Operation of Mandatory Deposit Insurance System

Performance of the mandatory system of insurance of household deposits in banks of the Russian Federation (hereinafter referred to as DIS) in the reporting year is characterized, first of all, by an increase of amount of insured events and volume of insurance payouts as a result of the growing instability of the Russian banking industry, related to the crisis phenomena in the global economy.

The structure of DIS’s membership has changed in the following manner. At the beginning of 2008, DIS had 934 member banks. During the reporting year, the Agency added 13 banks to the register of DIS members banks (hereinafter referred to as the bank register) which resulted from issuing licenses to them by the Bank of Russia granting a right to attract deposits from individuals. At that, 10 banks were excluded from the bank register: 3 of them due to termination of their activities as a result of their reorganization in the form of merger/acquisition; 7 banks were excluded because of their license revocation and completion of insurance payouts. The changes in structure of DIS member banks are indicated in Table 1.

Table 1. DIS member banks structure

Thus, as at the beginning of 2009 DIS had 937 banks registered therein. Among them: 44 inactive banks - as a result of insured events occurred, and 9 active banks that formally stayed in DIS but have forfeited their rights to open new accounts and take deposits from individuals. DIS member banks accounted for 99.6% of all funds placed by households on deposits and accounts with banks of the Russian Federation.

In this reporting year there was continued implementation of the strategic line in DIS development, which consists of successive increase of deposit insurance coverage and decrease in the rate of deposit insurance premiums, resulting from achievement of optimal ratios of basic financial and economic indexes of the deposit insurance system.

According to the Federal Law "On Amendments to Article 11 of the Federal Law "On Insurance of Household Deposits in Banks of the Russian Federation and to other Legislative Acts of the Russian Federation" No. 174-FZ of 13.10.2008 the deposit insurance coverage limit was increased from 400 thousand rubles to 700 thousand rubles for insured events that occurred after October 1, 2008. Furthermore, a rule was introduced which envisages full reimbursement of deposits up to the limit established by law rather than co-insurance which existed earlier.

As a result, the deposits (accounts) which are fully insured made by number 99.8% (in 2007 – 97.4%), by sum – 63% (the year before – 25.3%) of all insured bank liabilities to individuals. This fully complies with the main objective of the deposit insurance system to protect interests of mass depositors.

Since October 1, 2008, the quarterly rate of bank deposit insurance premiums to the DIS fund was reduced from 0.13% down to 0.1% of the calculation base (the Agency Board of Directors' decision of 23.09.2008). The forth quarter of 2008 was determined as the first settlement period for paying insurance premiums at the new rate.

Reduction of insurance premium rate allowed to decrease financial burden on banks resulting from their participation in DIS. In accordance with calculations in 2009 the banks collectively will be able to save up to 9 billion rubles on insurance premiums. Thus, the reached balance will be preserved in the ratio of the Agency's insurance liability and the size of the mandatory deposit insurance fund, providing the adequate safety margin for insurance payouts.

In connection with entry into legal force of the Federal Law "On amendments to the Federal law "On Insurance of Household Deposits in Banks of the Russian Federation and to other legislative acts of the Russian Federation" No. 270-FZ of 22.12.2008 proposed by the Agency approaches to realization of heirs' rights to insurance reimbursement received the legislative recognition, concept of bank counter claims subject to taking into account in the process of insurance reimbursement calculation, and grounds for introduction of changes into the register of the bank liabilities were clarified, more convenient for Agency and banks 25 days payment term for deposit insurance premiums upon expiration of calendar quarter was determined.