OREANDA-NEWS. April 01, 2010. meeting of the State Corporation “Deposit Insurance Agency” (DIA) Board of Directors chaired by Sergei Ignatiev, the Bank of Russia Chairman, was held.

The meeting reviewed and approved DIA Annual report for 2009. The document contains detailed information about DIA activities during the reported year with the focus on Deposit Insurance System (DIS) condition, use of Mandatory Deposit Insurance Fund’s (DIF) resources, execution by DIA credit organizations’ receivership management (liquidator) and failure prevention functions, and the review of the Agency’s financial statements.

In accordance with the law, the Annual report will be submitted to the Russian Federation Government and the Bank of Russia, and its summarized data along with the balance sheet will be published in the “Rossiyskaya Gazeta”.

Members of the Board of Directors took into consideration DIF resources investment information in the fourth quarter of 2009. In connection with partial markets restoration after the crisis events, which was discerned during the above period, DIA conducted more active investment policies: by reducing the share of low yield deposits with the Bank of Russia and increasing the share of the Russian issuers’ bonds. Purchase of stock was not carried out. Average weighted yield of DIF resources during 2009 without taking into account securities revaluation was 11.7% per annum, and it was 23.6% per annum with the revaluation of investments in securities.

The Board also heard information about investing temporary idle resources appropriated for implementing the Agency’s participation in preventing bank failures. Out of RUR 200 billion designated for the above purposes, as of January 1, 2010 RUR 135.6 billion was used. The remaining temporary idle funds were invested in high yield financial instruments, including – RUR 35.9 billion in the deposits with the Bank of Russia. The average weighted yield of the above investments in 2009 was 9.2% per annum without revaluation, and 9.3% taking into account securities revaluation.

Based on the results of 2009 operations after profit tax of RUR 3.9 billion was paid, DIA net profit reached RUR 26.3 billion, which enabled the Agency to cover the losses for 2008 of RUR 12.8 billion. According to the current Rule for cost financing and DIA profits’ use, approved by the Board of Directors, the retained profit of RUR 13.5 billion was designated to replenish DIF resources and the Russian Federation property contribution funds, which are to be used to implement measures aimed at credit organizations’ failure prevention with the purposes of the Federal law №175-FZ “On Additional Measures to Strengthen the Stability of the Banking System Through December 31, 2011”, including as provisioning for expected losses.

The Board of Directors took into consideration information about bank deposit market monitoring during the second half of 2009. The results of the above period testify to the cessation of negative crisis impact on the bank deposits’ market, as well as to the public’s more active and prudent savings behavior. Households’ deposits in DIS member banks during the second half of 2009 grew by RUR 996.7 billion (during the whole year – by RUR 1,579 billion) and reached RUR 7,464.3 billion.

In accordance with the Russian President assignment, the Board of Directors adopted a number of decisions aimed at enhancing the Agency’s corporate governance. Thus, the Board approved key performance indicators (KPI) for DIA operations in the year 2010, which are aimed at enhancing DIA management personal liability for their operations’ results. The system of short-term and mid-term bonus indicators is envisaged, which will assess the efficiency of DIS operations, receivership management (liquidation) activities, bank failure prevention implemented measures, and earnings of temporary idle funds’ investment.

During the Board meeting - information was presented about implemented by DIA bank failure prevention measures and the use of the Russian Federation property contribution funds for executing the above measures during November 2009 – January 2010. In connection with completing financial rehabilitation measures for “Nizhegorodpromstroibank”, as of January 1, 2010 DIA has been involved in rehabilitation of 14 banks.

The Board also reviewed other issues related to DIA activities.