Eurasia Regional Committee Current Topics in Eurasia İlhami ÖZTÜRK Board Member of Savings Deposit Insurance Fund Turkey Chairperson of IADI Eurasia Regional Committee March 14, 2018 Kyoto, Japan
Outline I. Eurasia Regional Committee Countries II. Organization III. Coverage IV. Resolution Process V. Eurasian Economic Union VI. Activities All information and data in the presentation are based on the latest data and information available between December 31, 2015 and December 31, 2017. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 2
I. Eurasia Regional Committee Countries Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 3
Eurasia Regional Committee (EARC) Countries Country Institution Status Armenia Armenian Deposit Guarantee Fund Observer Azerbaijan Azerbaijan Deposit Insurance Fund Member Belarus Agency of Deposit Compensation Observer Georgia Law on Deposit Insurance System not in IADI no info available Kazakhstan Kazakhstan Deposit Insurance Fund Member Kyrgyz Republic Deposit Protection Agency Member EARC Vice Chair Moldova Deposit Guarantee Fund in the Banking System not in IADI Mongolia Deposit Insurance Corporation of Mongolia Member Russia Deposit Insurance Agency Member Tajikistan Individuals' Deposits Insurance Fund Observer Turkmenistan Deposit Insurance System not in IADI no info available Turkey Savings Deposit Insurance Fund Member EARC Chair Ukraine Deposit Guarantee Fund Member Uzbekistan Individuals Bank Deposit Guarantee Fund not in IADI Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 4
II. Organization Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 5
Organization All Deposit Insurance Systems in EARC Countries are Government legislated and administered All Deposit Insurance Agencies in EARC Countries have independent legal structure Deposit Insurance System mandates are: Armenia, Azerbaijan, Kyrgyz Republic, Tajikistan, Uzbekistan have pay box mandates Belarus, Kazakhstan, Moldova, Mongolia have pay box plus mandates Russia, Turkey, Ukraine have loss minimizer mandates As Additional Key Powers, Belarus, Kazakhstan, Russia, Turkey, Ukraine are the Resolution Authority. Belarus deals partly with supervision, Kazakhstan and Moldova provides partly financing, Kazakhstan has partly administration responsibilities and Turkey deals with recoveries Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 6
Organization 1200 1000 800 600 400 200 0 1097 441 246 42 8 21 22 14 5 24 8 7 Number of Employees Armenia Azerbaijan Belarus Kazakhstan Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey Ukraine Uzbekistan Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 7
Organization There are only 3 large scaled Deposit Insurance Agencies in EARC Countries with the number of employees of more than 100: Russia 1097, Turkey 441, Ukraine 246 There are 5 medium scaled Deposit Insurance Agencies in EARC Countries with the number of employees between 10 100: Kazakhstan 42, Mongolia 24, Belarus 22, Azerbaijan 21, Kyrgyz Republic 14. There are 4 small scaled Deposit Insurance Agencies in EARC Countries with the number of employees less than 10: Armenia 8, Uzbekistan 8, Tajikistan 7, Moldova 5 Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 8
II. Coverage Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 9
Coverage: DIA Member Banks/ Institutions Type Country Armenia Azerbaijan Commercial Banks Investment Banks Islamic Banks Microfinance Institutions Rural Banks / Community Banks Savings Banks Belarus Kazakhstan * Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey Ukraine Uzbekistan * Kazakhstan has Islamic Banks, however KDIF does not cover Islamic Banks. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 10
Coverage: DIA Member Banks/ Institutions Number 900 800 700 600 500 400 300 200 100 0 784 118 20 43 24 30 25 41 40 11 14 25 Number of Deposit Taking Institutions Armenia Azerbaijan Belarus Kazakhstan Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey Ukraine Uzbekistan Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 11
Coverage: Membership All Deposit Insurance Agencies in EARC Countries have Mandatory Membership, with the exception of one bank in Ukraine where the State directly guarantees one State Bank. With the exception of Russia and Ukraine the number of deposit taking institutions insured by the Deposit Insurance Agency in EARC Countries ranges between 10 50. Russia has 784 deposit taking institutions insured and Ukraine has 118 deposit taking institutions insured. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 12
Coverage: Total Amount of Insured Deposits 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 9,93410,533 296.090 105.644 937 1,480 1,453 374 160 126 8,059 Total Amount of Insured Deposits (in USD millions) Armenia Azerbaijan Belarus Kazakhstan Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey Ukraine Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 13
Coverage: Total Amount of Insured Deposits and Eligibility Only Russia and Turkey have Total Amount of Insured Deposits of more than USD 100 billion. Azerbaijan, Belarus, Kazakhstan, Mongolia and Ukraine have Total Amount of Insured Deposits between around USD 10 billion and USD 1 billion. Armenia, Kyrgyz Republic, Moldova and Tajikistan have Total Amount of Insured Deposits of less than USD 1 billion. Savings Accounts and Foreign Currency Accounts are eligible for coverage by all Deposit Insurance Agencies. None of the Deposit Insurance Agencies cover Interbank Deposits. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 14
Coverage: Maximum Coverage Limit 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 unlimited unlimited Armenia Azerbaijan Belarus Kazakhstan 30,091 28,314 Kyrgyz Republic 24,305 Moldova 20,672 19,355 Mongolia Russia Tajikistan 10,023 8,400 Turkey Ukraine 2,900 1,984 305 Uzbekistan Maximum Coverage Limit (per depositor per institution) in USD Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 15
Coverage: Maximum Coverage Limit Maximum coverage limit varies from below USD 1.000 to unlimited. Belarus and Uzbekistan have unlimited coverage. Median Maximum coverage limit is USD 20.014. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 16
III. Funding Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 17
