gazeta

Advisers to Monitor

Hundreds of Banks

By Simon Shuster

STAFF WRITER

The Central Bank will send out hun­dreds of on-site advisers to banks in a bid to police them and help them to analyze risk, a senior bank official said Monday.

Each representative will study a spe­cific bank and report their findings to the Central Bank's oversight department, which will make any punitive decisions, Alexei Simanovsky, the head of the de­partment, said at a news conference.

Andrei Kozlov, the first deputy chair­man of the Central Bank who was shot dead in a contact-style hit in September, had lobbied for on-site advisers of this kind, and a pilot project was started dur­ing his tenure. Kozlov's crusade to clean up the banking sector is widely believed to have cost him his life. Analysts said the institution of advisers would be a test of the Central Bank's ability to carry on his reforms.

About 5 percent of the country's more than 1,100 banks had their licenses revoked last year, mainly over money laundering.

Still, Simanovsky said he believed banks would not be forced to take on the advisers. "If the bank does not want to say anything about itself... the adviser will be recalled," he said.

But if accepted, the advisers will be responsible for "gaining a deeper under­standing of what's happening in banks and developing closer relationships with the banks' employees," said Simanovsky, who was recently appointed to the Cen­tral Bank's board.

In the hope of avoiding favoritism, each adviser will stay with a bank for no more than three years — a term that some experts said was still too long.

"You want the analyst to understand the bank in detail, but on the other hand, you don't want them to become too close and too friendly to the bank," said Richard Hainsworth, head of RusRat-ing, an independent bank-rating agency. "This is always a risk with analysts."

The adviser "will not be an overseer, but an assistant, a mentor," Anatoly Aksakov, head of the Association of Re­gional Banks, said at Monday's news conference.

Gennady Melikyan, the first deputy head of the Central Bank, was set to at­tend the news conference, but did not. Appointed to his post Thursday, Melikyan has taken over for Kozlov and the advisers will fall under his jurisdiction.

Alexei Frenkel, a prominent banker who was charged last month with order­ing Kozlov's death, has lashed out against the Central Bank in open letters, accusing it of corruption and saying Kozlov's true killers were within its ranks.

Simanovsky said Monday that inves­tigators working on the case had fin­ished their probe of the Central Bank. He added that a new probe based on Frenkel's recent accusations had "not yet" been conducted.

Alexei Mamontov, a friend of Frenkel's and the head of the Moscow International Currency Association, was on hand at the news conference to heckle the officials speaking.

"This adviser business is a red her­ring," Mamontov said on the sidelines of the conference. "They are meant to make us believe that the oversight de­partment is doing its job... even though the Central Bank's decisions go con­stantly back and forth."