In December 2013 it was the tenth anniversary of the Federal Law No. 177 "On insurance of the nationals' deposits in the Russian Federation's banks". Clause 12 of article 12 thereof titled "Procedure of reimbursement on deposits" expressly states the functions of agent banks, being the financial lending entities that act on behalf and at the cost of the DIA and make payments to the offended depositors. It is quite evident that the Agency needs such volunteering assistants. Still the preferences as vested to the banks acting as the DIA agents are at the back stage.

NOT EVERYONE CAN BECOME AN ASTRONAUT

As a rule, mass media reflect only the facts of assignments of these or those financial entities as the authorized DIAs, leaving the role of a wallflower for the process to select the agent banks. In practice the procedure consists of two phases: accreditation and tender. Not every national market participant is capable of over­coming  the selection phases and becoming the delegate of the Agency.

"In order to be accredited at the A gency, the bank shall be in line with specific requirements: it shall be a member of the deposit insurance system, it shall have been carrying out business on raise of cash from individuals to deposits at least for three years, it shall comply with the mandatory rates and regulations set by the Central Bank as of the reported monthly dates, for the recent year", informs the vice-president, deputy director of the retail business department in VTB24 Yulia Demenyuk. "During the same period the bank shall have no prescriptions from the Bank of Russia as for imposition of interdiction or restriction measures regarding the raise of monetary funds and opening of bank accounts for individuals, or no prescriptions on the bankruptcy arrangements. Besides, the entity shall not have any overdue debts to all levels of budgets within two financial years prior to the mandatory payment's tender bidding date."

The president-chairman of the board of SMP Bank, Dmitriy Kalantyrsky summarizes the terms as necessary for cooperation with the DIA, interposing the focus onto a somewhat different direction."The Agency lodges quite rigorous requirements to the agent banks; there is rather a huge list of them. The major thing is the availability of enough offices, capacity of rapid and high quality servicing to a large number of clients, presence of the relevant IT-system," emphasizes the specialist.

It is notable that among 62 agent banks (being the total number of them at present) there are both the federal level players, and relatively small lending organizations, which may be referred to the so-called regional banks. Of course, the edge is very windy there, however we may call Lipetskkombank (Lipetsk region), Bystrobank (Republic of Udmurtia), Ural Financial House Bank (Perm Krai) and some others the regional banks. Alongside the banks can pay the reim-bursements both to the depositors of the regions that their head offices are situated in, and to the customers dwelling or located in other areas of the country.

Accreditation of financial institutions wishing to become DIA agents is made on a continuous basis, its result lies in the agreement conclusion between the parties. So that the already accredited entity will be able to pay out the compensation, it will have to take part in the tender for the agent banks to be selected under a specific insured accident. "All the accredited banks may take part in tender for making of insurance payments, however the victory of a company in the tender depends on various factors such as the payment experience, network of affiliates, liquidity parameters, etc. However, in view of the complicated process, in addition to just a desire to take part in the tender, the bank will have to be capable of paying out the insurance compensation in terms of all the demands as laid by the Deposits Insurance Agency," notes the head of the deposit products development unit in Alfa Bank Marina Nadtochyi.

In the event that the license is recalled from the banking institution, the DIA will send the offer for the accredited banks to take part in the tender, with the bid form attached to the letter. Accepting the same, the agent will send the filled in form to the DIA, as well as other essential documents, in particular the accounting statement and list of affiliates. The points will be assigned to the bank resulting from the test. The participant that has gained the maximal amount of points will be appointed the payer at a specific insured accident.

MULTI-TASKING BANKS

Concerning the topic of compensation payments, it is worth mentioning about the DIA agent banks, which for one reason or another have never taken a single part in reimbursement of cash to depositors. Such banks include Gazprombank, OTP Bank, Uniastrum Bank. Nevertheless many lending organizations have become winners of tender more than once. Thus Alfa Bank is presently paying out the compensations to former customers of ODINBANK, Transinvestbank, Basmanny Bank and BUSINESS BANK.

The director of the retails business and retails network management department of Rosgosstrakh Bank, Vilen Lee, has told us about the bank's insurance payments." Currently our entity is making payments to the depositors of European Industrial Bank, MI-Bank, and Slavyansky Bank. We have already finished paying the insurance compensations to customers of eight lending entities which took part in the deposits insurance system: Sootechestvenniki Bank, ZelAK Bank, Baltcredobank, Sotscreditbank, South Trade Bank, Agrokhimbank, Kurganprombank and Donbank - for the total amount of RUR 3.8 bln."

The first payments of NOMOS-BANK were made in 2008, at that time the payments were made towards the depositors of Mira-Bank and Integro Bank. Further, as the director of the retail business products development and support department, Alexander Bazanov, has detailed, the funds were reimbursed to the customers of Sudkombank, Petro-Aero-Bank, Wolga Deutsche Bank, MIB, Galabank, Vympel, Neopolis, Rusich and Ratibor banks.

