capital adequacy ratio H1.2 as of October 1 of this year amounted to 9.342% against 9.394% as of September 1, 2017, and the equity capital adequacy ratio H1.0 as of October 1 of this year amounted to 13.392% against 13.168% as of September 1, 2017. In addition, the bank showed an increase in liquidity ratios: the instant liquidity ratio H2 as of October 1, 2017 amounted to 115.053% against 81.970% as of September 1 this year, the current liquidity ratio H3 as of October 1, 2017 amounted to 248.922% against 206.942% as of September 1 of this year. year, and the long-term liquidity ratio H4 as of October 1, 2017 amounted to 29.436% against 29.340% as of September 1 of the current year. At the same time, the net profit of Promsvyazbank for 9 months of 2017 according to the Russian accounting rules increased 3 times and amounted to 5.6 billion rubles, and the volume of income from core banking operations (net interest income and net commission income) grew by 22% year-on-year and amounted to 44.9 billion rubles.
We would like to remind you that Promsvyazbank and Bank Vozrozhdenie signed a cooperation agreement with the Kaliningrad region this autumn. As specified in the press service of the credit institution, this agreement provides for the partnership of banks with the administration in the implementation of joint priority projects to improve the business climate in the region, expanding the range of financial services and products provided, taking into account the requirements of the region, as well as supporting city-forming enterprises. At the same time, it was noted that banks have been operating in the market of the Kaliningrad region for about 20 years and are actively supporting small and medium-sized businesses by providing concessional financing, as well as guarantees and opening credit lines.
“It is very important for the bank to feel the region, the nerve and the rhythm of the territory's life. Despite the fact that we have been working in the Kaliningrad region for a long time (Promsvyazbank - 16 years, Vozrozhdenie Bank - 24 years), the signing of the agreement is an opportunity to build our work in such a way as to meet the challenges of today and fulfill the tasks that the regions face of our presence,” the Chairman of the Board of Promsvyazbank, Chairman of the Board of Directors of Vozrozhdenie Bank, emphasized earlier in the commentary. Dmitry Ananiev. – For us, they are clear: high availability of loans, primarily for small and medium-sized businesses, support for export-import operations that are relevant for the border Kaliningrad region. We understand that we must provide a good quality and, preferably, digital service to every resident of the Kaliningrad region, whether it be an individual or a small business.”
According to Dmitry Ananiev, "banks will start working with the public sector in a qualitatively new way." “We will try to create competition for state-owned banks. And we are ready to consider all the most important and large projects that the authorities of the region are currently working on,” the banker said.
In addition, in October, Promsvyazbank acted as the organizer of the placement of government bonds of the Sverdlovsk region in the amount of 5 billion rubles in tandem with Gazprombank and VTB Capital.
At the same time, earlier, in October of this year, the majority shareholders of Promsvyazbank and Vozrozhdeniye Bank adopted a new development strategy. In particular, the owners of banks paid special attention to the development of mobile and Internet channels for interaction between these credit institutions and their clients. It was noted that "both banks fulfill all the Central Bank's standards with a margin and keep a high liquidity cushion", and "the results for the nine months of this year showed that both banks are profitable and stable."
“Gamification in communication with customers gives us the opportunity to offer a new model for the use of banking products and services. We believe that we have set a new trend, and we see great potential for the development of this area in the financial sector,” explained the head of the Retail Business block of Promsvyazbank in today’s commentary. Vyacheslav Gritsaenko.
Growing credit risks
As FederalPress previously reported, as of April 1, 2017, the assets of PJSC Promsvyazbank under international financial reporting standards (IFRS) amounted to 1.2 trillion rubles, and equity (capital) -144 billion rubles. At the same time, the main shareholder of the bank is still Promsvyaz Capital B.V., which owns 50.0343% of the ordinary shares of Promsvyazbank, another 11.7457% of the shares - from the European Bank for Reconstruction and Development, 10% - from NPF "Future ", 9.9999% - from NPF "SAFMAR" and NPF "Doverie", included in the same group of persons, and 10% - PJSC MKB within the framework of REPO.
Meanwhile, according to financial experts, not everything is so rosy, and there are a number of problems that cannot but affect the current state of affairs of this financial institution.
