OREANDA-NEWS. September 21, 2010. IFC, a member of the World Bank Group, supports the development of the nonperforming loan market in Russia to help banks release capital and get back to normal lending. As part of this effort, IFC's Bank Advisory Program in Europe and Central Asia contracted RusRating to review and analyze problem loan market potential in Russia. 'We see good potential for developing a transparent market for nonperforming loans - both retail and corporate - originating from the largest banks as well as smaller players. It will help the banking sector, investors and the economy at large', - commented Richard Hainsworth, CEO of RusRating.
According to the report, the volume of nonperforming loans in Russia will reach USD 70 billion by the end of 2010. So far, the development of the Russian problem loan market has been slow with only 2% of NPLs, or approximately USD 1bln currently being offered for sale. Market players lack a uniform valuation methodology to assess bad loans; banks are reluctant to sell; investors often can't make informed decisions on the available portfolios.
'Today, when access to finance is limited, banks need to be able to release capital from reserves created against non-performing loans to expand lending to the real sector,' said Patrick Luternauer, IFC Regional Leader for Financial Markets Advisory Services in Eastern Europe and Central Asia. 'We believe that the report produced by RusRating will help banks, investors and specialized collection agencies speak a common language and will add the necessary impetus to the non-performing loan market development'.
IFC's Bank Advisory Program in Europe and Central Asia was launched in 2009 in partnership with the governments of Austria, Switzerland, The Netherlands and Finland. The program has delivered training to over 1,000 senior and middle-level banking professionals, disseminating good practice on risk management and approach to distressed assets. IFC experts are also working on legislative and regulatory aspects of creating a transparent and functional market for distressed assets to facilitate post-crisis recovery in the region.
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