The volume of bank deposits has risen beyond 8 trn. roubles. Last year the volume of monetary means of population on the bank accounts increased on 26,7%, this year according to the analyst prognosis, the growth will make 23-25%. We remind that we met the crisis with about 5 trn. roubles on the accounts of individuals in the banks.

Welfare of the Russians seems to improve at the pre-crisis speed, and the life works out for the best. However, it is unclear who brings money to the bank. Unemployment is still high, and salaries do not grow. It comes out that a group of rich men saves these trillions, but the real situation is far from the pre-crisis happy past. And these trillions do not make the bankers happy. And it even appears that some banking companies declare on the termination of accepting deposits and on the imposing of commissions for the account replenishment. This meens they do not need money from population any more.

It is clear. Credit organizations have no more power to service expensive deposits of population. Western funding sources are still closed for the majority of banks. Bankers have taken “physical” deposits under 20-22% per annum; and they can credit on such rates for “plastic” credits at the best case. Mortgage loans and auto loans appear to be much cheaper and they may be given to anyone. Besides, consumer demands on massive long-term borrowings are still few.

Stable Growth

Positive market dynamics as for bank deposits is secured by the following three factors: striving of population to save more, interest rates development on deposits and reallocation of resources of population out of more risky tools (open market) into less risky ones. If a consumer's behaviour pattern was typical for the population before the crisis, then after it people began to save more.

“Universal interest rate development on deposits also played its role as well as an increased attention of banks to this segment: Western sources were closed for them, the balance of accounts of legal entities was also less”, - tells Irina Velieva, the manager of Credit Institutions Rating Service “Expert RA”.

Besides, trust of the Russian citizens to the banking sector has generally increased because of the deposit insurance system (DIS) and the increase of the minimum amount of insurance indemnity up to 700 thous. roubles. “AIS has a very important function as a guarantor in case of bankruptcy of its participants, and provides a powerful psychological support to private investors», - says Michael Voronko, the department manager of marketing and electronic bank services of “URALSIB».

A competition for the depositor really transforms: from competition by rate it turns into a competition with services. In spite of the fact that the level of interest rates is the basic parameter of depositary proposal, the Russians begin to pay attention to other options: the possibility of refilling the account, the possibility of withdrawal of some part of deposit, capitalisation of interests, special conditions at the pre-term closure of the deposit, bank reliability, reputation of the brand, and developed retail chain. “In the nearest future on conditions of constant decrease of interest rates (state policy together with the market environment affect it significantly) the complex products will become well spread because the bank product lines are well developed, - says Ilya Zibarev, the deputy administrator of retail business block of Alpha-bank. – In the nearest future the deposit should turn into the family budget management tool from the standard means of saving. Complex products not only drive up the demand on nondeposit bank services, but promptly allow to create the base of potential customers. Also the quality of service plays a not insignificant role at the rendering of services, as remote client servicing will get the future development”.       

Besides, the cycle of bank clients has changed, as not many Russian citizens have improved their wellbeing. “The depositors base has narrowed, a narrow group provides the deposits growth, - explains Oleg Ivanov. - These are the people who belong to the above middle class, those, who buy goods of premium class”.

Besides, according to the data of credit rating agency “Expert RA”, large Russian banks belong to the market leaders of bank deposits. At present a concentration in the deposit segment continues, thus posing the risks for the existence of small and unknown to population participants at the market. TOP-30 banks have 75% in the volume of funds attracted from physical persons. On April 1, 2010 the following banks formed a quintuplet of leaders by the volume of attracted deposits: Sberbank, VTB 24, Bank of Moscow, GPB and Raiffeisenbank. However, according to the results of the previous year, the part of Sberbank descended lower than the psychological frontier to half of the market (for 01.01.2010 the volume of deposits is equal to 49,5% of the bank deposit market). Thus, a more conservative interest policy of Sberbank has manifested itself. Therefore, if in the beginning of the financial crisis a redistribution of deposits from private and foreign banks into the banks with the state share took place, now the population studies the propositions at the deposits market more thoroughly for obtaining of the highest income. And state banks may lose their position here.

Global Danger

It causes a concern on how much the part of deposits in the structure of cumulative bank passives has grown. Their volume stayed the same in the course of crisis and now it makes about 30 trn. roubles, as before. But if before the crisis the part of deposits made 1/6, now it is approximately ? of all bank passives. “This is a potential accrual of liquidity risks. For example, in case of panic, - says Oleg Ivanov, the vice-president, the director of center for the development of banking industry of the regional bank association “Russia”. - About 25% of banking system is absolutely liquid up to now. In case of panic at the market the situation will become twice as more harmful as we observed”.