“Let's consider the reporting of Promsvyazbank under IFRS for the first half of 2017. According to these reports, the bank's loan portfolio in the first half of the year amounted to 785.25 billion rubles, which is only 0.3% more than the loan portfolio in the first half of 2016. That is, the growth of the loan portfolio on an annualized basis is very small. At the same time, 9% of the issued loans have a delay of more than 90 days, such loans can already be classified as bad. This value is higher than the average for the banking sector, where the share of loans overdue by more than 90 days is about 5%. However, compared to the same period in 2016, the share of overdue loans in the total loan portfolio decreased from 9.3% to 9%. That is, there is a reduction in the share of "bad" loans in the first half of this year, which is positive, but it is very insignificant, since the volume of lending compared to the first half of 2016 at the bank did not increase much, and the share of "bad" loans is not much decreased, - the deputy director of the analytical department of the Alpari company clarified in a commentary to FederalPress Natalya Milchakova.– There are certain concerns about the quality of Promsvyazbank's client base. The vast majority of corporate clients the bank lends to are real estate and retail businesses. But with significant economic shocks and the collapse of the ruble, these industries are the most vulnerable in terms of their solvency, since they operate on the domestic market. Although the risks of a new devaluation of the ruble are now very small, and the Russian economy is recovering from the crisis, it means that the financial situation of these industries will improve.”
Forced capitalization
According to experts, by the end of this year, Promsvyazbank will still have to resolve issues with the size of its own funds, since the capital adequacy ratio for the country's leading credit institutions will be increased in the new year. Also an alarming signal, although not critical, according to financial analysts, is the recent downgrade of Promsvyazbank's rating by Moody's from Ba3 to B2, and the rating outlook to "negative".
“We believe that the bank has problems, but much depends on the ability of its shareholders to increase the bank's capital and prevent the outflow of depositors,” said leading expert Tatyana Milchakova.
In turn, the international agency S&P in early November also downgraded Promsvyazbank's long-term credit rating to B+ with a negative outlook. Among the main factors, the rating agency's analysts name the weakening of Promsvyazbank's business position due to the prolonged negative information background around it, the tightening of regulatory requirements, as well as the uncertainty regarding the further development strategy and the departure of a number of top managers in recent months.
“In my opinion, the more this topic is discussed in the media, the more difficult it will be for the bank to resolve current issues against the backdrop of clients’ concerns about the stability of a financial institution,” said an analyst at the Finam group of companies in a comment to FederalPress. Sergey Drozdov. – It is worth noting that already in the current situation, due to the prevailing negative information around the bank, PSB lost about 60 billion rubles due to the outflow of customers. Nevertheless, Promsvyazbank has good indicators in terms of interest margin and profit. As for the sale of part of its assets, the representatives of the bank said that this was out of the question and PSB could carry out additional capitalization at the expense of the bank's profits.
This was also confirmed by Promsvyazbank's main co-owner Dmitry Ananyev, who in a recent interview with Reuters said that Promsvyazbank has recently been focused on retaining customers and accumulating liquidity, and is also preparing to replenish capital from profits to comply with the requirements of the Central Bank.
“The second half of the year is not developing in the easiest way due to the fact that we are forced to focus on retaining customers and accumulating additional liquidity at the bank,” Dmitry Ananiev specified. - One-day shocks were up to $300 million - this was in August. But then, as a rule, these funds are returned. We haven't watched liquidity as closely as we do now for a long time. Now, on average, according to the results of three months, about 240 billion rubles is available liquidity.”
According to him, in October of this year, the total outflow of funds from corporate and retail customers amounted to about 20 billion rubles, or about 2% of all customer funds on the bank's balance sheet. However, earlier the banker stated that the decision of the S&P rating agency "is rather understandable, but does not fully take into account the long-term prospects of Promsvyazbank."
“Risks in the private sector of the banking system have increased significantly. We need to take decisive steps to restart and sustainable development of the bank, - the Banki.ru portal quotes the statement of the Chairman of the Board of Promsvyazbank Dmitry Ananiev. - These changes are due not only to our desire to quickly adapt to the new situation, but also to the vision of the group's development for the future in several years. Any changes create certain risks in the short term, but growth in the future is impossible without them.”
Meanwhile, this autumn, in October, Promsvyazbank postponed the planned merger with Vozrozhdenie Bank, explaining this by the unfavorable market situation. “We thought that our positive event in the form of a merger was devalued against the backdrop of general nervousness and a completely different merger between Otkritie and Binbank. We decided that both us and the clients of Vozrozhdenie Bank would be calmer if the merger takes place against a different background,” commented Dmitry Ananiev.
Moreover, the majority shareholders of Promsvyazbank and Bank Vozrozhdenie issued an official rebuttal about the sale of Vozrozhdenie.
“The majority shareholders of Promsvyazbank and Bank Vozrozhdenie officially declare that the sale of Vozrozhdenie Bank is not being considered and no such negotiations have been held. We perceive any materials in the media about a possible sale as attempts to manipulate the market,” the official statement of the co-owners of these credit institutions emphasizes.
FederalPress will be watching developments.