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. Last Updated: 07/27/2016

Bank Insurance Bill in Danger of New Delay

The chance of the deposit insurance law passing this year slipped again as representatives from the Federation Council suggested they would block the bill and bankers said deputies acted on purely pre-election motives.

The State Duma passed an amended version of the bill in a second reading Wednesday.

The deputies voted to retain state guarantees on all Sberbank deposits until 2007, not just on those accounts opened before the law comes into effect, as stipulated in an earlier version backed by the government and the Federation Council, the upper house of parliament.

The Duma version "gives Sberbank clear advantages vis-?-vis other financial institutions for attracting people's savings," which is anti-competitive and contradicts the Russian Constitution, deputy chairman of the Federation Council's financial committee Igor Provkin said in an e-mail to The Moscow Times.

Provkin said the bill, if approved in a third Duma reading, "will have a hard time passing the Federation Council, since the members of the council are not affected by pre-election populism. At the very least, the [finance] committee will recommend that it be sent back."

His views were echoed by other committee officials Thursday, as well as by some bankers.

The deputies "destroyed the compromise that was so difficult to hammer out," said Yevgeny Ivanov, president of Rosbank, one of the participants in months-long negotiations on the bill. "Such a version of the law should be rejected now and reviewed next year."

Deputies defended the vote.

"We must not, with our own hands, worsen the situation for millions of Sberbank account holders," Yabloko deputy Mikhail Zadornov said on Wednesday in the Duma .

The bill gives the Central Bank the right to conduct special inspections to allow or reject banks from entering the insurance scheme.

Most analysts said this was the most important part of the bill, as it would allow for greater regulation of the country's fragmented banking sector and help depositors choose between healthy and weak banks.

Some bankers, however, insisted the inspections would take too long.

"We have serious doubts that the Central Bank could conduct these inspections quickly and professionally," said Andrei Yemelin, executive vice president of the Association of Russian Banks, adding that current regulations are already too extensive.

Nevertheless, Yemelin called for passage of the bill: "It would be easier to correct it later than to start anew," he said.

"If I could be sure this law would be adopted within the next six months, I'd wait [for a more liberal version]," said Andrei Ivanov, bank analyst at Troika Dialogue. As it is, he supports the bill's adoption now.

But Natalya Orlova, an analyst at Alfa Bank, said that the bill is unsatisfactory to too many sides and may fail at some future legislative stage.