’s management’s mistakes led to poor reaction to trouble, Probusinessbank says

24 December 2008 (11:17)

‘The share of non-core assets that our newly bought banks used to run is insignificant on our Group’s scale. So the better part of these bank’s assets is quite manageable. The thing is, a number of their management’s mistakes led to their inability to promptly react to the dramatic deposit outflow,’ Probusinessbank’s President Sergey Leontiev said in the course of his interview to Kommersant.

Probusinessbank (aided by the Deposit Insurance Agency, the state-run corporation) acquired Gazenergobank and that had experienced grave liquidity problems.

‘Firstly, the banks’ management did not think of getting ready for the crisis in advance by creating a liquidity cushion. Secondly, the banks were unable to get the quick refinancing at the Central Bank because they were too small. Thirdly, both banks employed the traditional personnel hierarchy, thus making it impossible for the staff to operate stably during a troubled period. All it takes to start the rumors circulating is one director’s inconsiderate behavior towards his or her subordinates. As a result, a crowd of customers will be demanding their money bank as soon as the very next morning. The bank tries to save the day by demanding a written appointment and putting people on the waiting list and the crowd only gets bigger. So one ends up nearly going mad because of all the hassle and has neither nerve nor the money to deal with the assets,’ Leontiev explained.

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