Besides, banks, in order to attract clients, left the practice of closing interests for the pre-term withdrawal of a deposit. Banks became more flexible, that is why the depositors have no barriers for withdrawing money due to the fear of losing interests.

In spite of dangers, which emerged now, there is an absolute advantage in such a competition, which developed for depositors during the crisis. Thus, according to Oleg Ivanov, banks and depositors understand now that a deposit is a complex tool, which may have up to 10 sufficient conditions. “It is not only the rate and term of a deposit but also such options as opportunity to refill, early withdrawal, interest rates, conditions and terms, - explains Ivanov. – We have a possibility and we may choose”. Thus, as he says, trip tickets, lottery tickets etc. may be attached to banking agreements. But in this case the bank may attract attention of Federal Service on Surveillance for the consumer rights protection and human well-being for the dictated terms.

Interest Rate Scissors

According to Irina Velieva, the means of individuals played the role of a lifebelt in the years 2008-2009. But now the deposits turn into the time-delay bomb.

Banks are not afraid of population panic. But there is one more risk, which only starts to appear. “Deposit is a quite expensive passive, - she says. – The loan interest rates get down, and it becomes more difficult to service interests on deposits. Banks with a high rate of deposits from individuals are thus at risk to get into the interest rate scissors”.

Besides, According to the words of Pavel Samiev, the general director deputy of “Expert RA”, the effect of interest rate scissors will have a rather short term effect – within half of a year.

“The pressure of those passives, which the banks took during the crisis is strong especially if there is an opportunity to renew the balance on the deposit on the same conditions, - says Samiev.

– Therefore, now banks prefer valuable security instead of credit financing”.

But in spite of all difficulties a lot of banks are interested in the work with deposits. This is, for example” Tinkoff Credit Systems Bank”, which is ready to sent the employee to any place in Moscow in order to sign a banking agreement. “Moreover, it is necessary to find a replacement for the  unsecured credits of Central Bank of Russia, which will be cancelled by the end of 2010, - says Pavel Samiev. – A low interest rate is a variant, and the flow will still be constant”. “After the crisis, together with the constant reduction of rates on refinancing, we observe the reduction of rates on deposits (and our bank is no exception), - explains Ilya Zibarev. – This all has lead to the decrease of savings activity in population. Despite of this fact, deposits of physical entities are still a source of long-term bank passives”.

It is clear that the growth of rate of interest cannot be everlasting. A systematic reduction of rates began from the end of 2009, which was the result of stabilization of banking system on the one hand, and activity of Central Bank as a regulator of banking market on the other hand. In March 2010 the average weighted rate on deposits in roubles (over one year) made 7%, while in the pre-crisis period the average weighted rate made 9-11%.

Nevertheless, the reduction of rates is not abrupt and dramatic, but progressive and rather commercial. According to the opinion of “Expert RA” analysts, the rates on deposits will stabilize and during the year 2010 will stay on the level of 6-8%. Some increase in rates this summer is a certain signal of achieving “the bottom”.  This means that if the government does not restrain the competition artificially (controlling the size of interest rates), the market will become balanced by itself, when every bank will define its supportable level of risk on the passive banking operations.

Regulation and Perspectives

According to the opinion of Irina Velieva, the state should promote the increase of bank stability, and defend the population from the dishonesty risks of some credit organizations. Such task can be completed with the help of the following measures: the increase of limit size on deposit insurance and irrevocable bank deposits, introduction of differentiated scale of charges to the deposit insurance system. Such a scale may make a banking market of deposits more secure for the clients: banks with more risks will pay more money, therefore, they will take more care to their risk management. It should be said that there are 21 unprofitable banks for May 1, 2010. But profitability is one of the criteria of inclusion into the deposit insurance system. And introduction of irrevocable fixed-term deposits and development of savings certificates will allow to extend the range of low risk long-term investment tools within the limits of such a banking system.

“Now we begin to understand, that the regulation of deposit segments, which previously existed, is not sufficient enough”, - says Oleg Ivanov. He thinks that those Ural banks with the commission of 7% for the refilling of account can be understood. “Is it legal? – he asks. – But there is no answer. – There is no clear regulation. Banks interpret the legislation efficiently for themselves. In order to develop the market further, it should be stated what is normal and what is not”.

Generally the development of market in the year 2010 will be restricted by three factors. First, the government was focused on the growth of credit financing in the year 2010. A constant decrease of refinance rate is the proof. Secondly, the banks are interested in the constant flow of money from population. The attraction of means of physical entities is a hard burden for many credit organizations now, especially for those, who increased their deposit bag in the crisis period on the excess interest rates. Third, people feel a certain stability and gradually return to banks.