The problems of Binbank began in the spring of 2017. The bank asked the state regulator for reorganization, as it was not able to continue financial activity in the Russian Federation. In the media, information about the unstable situation of the lender "leaked" in August 2017. Since then, there have been rumors about a possible revocation of the Binbank license. What happened to the famous brand, and what are the forecasts of financial specialists regarding it now?
Binbank Ratings
In 2017, the crisis affected the company's position. Being on the verge of revoking the license, Binbank lost a significant part of its assets, which affected the lender's rating.
In 2018, the S&P Global Ratings rating agency improved the institution's performance relative to unsecured debt. The rating "B" previously assigned by the agency has been changed to "B +". S&P Global Ratings commented on the decision that the situation with Binbank is gradually stabilizing, which affected the nature of forecasting activities.
But S&P Global Ratings negatively assesses Binbank's position in the business and classifies it as a risk group. Nevertheless, the agency notes the possibility of financing the lender by the state regulator, which reduces the risks for depositors and investors.
In December 2018, Binbank took 16th place in the asset rating (according to banki.ru). In a month, he lost almost 2% of his assets.
But the most important, according to Binbank employees, is the customer rating on banki.ru. According to the results of 2018, he took 1st place among the reviews of Russian financial institutions. Customer focus and high service allowed the well-known bank to "not fall" in the eyes of investors in the midst of the financial crisis of the company.
Problems of the banking sector and their impact on Binbank
The reorganization of 2017 was for Binbank a salvation from possible bankruptcy. Since 2013, Russia began a massive "purge" in the financial sector. Financially unstable commercial banks ceased to pass regulatory checks, as it was before. This led to a massive outflow of customer deposits in organizations with a state share.
Commercial banks, such as Binbank, Otkrytie, Rost Bank, began to experience significant difficulties. In 2015-2016, the situation only worsened. Clients began to contact Binbank branches in order to withdraw cash from their accounts.
As soon as assets were reduced to a minimum, the lender was forced to seek help. Like other similar institutions, he needed the participation of the Central Bank. In connection with the current situation in the country, the regulator had to immediately decide on the future of Binbank. It became obvious to management that without the support of the Central Bank of the Russian Federation, they would not be able to save the company.
What are the reasons for the failures of Binbank?
The irrational business model of Binbank only contributed to the deterioration of the position of the lender. The institution has been actively lending business projects to owners, investing in most of its assets. Such a policy could well lead to the revocation of the Binbank license.
The Central Bank of the Russian Federation noted in its letters to the company that the share of assets issued to owners as loan funds amounted to more than 700 billion rubles. But the leadership of Binbank has denied information about this level of involvement in high-risk assets. On behalf of the bank, there were statements that the maximum amount of funds issued to subsidiary business projects does not exceed 20 billion rubles.
Consequences of the 2017 crisis for Binbank
Without assets with high liquidity, the outflow of equity instantly leads the creditor to a crisis, which happened with Binbank. In addition to lending, part of Binbank’s assets was allocated to construction and real estate — unstable sectors of Russian production.
Investors trusted Binbank, therefore, with the withdrawal of a huge share of assets, the creditor as a whole managed to maintain its position in the Russian market. But the unrest among customers began to intensify. In September 2017, the situation became critical.
At the same time, the amount of funds stored until the outflow on the accounts of individuals allowed Binbank to develop in the banking sector of the Russian Federation. In 2017, it amounted to 539 billion rubles. Another 18 billion rubles - funds from the budget. With such a margin of financial strength, the lender was among the top 15 Russian banks in 2017 in terms of assets.
But the rapid decline in assets provoked a wave of crisis in the bank. It dragged on until the end of the first quarter of 2018. The decisive factor in restoring customer confidence and financial strength was the return of funds issued to Rosta Bank.
"Growth Bank". Reorganization
Binbank branches continued to provide stable customer service. However, this did not last long. After the media reported that the institution had applied for reorganization, the depositors “rushed” to the branches of Binbank to close their accounts. The massive outflow of capital, together with a number of internal problems, contributed to the deterioration of the situation.
At Binbank in Moscow, customers increasingly began to ask questions about the future of the company. The managers assured citizens that there was no cause for concern. But before that, information appeared on the Network that Growth Bank needed reorganization. Binbank assumed the responsibilities of a creditor of a “weak” bank, which in its position could not affect the company's assets.
