Grave state of Tatfondbank was discovered much too late

6 march 2017 | Rossiyskaya Gazeta

Friday saw the revocation of the banking operations license of one of the backbone banks in the republic of Tatarstan, Tatfondbank. The bank was rated among the top-50 financial institutions in the Russian banking sector in terms of the amount of assets and managed RUB 75 billion worth personal deposits and RUB 44 billion worth funds belonging to companies and organizations.

Daniil Nametkin
Daniil Nametkin
Department for Expert Analytics

 "Tatfondbank's financial statements were outstanding, for a period of four years it reported an overdue rate for its main credit portfolio of just about 3% (3.3% as of the last reporting date), which is far less than the average for the banking sector as a whole (6.9%)," expert Daniil Nametkin, an expert with the Analytical Center, said, commenting on the situation for a Rossiyskaya Gazeta correspondent. Once again the grave financial condition of a major bank was discovered much too late due to the inadequacy of the system the Bank of Russia uses to assess the quality of assets, the expert believes.

According to the analyst, since mid-December the government of the Republic of Tatarstan has been negotiating with the Bank of Russia about the ways of the bank’s financial rehabilitation, including resolution and a possible merger with the region's other largest bank AK Bars. The Bank of Russia estimates the bank has a capital of RUB 97 billion, but it would then take RUB 220-230 billion for the resolution of Tatfondbank. Another reason why the situation at the bank may have deteriorated so suddenly may have been the suspension of operations at the Peresvet bank that Tatfondbank had some RUB 5 billion invested in through bonds, an amount close to 15% of the bank's own capital. This situation proves once again that even as the performance of the banking sector is stabilizing, even major banks are still facing risks of a fast deterioration in their financial situation, Mr. Nametkin believes.