OREANDA-NEWS. September 27, 2010. An official presentation of the State Corporation “Deposit Insurance Agency” (DIA) Representative Office in the North-Caucasian Federal District (NCFD) was held in the city of Pyatigorsk. DIA General Director, A. Turbanov; DIA Deputy General Director, A. Melnikov; DIA Deposit Insurance Organization Department Director, A. Abramov; Head of DIA NCFD Representative Office, Ahmed Zhamanov, took part in this presentation.  

Earlier DIA representative offices were opened in the Southern, the Volga-River, the Urals and the Siberian federal districts. DIA is represented in the North-Western federal district by “St. Petersburg Fund for Deposit Insurance System and Commercial Banks Development”. 

The representative office basic objectives are: providing information and clarifications about DIA goals and objectives; interacting with local authorities, the Bank of Russia territorial branches, and DIS participating banks; assisting in the arrangement of deposit insurance payouts to depositors; and conducting receivership (liquidation) process in credit institutions located within the district’s respective territory. 

The Agency Representative Office in the North-Caucasian Federal District was opened in accordance with the DIA Board of Directors’ decision adopted in June 2010. Ahmed Zhamanov, who has more than 18-year practical experience in banking, was appointed as the head of the representative office. 

Presently 43 DIS member banks are in operation in the NCFD. Since the time of DIS establishment two insurance events have been registered in the North-Caucasian Federal district. Currently one bank is undergoing liquidation process in this district.  
Reference Information:
• Insurance event at KB “Rubin” (OOO), the city of Makhachkala, took place on March 9, 2007 in connection with its banking license revocation by the Bank of Russia on March 7, 2007.  
• Insurance event at KB “Antares” (ООО), the city of Makhachkala, took place on April 6, 2007 in connection with its banking license revocation by the Bank of Russia on April 5, 2007.  
• KB "Mineralovodsky" (ООО), the city of Mineral Waters, was declared insolvent (bankrupt) in accordance with the Stavropolsky Region Arbitration Court Award, dated April 16, 2010. The State Corporation “Deposit Insurance Agency” was appointed a receiver of this bank. 
Brief Information about the Deposit Insurance System  
Establishment of the mandatory deposit insurance system (DIS) is a special government program implemented in accordance with the Federal Law “On Insurance of Households’ Deposits in Banks of the Russia Federation”, which came into force on December 23, 2003. 
Its basic objective is protecting public savings placed into deposits and accounts with banks located on the territory of the Russian Federation. 
The deposit insurance system operates in the following manner. When an insured event occurs at any bank (its banking license is revoked), its insured depositors are entitled to receive a compensation from the Agency – up to the established limit. The bank’s depositors are entitled to receive the above compensation within 14 days after the insured event date. 
In accordance with the law, the deposit insurance coverage amounts to RUR 700 thousand. When calculating the coverage amount - deposits denominated in foreign currency are to be converted to rubles as of insured event date based on the Bank of Russia exchange rate. The bank’s counterclaims against an insured depositor should be deducted from the deposit amount. 
During the bank liquidation process - settlements with depositors for the amount exceeding received compensation will depend on the condition of the remaining bank’s assets. 
The DIS financial foundation is its Mandatory Deposit Insurance Fund. At present the Fund’s resources amount to RUR 116.9 billion. The following are the main Fund formation sources: 
• the Russian Federation property contribution;
• insurance premiums paid by member banks;
• income derived from investment of the Fund’s resources. 
Membership in the deposit insurance system is mandatory for all banks licensed to attract households’ deposits. As of September 15, 2010 - 914 banks are DIS members. As of August 1, 2010 the total volume of households’ accounts placed with these banks amounts to RUR 8.6 trillion.  
Since the time when the DIS started its operations 89 insurance events have taken place. Among them 50 banks are located in the Moscow region and 39 banks - in other regions, including 2 banks on the North-Caucasian Federal District territory.  
The total number of insured depositors in the above failed banks amounts to 641000 people. The total amount of insured deposits in the failed banks is about RUR 23.3 billion, of which RUR 23 billion have been paid to depositors as of present. The balance has not been claimed by depositors so far. In all failed DIS member banks compensation payouts started no later than in 14-day period as set forth in the law.  

43 DIS member banks are registered in the North-Caucasian Federal District. 
About 520 thousand households’ accounts are opened in these banks. The average deposit size with the NCFD banks is estimated at the level of RUR 28.2 thousand. 
The household deposits amounting to RUR 700 000 and less constitute 99.6% of the total eligible deposits. It means that the deposit insurance system guarantees safety of savings of vast majority of the district inhabitants. 
In January-July 2010 household deposits in NCFD banks grew by 17.5%, which is somewhat higher compared to the deposit growth rate in the Russian banking system (15.1%).