According to analysts, the financial recovery of Rost Bank, which began to experience difficulties in 2014, was an important reason why Binbank’s economic situation was recognized as critical. Binbank was appointed as an interbank lender in the process of reorganizing the company in 2014, and after 3 years it itself experienced difficulties with assets.
Settlements with "Growth Bank"
On February 1, 2018, Rost Bank was to return more than 700 billion rubles to the creditor. In 2014, the Agency for Deposit Insurance was engaged in financing unstable financial organizations.
A large amount of interbank credit affected the position of Binbank. But the Central Bank helped both structures restore their position in the economic market of the Russian Federation. In March 2018, Rost Bank fully repaid the loan provided by Binbank. The situation has been settled.
The news of the liquidation of Rosta Bank's debt was warmly received by Binbank customers in Moscow and other cities. As the managers of the company wrote in the comments, with the influx of funds to pay off loan debt, depositors who hastened to withdraw cash from their accounts admitted to the haste of their decisions.
Lender Development in 2018
In January 2018, the company's earnings were negative: capital “went negative” by 36 billion rubles. But at the beginning of 2018, the probability of revoking the Binbank license was 30-40% lower than in the summer of 2017, despite the negative profit indicators. The reason for this was the approval of the reorganization of the Central Bank of the Russian Federation and the new company policy.
March 2018 became the key to the restoration of the lender. In March 2018, the Central Bank allocated Binbank more than 56 billion rubles. In the same month, Rost Bank fully repaid the debt. Binbank's reliability and good reputation have been partially restored. Investors again trusted the institution with their capital.
What do the problems of Binbank and Discovery have in common?
Belonging to a group of significant creditors, Binbank did not hide its difficulties from the Central Bank and openly applied for reorganization in September 2017. The Central Bank a month earlier helped another well-known participant in the financial market of the Russian Federation, Otkritie FC Bank, cope with the crisis.
Like Binbank, Otkritie experienced serious asset difficulties. Media scandals only fueled rumors of a possible loss of license. But the shares in the banking sector at Otkrytie and Binbank are significant (3.2% and 2.3% respectively in 2017), and the brands are well-known. These reasons do not allow the regulator to refuse to improve creditors, as was the case with the Ugra bank. In 2017, Ugra occupied less than 1% of the market in Russia (0.4%), which caused the Central Bank of Russia to be uninterested in stabilizing it.
The situation with banks from the top 15 is different: Otkritie and Binbank are popular with depositors. But after media reports in August 2017, individuals hastened to withdraw assets, as a result of which the financial "holes" of creditors only worsened. The Central Bank decided to support both companies by offering funds from the Bank Sector Consolidation Fund.
This is a modern version of economic recovery in the Russian market. Such measures can not only help strengthen the position of creditors, but also restore the faith of customers in the reliability of Binbank and Otkrytie. One of the options for the further development of companies was the merger of brands.
The Unification of Discovery and Binbank: Reasons
After the reorganization by the Central Bank of "Discovery" and "Binbank" in the media, news appeared about the creation of a new enlarged bank. It was formed after the merger of the two studied. This caused the revocation of the Binbank license on January 1, 2019.
There are several reasons for the merger of famous brands:
- Raising the level of assets due to the absorption of one well-known brand - Binbank.
- Returning customer confidence in commercial lenders.
- Strengthening ratings among Russian banks.
According to the new concept, the bank will be formed under the brand name FC Otkrytie. The Binbank brand will lose its relevance. That is, he has almost ceased to exist. The addresses and phones of Binbank will remain the same until April 2019. After that, the details of the organization will change.
Consequences of the merger for bank customers
The regulator has hopes for a unification under the brand "Discovery". According to the official website of the new institution, Binbank branches will operate as before.
Customers who pay a loan in the first quarter of 2019 can transfer funds to old accounts. The new details of Binbank will appear in April 2019. In the process of merging accounts, FC Otkritie will remain the same. Payers can find out the new details of the creditor on the official website of FC Otkrytie.
Why did the change affect only the Binbank brand? Such information was not officially disclosed by the Central Bank. But experts suggest that the concept of "Discovery" is more modern and interesting for customers. Therefore, the details of Binbank are changing, as well as the concept of branches and ATMs. The new brand will include banking products of both companies. Despite the fact that the merger officially took place on January 1, 2019, in fact, the brands will be merged only after 2-3 months.