$55 billion disappear from Russian banking system

The bankruptcy of several hundred banks and pension funds, which took place in recent years, left a $4 trillion rubles ($55 billion) hole in the Russian financial system.

The real value of the assets of 414 financial institutions, which are undergoing liquidation, is only 15% of the value indicated on their balance sheet, said First Deputy Director General of the Russian Deposit Insurance Agency (DIA), Andrei Melnikov.

Of the 4.7 trillion rubles ($65 billion) of declared assets, only about 700 billion  ($9.63 billion) are backed by real value, and the remaining 85% is just a fiction.

In the banks that have been liquidated recently, the value of assets is much higher and reaches 50%, and in some cases even 80%, said Melnikov.

But there are still banks that can not pay even the first-tier creditors. "Not quite dummies, but close," Melnikov said.

In order to find money in the pockets of former owners, who often leave Russia for London or Monaco, the DIA introduced a new procedure for bringing them to liability. Bankers and top managers who disclosed information about the ultimate beneficiaries and property owners will be able to count on a reduced punishment.

The mechanism, according to Melnikov, has already worked: "People have begun to apply. There are already clearly recorded testimonies, including as part of criminal cases."

By the end of the year, the DIA plans to complete the bulk of liquidation measures in those banks where possible, to sell assets, write off illiquid property, complete enforcement proceedings. As a result, only complex procedures should remain such as disputes about bringing to justice primary owners, criminal trials, sale of complex property.

"There are about 150 such banks. This is quite a serious load, but we will fulfill this task," Melnikov said.

  Russia, Kremlin