Funding: Systems, Rates and Size All Deposit Insurance Agencies have Ex ante Funding Systems. Azerbaijan, Belarus, Kyrgyz Republic, Moldova, Mongolia, Tajikistan, Uzbekistan use flat rates to assess premiums on member banks/institutions. Armenia, Kazakhstan, Turkey and Ukraine use differential rates to assess premiums on member banks/institutions. Russia uses a combined rate to assess premiums on member banks/institutions. The Actual Fund Size as a percentage of total covered deposits ranges around 5 10% with the exception of Russia where the Fund Size is negative. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 18
Sources of Additional and Back up Funding Sources of additional or back up funding vary for Deposit Insurance Agencies in the Eurasia Region. A number of Deposit Insurance Agencies have Back up Funding from the Central Bank, Treasury and Ministry of Finance. There are Deposit Insurance Agencies that receive loans from Development Banks, International Organizations and Private Banks. Some Deposit Insurance Agencies charge extraordinary premiums or advance premiums to be deducted from the future premium obligations of the banks. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 19
IV. Resolution Process Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 20
Resolution Process : Tools and Methods Country Purchase and Assumption Open Bank Assistance Bridge Bank Liquidation Deposit Reimbursement Armenia Azerbaijan Belarus Kazakhstan Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey Ukraine Uzbekistan Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 21
Resolution Process : Tools and Methods Resolution tools and methods available for bank resolution in Eurasia Region: All Eurasia Region countries reimburse depositors. All Eurasia Region countries except Mongolia liquidate banks. All Eurasia Region countries except Belarus and Tajikistan make Purchase and Assumption transactions. Armenia, Belarus, Kazakhstan and Russia provide Open Bank Assistance. Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia and Ukraine establish Bridge Banks. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 22
Resolution Process : Authorities Deposit Insurance Agencies in Azerbaijan, Belarus, Kazakhstan, Russia, Turkey and Ukraine have the authority to act as administrator/ conservator. Again, Deposit Insurance Agencies in Azerbaijan, Belarus, Kazakhstan, Russia, Turkey and Ukraine have the authority to act as receiver/liquidator. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 23
Resolution Process : Governance of Resolution Framework Country Bankruptcy/ Insolvency Laws Special Resolution Regime Banking Law Armenia Azerbaijan Belarus Kazakhstan Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey * Ukraine Uzbekistan * Banking Law (No:5411) includes special provisions for the resolution of failed banks. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 24
Resolution Process: Number of Failures 450 424 400 350 300 250 200 150 100 50 0 26 12 0 3 5 2 5 8 1 0 Number of Failures 100 Armenia Azerbaijan Belarus Kazakhstan Kyrgyz Republic Moldova Mongolia Russia Tajikistan Turkey Ukraine Uzbekistan Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 25
Resolution Process: Number of Failures Russia and Ukraine have the highest number of member bank/ institutions failures since the inception of the Deposit Insurance System. Russia has 424 failures and Ukraine has 100 failures. Turkey and Azerbaijan follow with 26 failures and 12 failures. Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Moldova, Mongolia, Tajikistan and Uzbekistan have less than 10 failures. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 26
IV. Eurasian Economic Union Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 27
Eurasian Economic Union Eurasian Economic Union (EAEU) Treaty was signed in 2014, entered into force in 2015 and the harmonization is to be completed by 2025. Members of the EAEU are Armenia, Belarus, Kazakhstan, Kyrgyz Republic and Russia. The Eurasian Economic Union is an international organization for regional economic integration. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee, March 14, 2018 28
Eurasian Economic Union A key area of harmonization of legislation and practices is the common economic space that includes the harmonization of regulation of financial markets that includes banking sector and that again includes the harmonization of deposit insurance systems and recovery and resolution regimes of deposit taking institutions. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee, March 14, 2018 29
Eurasian Economic Union EAEU Members have different deposit insurance systems and recovery and resolution regimes of deposit taking institutions. Key areas of harmonization are scope and amount of coverage, triggering event and timing of reimbursement, DIF target ratio, differential premiums, governance, creditor rights and priority of claims. IADI Core Principles and Deposit Guarantee Schemes Directive are the benchmarks. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee, March 14, 2018 30
V. Activities Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee (EARC), March 14, 2018 31
Activities Deposit Insurance Agencies in EARC countries work to comply with the international financial regulations and practices, IADI Core Principles for Effective Deposit Insurance Systems and FSB (Financial Stability Board) Key Attributes of Effective Resolution Regimes for Financial Institutions to improve their Systems. Kazakhstan Deposit Insurance Fund hosted the 10th EARC Annual Meeting, International Technical Seminar and Conference on Resolution on September 4 6, 2017 in Almaty, Kazakhstan. Savings Deposit Insurance Fund of Turkey will host the 11th EARC Annual Meeting, International Conference and Technical Assistance Workshop on Crisis Management on May 7 9, 2018 in Istanbul, Turkey. EARC countries cooperate and collaborate under IADI and EFDI depending on the membership as well as in terms of bilateral, multilateral working visits and MOUs with EARC countries and non EARC countries. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee, March 14, 2018 32
Activities EARC countries collaborate in the Financial Safety Net cooperate with the International Institutions including World Bank, IMF, USAID, OECD in terms of Technical Assistance and Training. make internal and external IT improvements. promote public awareness on various media. work to increase financial literacy and improve financial consumer protection, hold trainings and seminars for universities, schools, banks as well as the public. Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee, March 14, 2018 33
Thank You! Savings Deposit Insurance Fund (SDIF) Turkey Eurasia Regional Committee, March 14, 2018 34