OREANDA-NEWS. June 17, 2013. Deputy Head of the Federal Antimonopoly Service (FAS Russia) Andrey Kashevarov addressed the XXII International Banking Congress – “Financial Stability: Micro- and Macro-Aspects”.

In his report on the “Main Areas of the Work of the Antimonopoly Authority on the Banking Market”, Andrey Kashevarov, in particular, highlighted the current problems in the banking sector associated with additional barriers in normative legal acts for relatively small banks.

As Mr. Kashevarov pointed out, these barriers prevent development of small and medium banking business and, as a consequence, restrain development of the banking market in general.

To get access to particular financial resources and to exercise certain banking services, the banks must meet the following requirements:

- Have a certain share of the state in their authorized capital

- Reach a certain level of the bank’s own funds (capital) (from one to 20 billion Rubles)

- Possess a general license for banking operations

- Exercise banking activities for a particular period

- Be assigned a long-term credit status rating by an international rating agency.

At the same time, according to the Deputy Head of FAS, meeting the above requirements cannot prove a high level of a bank’s financial stability and solvency; therefore, this approach to selecting banks cannot be considered competitive.

One of the consequences of this approach is lack of liquidity experienced by small and medium banks, especially in the period of crisis. Searching for the means to eliminate the deficit, certain banks are engaged in unfair competition. For instance, they attempt to attract clients by advantageous conditions and then worsen the conditions due to difficulties with execution of initially accepted obligations.

FAS is undertaking robust efforts to make changes to the relevant normative legal acts.

In particular, Andrey Kashevarov said that FAS had devised a draft Law aimed at excluding advantages for the state banks from the Family Code, the Federal Law “On Guardianship and Protective Services” and the Federal Law “On Additional Guarantees for Social Support to Orphaned Children and Children without Parental Care”. At the moment the draft Law is being prepared for submission to the State Duma of the Russian Federation.

Also, according to Andrey Kashevarov, the antimonopoly authority is considering excluding anticompetitive norms from other legislative acts: the Tax and Housing Codes, the Federal Law “On the Foundation for Reforms in Housing & Utilities Sector”, the Federal Law “On Customs Regulation in the Russian Federation”, which contain mandatory requirements to the amount of the bank’s own funds and the period of exercising banking activities.

“To this purpose, the antimonopoly authority is working on alternative criteria for selecting banks that would ensure equal competitive conditions for operations on the market”, said Andrey Kashevarov.

“Unlike the funds of physical persons that are subject to mandatory insurance by the state, the funds of legal entities require additional protection. Therefore, it is expedient to raise the standards for the banks but they should be based on relative indicators of their work”, pointed out Andrey Kashevarov, and added that “the approach elaborated by FAS can also be used at the level of by-laws, particularly, "for selecting banks to deposit budgetary means and the means of extra-budgetary fund”.