New law on express loans to be less profitable for banks, more secure for consumers

New law on express loans to be less profitable for banks, more secure for consumers

MOSCOW, November 11 (RIA Novosti) - The Russian Finance Ministry has developed a draft law introducing new regulations for express loans making the procedure less profitable for banks and more secure for consumers, a Russian respected business daily said.

The ministry published on its website a draft law it has been developing since 2004, Kommersant said. "The existing legislation and procedure for consumer credit... did not take into account the internationally accepted specific rights of the borrower," the ministry said.

If the law is adopted, banks will have to meet a list of new requirements in procedures to issue loans, including notifying borrowers of overdue debts no later than one week after its occurrence and strictly through a registered letter.

"One letter with a notification costs some 30 rubles ($1), and if a market average delay is 10%, while a bank has some 5 million customers, costs of mail would be $ 500,000 per month, this is an incredible amount," a member of Renaissance Credit bank management Sergei Korolyov said.

However, the head of the International Confederation of Consumer Societies, Dmitry Yanin said some banks are intentionally not notifying borrowers for a long time so the size of the debt plus penalties and interest continue to grow.

Text notifications by phone or e-mail are not an option as the bank cannot prove that notice in court.

The draft bill also bans sending credit cards if it cannot be "unequivocally established that it [the card] was received by the borrower personally or by his legal representative."

"And this seems logical since one cannot determine whether the borrower received his card or not, some banks are starting to charge a fee for this, and an outstanding debt occurs without the knowledge of the potential beneficiary," a deputy chairman of Absolut Bank Emil Yusupov said.

Another restriction stipulated by the bill concerns insurance. Banks working with unsecured loans are required to exclude insurance from its agreements. "With mortgage and auto loans, insurance contracts are issued as separate documents, and with consumer loans, usually, this condition is included in the consumer credit contract, but in fact this is a fake insurance as the payment for insurance cases for such loans tends to be zero, so fees for insurance are an additional income source for banks," Yusupov said.

The level of rates and risks in the consumer finance sector will be largely determined by the degree of elaborating the legislation, which for several years proved controversial, leading to the delay in adopting the bill for more than six years.

Business, Energy or Environmental regulations or discussions

Kuzbassrazrezugol, Polyus Gold, Rosneft: Russian Equity Preview

By Jason Corcoran

Nov. 11 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index slid 1.3 percent to 1,574.63 at the close in Moscow. The dollar-denominated RTS Index fell 1.3 percent to 1,637.50.

OAO Kuzbassrazrezugol (KZRU RU): Russia’s second-largest coal producer, plans to boost exports to Asia, Chairman Andrei Bokarev said in an interview in Seoul yesterday. Its shares added 0.3 percent to 35.6 kopeks on the RTS Stock Exchange.

OAO Polyus Gold (PLZL RX): Gold futures fell the most in three weeks, losing 1.6 percent to $1,388.10 per ounce as the dollar strengthened to the highest level in a month against the euro, eroding the metal’s appeal as an alternative asset. Polyus, the country’s biggest gold producer, lost 1.8 percent to 1,612.15 rubles on the Micex Stock Exchange.

OAO Rosneft (ROSN RX): Crude oil rose to a two-year high, adding as much as 1.4 percent to $87.89 per barrel after a report showed an unexpected decrease in inventories as imports declined and refineries bolstered fuel production. Rosneft, Russia’s largest oil producer, retreated 1 percent to 221.25 rubles on the Micex Stock Exchange.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Last Updated: November 10, 2010 22:00 EST
November 11, 2010 10:53

MICEX share-trading opens on upswing as oil prices rise

MOSCOW. Nov 11 (Interfax) - Russia's MICEX Stock Exchange opened on Thursday with the MICEX index gaining 0.6% to 1584 points in early trading as oil prices worldwide continued to climb, and RTS-listed Russian oil pipeline company Transneft's (RTS: TRNF) prefs leading the growth pack.

By 10:31 a.m. Moscow time, the RTS index was also up - 1.12% to 1655.3 points - and most benchmark shares had posted early gains of within 1%.

VTB (RTS: VTBR) was up 0.9% on the MICEX, Gazprom (RTS: GAZP) had risen 0.6%, Gazprom Neft (RTS: SIBN) 0.7%, Norilsk Nickel (RTS: GMKN) 0.7% as well, Lukoil (RTS: LKOH) 0.5%, Polyus Gold (RTS: PLZL) 0.9%, Rosneft (RTS: ROSN) 0.7%, Rostelecom (RTS: RTKM) 0.4%, Sberbank of Russia (RTS: SBER) 0.7%, Surgutneftegas (RTS: SNGS) 0.2%,and Tatneft (RTS: TATN) 0.7%.

Transneft prefs were up 9.6% at 39,282 rubles per by 10:37 a.m. on Thursday, following their inclusion on the MSCI Russia Standard weighted 0.81%.

Stock in IDGC Holding, despite its unexpected non-inclusion on the MSCI Russia, was down 4.2%.

The MSCI Russia IMI includes shares in OJSC OGK-2 (RTS: OGKB) (weight 0.35%), Mosenergosbyt (RTS: MSSB) (0.05%), and Pharmacy Chain 36.6 (RTS: APTK) (0.07%). These shares were up from 1% to 2% on the MICEX Thursday morning.

The bank Vozrozhdenie's (RTS: VZRZ) shares bucked the trend, however, dropping 0.6%.

Cf