OREANDA-NEWS. October 03, 2013. The conference just ended was convened by Sviaz-Bank (Vnesheconombank Group) and the International Analytics Unlimited Bank Club and sponsored by their partners – Invest Project LLC, EOS LLC (EOS Group), and the Russian Auction House OJSC.

Anatoly Milyukov, ARB Executive Vice President, who unveiled the conference, said that industrial production had entered into a stagnation period and that it had to be rescued from recession by lending mechanisms. Declining lending growth rates are pushing banking risks up instead of depressing them. The Association of Russian Banks, Anatoly Milyukov said, was drawing up a model to be followed for restructuring debts owed by individuals.

Debt handling is an inherent part of work undertaken by successful and proactive lending and financial institutions. This work must proceed at a high level of quality. The need for pretrial and out-of-court debt settlement was one of the rational ideas voiced at the conference. Debt settlement was among the subjects raised in the report delivered by Sergey Akinin, Director, Sviaz-Bank’s Problem Assets Management Department, who acted as conference moderator. He spoke about the Bank’s relationships with debtors. “We are trying to induce, rather than force, the customer to meet our demands,” Sergey Akinin said.

The department’s uncommon practice is that it centralizes and coordinates activities of all parties involved at each phase of settlement. Alexander Kiselyov, Chief of Gazprombank’s Medium Business Department, highlighted the proactive approach as well: “The debt repayment rate is falling rapidly depending on delinquency time. It is important, therefore, to identify potentially problem loans.” To this end, the speaker said, information about the customer must be gathered from as many sources as possible – on the Internet, in the media and databases (Arbitration, Consultant, and the Unified State Register of Legal Entities), and by tracking the movement of funds in the customer’s account with the Bank.

Gennady Dongayev, Head of Sviaz-Bank’s Collateral Service, emphasized the significance of staff quality: “Specialists’ skills help prevent emergence of many problems, for example, as early as recruitment of appraisal companies. The largest number of arguments arises over the appraisal of collaterals put up for sale. As a rule, appraisers choose the most expensive precedents for pledging purposes or use cost adjustments. A specialist can track down the trick and break off relations with the dishonest appraiser.”

Improving litigation is no less important. Oleg Ushakov, a lawyer with the Law Line Attorneys Bureau, and Yelena Dokuchayeva, Vice President, NO NAPKA (Nonprofit Association of Collection Agencies), General Director of the Sequoia Credit Consolidation CJSC, discussed legislative regulation aspects. Oleg Ushakov offered a look at inconsistencies of laws, for example, giving a loan to a borrower after he had taken out life and health insurance policies, with the premium to be paid by the borrower to the insurer regarded as the borrower’s damages to be recovered from the bank. In Yelena Dokuchayeva’s view, protection of the borrower’s rights is the dominating trend in the world, Russia included, today. The interests of banks and their customers, though, must be balanced. “Today, for example, the draft Individual Bankruptcy Law names 50,000 rubles as the litigation amount. This is far too little for the realities of our day.” Dokuchayeva also provided an outlook for the Consumer Credit Law and Debt Recovery Law going into force.

According to Mariusz Klosk, General Director of EOS LLC, the growth of debts bought by EOS LLC is sustained by banks, in the first place.

Stanislav Volkov, Head of the Lending Institutions Rating Section, Expert Rating Agency, said: “Even though the quality of portfolios in retail banking is falling, the Central Bank’s timely measures have reduced the probability of a bad debt crisis.”

Boris Zemlyanukhin, director for insurance of credit and specialized risks, Alliance Insurance Company, OJSC, told the audience about safeguards against a variety of risks arising from problem debts by special-purpose insurance programs used widely around the world, but so far little known in Russia.

The bad debt problem was examined from all angles at the conference – government regulation, banking practice, collection agencies, appraisal companies, lawyers, and insurers.

The conference was attended by over 100 persons.