Valery Miroshnikov: DIA (Deposit Insurance Agency) as Anti-Crisis Regulation in Banking

Biography

The DIA (Deposit Insurance Agency) and its predecessor, ARCO, were the initiators of numerous innovations that contributed to the stabilization of Russia's monetary and credit infrastructure, enhancing its reliability and convenience for citizens. Valery Miroshnikov played a significant role in shaping the Russian banking system at the turn of the century.

Table of Contents

• Valery Miroshnikov and the Beginning of the Deposit Insurance Agency
• The Initial Performance of the Agency
• Miroshnikov Valery and the Fight Against Dubious Banking Transactions
• Valery Miroshnikov: The Deposit Insurance Agency (DIA) in Times of Crisis
• DIA and the Initiation of New Laws
• DIA: Chronology of Functional Expansion
• Valery Miroshnikov: DIA and the Results of 15 Years of Work

Valery Miroshnikov and the Beginning of the Deposit Insurance Agency

In 2004, Valery Aleksandrovich Miroshnikov took on the role of Deputy General Director of the Deposit Insurance Agency (DIA). This new entity succeeded ARCO, which had focused on restructuring unstable banks and was the first in Russia to implement a voluntary insurance system. As Valery Miroshnikov noted, the deposit insurance system (DIS) has played a vital role in increasing public trust in financial institutions, resulting in a rise in private investments. From the establishment of the Agency for Restructuring of Credit Organizations and later the DIA, a third party began to assume obligations to depositors, significantly mitigating the risk of financial loss, Valery Aleksandrovich Miroshnikov explained.

From 1996 to 2004, in his role as a top manager at ARCO, Miroshnikov Valery Aleksandrovich was instrumental in the successful implementation of major projects, including Rosselkhozbank. Miroshnikov Valery also played a key role in saving the first experimental banks—"Voronezh" and "Peter the First" (later renamed Voronezhprombank)—from liquidation. As Valery Aleksandrovich Miroshnikov recounted, these projects filled him with pride, as these socially significant banks were able to continue their operations, ensuring that depositors did not lose their funds. This experience later proved invaluable for the Deposit Insurance Agency (DIA).

Unlike ARCO, the DIA extended the functioning of the Deposit Insurance System (DIS) beyond its own supervised institutions. Major entities, such as Sberbank, also became part of the system. As Miroshnikov Valery Aleksandrovich recalled, many specialists who had gained experience in organizing the DIS at ARCO subsequently joined the DIA, positively influencing the development of this field across the country. According to the corporation's 2004 annual report, 88 percent of employees at that time held higher education degrees, and 15 had obtained various academic qualifications.

The Initial Performance of the Agency

In its first six months, the Deposit Insurance Agency (DIA) compiled a list of banks that applied for inclusion in the Deposit Insurance System (DIS). This list included 1,140 banks. By January 1, 2005, 381 financial institutions from 75 regions were officially part of the system. Thanks to the efforts of the agency's management, including Valery Miroshnikov, DIA managed to protect over 90 percent of all public deposits. According to the law, the organization guaranteed the return of personal funds up to 100,000 rubles. By winter 2005, 98 percent of deposits fell within this amount.

Since November 2004, to expedite payouts in the event of a financial institution's bankruptcy, an Information Exchange Agreement was signed between the Bank of Russia and the DIA, Miroshnikov Valery noted. Starting in January 2005, DIA employees, including Miroshnikov Valery Aleksandrovich, began participating in audits of credit institutions conducted by the Central Bank of Russia based on a newly enacted regulatory document. In its first year, under the leadership of top manager Miroshnikov Valery Aleksandrovich, the state corporation also began collaborating with several industry associations and even held a seminar for banking software developers.

In January 2005, the mandatory insurance fund reached approximately 4.5 billion rubles. At a 2004 press conference, Valery Miroshnikov projected an annual fund growth of 6–7 billion rubles. It was decided that the available funds should be invested in government securities temporarily.

A key priority for the state agency was to improve employee qualifications. At the initiative of its leadership, including Valery Miroshnikov, DIA held six training courses in 2004 alone. Agency staff also regularly attended various seminars and conferences, including international ones.