VTB24 is the agent bank to many financial organizations, as recently as in autumn 2013 we commenced paying the insurance compensations to the customers of the following banks: PUSHKINO, Pervy Express, Master Bank, outlines Yulia Demenyuk (VTB24). It is worth mentioning that it is far from the first case for VTB24 that it acts as the DIA agent bank: the company made its first payments back to 2006, which year was not calm at all, when it repaid the money to the depositors of Sakhalin-West Interregional Joint-Stock Bank for Economic Cooperation.

Dmitriy Kalantyrsky (SMP Bank) informs: "The first time that SMP Bank becomes the agent bank is in December 2013. Together with VTB24 we have won the tender for payment of reimbursement to a portion of depositors of the Project Financing Bank. It is our first experience that will make it possible for us to work out the relevant competences in that matter."

WHERE DOES THE INTEREST LIE?

As of November 2013, the amount of the deposits insurance fund made RUR 232.7 bln. The procedure and terms for remittance of the DIA money to the agent bank's account are set by the contract of agency. In a number of cases, the finan­ciallending entity pays out the compensation to depositors out of its funds, which will be reimbursed later. This circumstance is not an obstacle for the banks that find a lot of reasons to have cooperation with the DIA.

"In past we never had an experience of such payments, mainly it was connected with quite a difficult process and necessity of considerable finalizations of information systems," recalls Marina Nadtochyi (Alfa Bank). In this connection, for a long time we were declining the participation in tenders as conducted by the Deposits Insurance Agency. But in the end, we have resolved that such a large bank as we have should entertain an opportunity of making insurance pay­ments. We have worked out the systems, changed the processes and trained our employees in addition."

Alexander Bazanov (NOMOS-BANK) also dwells upon the motivation for cooperating with the DIA: "The decision was made at the moment when NOMOS-BANK, already being a successful bank in the corporate segment and having the expertise in serving a large base of individuals, was working at growth of its share at the retail market. Along with the expertise with private customers, our advantage lay in the fact that we were a large-size and stable organization with a good history and the developed network of affiliates. We strived to make ourselves known to the market, to enhance the potential clients' base and to prove that we were capable of prompt and high quality solutions of any tasks within short terms".

The Bank of Moscow's press service has informed: "Such a decision was approved back by the former executives of the bank. As practice shows, a particular number of depositors, for whom the insurance compensation is made, allocate their monetary funds in the agent bank. It is a kind of a chance to expand one's own clientele. Besides, the DIA makes certain demands to the agents, therefore inclusion of a company into the DIA list of agent banks will provide a positive effect on its image."

Some other DIA agent banks also emphasize the importance of the image factor. "For us in the first line it is a question of reputation. Trust from the DIA in that situation is a great advantage to the lending entity's image. Alongside one should keep in mind that the bank will use its own funds for payments as our liquidity affords us to do it, and we are going to receive the reimbursement from the DIA only in a couple of months", says Dmitriy Kalantyrsky (SMP Bank).

Vilen Lee (Rosgosstrakh Bank) shares the point of his colleagues from other lending entities. "In addition to the evident benefit: an opportunity for growth of the clientele and enhancement of its own deposit portfolio, one can underline the reputation strength of the agent bank upon participation in the insured accident. Undoubtedly, the financial institution that has assumed the liability to pay out the compensation to depositors of other banks undergoes the tender selection procedure, and accordingly it has not only the developed network of branches, necessary resources and options for serving a large number of customers, but is the bank with a high level of reliability," outlines the specialist.

If one takes into account the reputation factor, the majority of banks see the major advantage of cooperating with the Deposits Insurance Agency in the expansion of their own clients' base. "Naturally, acting as the agent of the DIA has provided the bank with an expanded clients base and attracted new customers, and many of them are still served by us and use our product line," says Alexander Bazanov (NOMOS-BANK).

Yulia Demenyuk (VTB24), in her turn, gives us particular figures: from 30% to 60% of depositors receiving the insurance compensation in VTB24 decide to remain the clients of the agent bank. The price figure, according to the expert's words, depends on many factors: region of the insurance compensation payment, market situation, attitude to the bankrupt bank, etc.

Subject to the fact the Russian deposits insurance system is quite young (it is only 10 years old), the experts arrive at an optimistic conclusion: both the DIA and the agent-banks' group are justifiable. The analysts do not preclude the growth of the DIA agents as time goes by. Never­theless, as shown by the recent years statistics, there are more than enough of such banks being ready to pay to the offended customers on a continuously basis and on time, which means to a large extent an extinguisher of panics among the depositors at the bank market.