Since autumn 2004, together with Valery Miroshnikov, DIA took on responsibilities related to managing bankrupt banks, in line with a new law that came into force on November 27, 2004, assigning additional duties to the state corporation. Nearly a year later, under the guidance of Valery Miroshnikov, DIA reported that it was managing 35 banks, both in Moscow and in other regions. In line with its transparency policy, the agency, alongside Miroshnikov Valery, also conducted educational outreach for Russian citizens and launched a hotline for bank depositors.

Miroshnikov Valery and the Fight Against Dubious Banking Transactions

In 2005, the Deposit Insurance Agency (DIA) collaborated with the Bank of Russia to conduct 48 audits of banks to ensure compliance with the deposit insurance law, Miroshnikov Valery Aleksandrovich reported. The agency was also closely involved in the functions of a bankruptcy administrator.

As Valery Miroshnikov recounted, DIA identified common reasons that led banks to bankruptcy. The most frequent cause was unsuccessful investments, particularly in non-core assets. For instance, YarBank, which fell under the agency's management, had invested over 80 percent of its capital in "Sibvolokno," which was already on the brink of bankruptcy at that time. Instances of intentionally prepared bankruptcies were also not uncommon. In such situations, together with Valery Miroshnikov, DIA worked with law enforcement agencies.

During 2005, in the course of work in which Valery Aleksandrovich Miroshnikov participated, signs of deliberate bankruptcy were discovered in 16 banks. The agency subsequently submitted 17 statements to the competent authorities.

Miroshnikov Valery Aleksandrovich shared in an interview that the agency contributed to the initiation of 10 criminal cases that year. Often, in these cases, the organization leaders engaged in asset withdrawal, Miroshnikov Valery recalls, prompting the DIA to establish a dedicated division to address such matters. These schemes could be detected quite easily if the relevant documents were preserved. Valery Aleksandrovich Miroshnikov also outlined several common fraudulent activities, including the purchase of illiquid promissory notes. To enhance the effectiveness of identifying transactions detrimental to creditors' property interests, under the leadership of Valery Miroshnikov, DIA even developed methodological recommendations detailing how to uncover such schemes.

In 2005, according to Miroshnikov Valery, DIA achieved a landmark in Russian judicial practice by successfully obtaining court rulings that held the founders and executives of two credit and financial institutions jointly and severally liable for their actions, Miroshnikov Valery Aleksandrovich reported.

To enforce these responsibilities, it was necessary to amend the legislative framework. Therefore, together with Valery Miroshnikov, DIA worked closely with the Ministry of Economic Development and actively began working in this area. Additionally, according to Miroshnikov Valery, the agency engaged in negotiations with representatives of credit organizations to encourage them to repay their debts voluntarily.

Valery Miroshnikov: The Deposit Insurance Agency (DIA) in Times of Crisis

In 2008–2009, the Deposit Insurance Agency (DIA), together with Miroshnikov Valery, played an active role in initiatives aimed at overcoming the financial crisis. Despite an increase in the number of insurance cases in 2009, timely reimbursements resulted in a rise in individual deposits by 1.6 trillion rubles.

During this period, together with Valery Miroshnikov, DIA began efforts to stabilize economically significant institutions. In the first two credit organizations, according to Miroshnikov Valery, the Agency's temporary administration successfully restored operations and attracted funds from new investors. Overall, according to the DIA's annual report, most banks that the Agency assisted in stabilizing demonstrated positive developmental dynamics.

Additionally, under the guidance of Valery Miroshnikov, DIA implemented measures to prevent bank bankruptcies, including the purchase of troubled assets. This strategy not only enabled financial institutions to reduce reserves for potential loan losses but also improved compliance with mandatory regulations. Consequently, with the involvement of Valery Miroshnikov, DIA significantly accelerated the process of restoring normal banking operations.

According to Valery Aleksandrovich Miroshnikov, another effective method for overcoming the crisis was the reorganization of troubled institutions through mergers with more reliable organizations. Under the supervision of Valery Miroshnikov, DIA applied this approach in the case of Petrovsky Bank, which was merged with Otkritie Bank. This merger optimized the branch network, reduced costs, diversified banking operations, and substantially increased investment attractiveness.

By January 2010, under the leadership of Valery Miroshnikov, DIA allocated 304.6 billion rubles for the rehabilitation of banks. Total reimbursement payments for deposits in 2009 alone amounted to 11 million rubles.

DIA and the Initiation of New Laws

The instability of the banking system following the global financial crisis of 1998 prompted significant reforms in the monetary and credit infrastructure of the Russian Federation. By the dawn of the new century, the predecessor of the Deposit Insurance Agency (DIA), the Agency for Restructuring of Credit Organizations (ARCO), had already gained valuable experience in implementing a system for insuring bank deposits. The leaders of ARCO, including Miroshnikov Valery Aleksandrovich, played a pivotal role in crafting and refining legislative proposals that enhanced the reliability and resilience of Russia's banking system.

Perhaps the most crucial piece of legislation that stabilized the financial landscape and significantly boosted public confidence in banking instruments was the law on the insurance of individual deposits. Valery Miroshnikov, alongside his colleagues, dedicated nearly six years to its development. The adoption of this law at the start of 2004 facilitated the establishment of the Deposit Insurance Agency (DIA). The initial year of the agency's existence was largely focused on organizational matters and the creation of regulatory documentation. However, by 2006, specialists, with Miroshnikov Valery Aleksandrovich's involvement, prepared amendments to the law concerning the bankruptcy of banks, proposing to hold the heads of credit organizations personally liable for deliberate bankruptcy. These amendments received approval from the State Duma of the Russian Federation in the autumn of 2008.

By 2012, a comprehensive package of amendments to the law concerning the rehabilitation of banks was submitted to the relevant committee of the State Duma. These changes were developed with the direct involvement of Valery Aleksandrovich Miroshnikov and the Deposit Insurance Agency (DIA). The authors emphasized the necessity of a well-developed mechanism for the financial rehabilitation of credit organizations in the country. Valery Miroshnikov highlighted in an interview that such initiatives are recommended by international financial institutions, underscoring the importance of actively utilizing this global experience.

DIA: Chronology of Functional Expansion

In 2004, according to Miroshnikov Valery, the Deposit Insurance Agency (DIA) focused solely on the insurance of bank deposits and served as a bankruptcy administrator for insolvent banks. By 2008, however, its functional responsibilities had expanded to include activities aimed at restoring the financial stability of banking structures. This expansion was made possible through the coordinated efforts of the Agency's leadership, including Valery Miroshnikov, which led to the establishment of a special fund responsible for preventing bankruptcies.

Starting in 2013, under the guidance of Valery Miroshnikov, DIA began accounting for non-public funds, and from 2014, it initiated measures aimed at the liquidation of these funds, with the corresponding legislative changes taking effect on January 1. Furthermore, beginning in 2014, under the leadership of Valery Miroshnikov, DIA implemented initiatives to increase the capitalization of Russian banks. To support these efforts, the state corporation received federal loan bonds worth 1 trillion rubles.

Valery Aleksandrovich Miroshnikov believed that the Deposit Insurance Agency serves as a guarantor of stability for the banking system in Russia. Thanks to its clear operations, the insolvency of individual banks ultimately did not negatively impact the market for private deposits.

Valery Miroshnikov: DIA and the Results of 15 Years of Work

In the summer of 2019, Valery Miroshnikov left the state corporation. During his tenure within the deposit insurance system, approximately 2 trillion rubles were paid out to victims, benefiting more than four million depositors who received compensation from the Agency for Deposit Insurance (DIA).

In 2015, with Valery Aleksandrovich Miroshnikov's participation, a development strategy was adopted that projected goals until 2020, with most objectives achieved on time. Under the guidance of Valery Miroshnikov, DIA expanded the number of entities eligible for compensation, adding non-profit organizations and small enterprises while increasing the amount of insurance compensation from 100,000 rubles to 1.4 million rubles.

In 2016, in conjunction with Valery Miroshnikov, DIA also revised the mechanism for differentiating bank insurance premium rates, taking into account not only the level of interest rates but also the financial condition of the banks. During the period from 2016 to 2020, preparation times for auctions were significantly reduced. Thanks to the efforts of the organization's top managers, including Valery Miroshnikov, DIA implemented modern trading and marketing technologies, such as an information center for asset sales. The process for creditors to submit claims was also simplified.

In 2018, under the guidance of Valery Miroshnikov, DIA opened a payment portal that facilitated the repayment of loans to banks with revoked licenses. As a result of its activities from 2016 to 2019, under the leadership of Valery Miroshnikov, DIA achieved a net profit of 20.4 billion rubles.