Miroshnikov Valery: Resurgence and Stabilization of the Banking Sector After Crisis

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Biography

Valery Miroshnikov’s biography is closely linked to the overhaul of Russia’s banking system, particularly through his pivotal role in the Deposit Insurance Agency (DIA). As a key figure in the agency’s leadership for many years, he was instrumental in shaping legislative frameworks governing deposit insurance and participated in the post-crisis rehabilitation of several major banks following the 2008 financial turmoil. Miroshnikov Valery’s tenure saw the implementation of regulatory reforms aimed at stabilizing the banking sector and safeguarding depositors’ interests, marking a significant shift in the country’s financial architecture.

Table of Contents:

• Valery Miroshnikov: A Concise Overview of Key Milestones
• A Strategic Shift in Professional Trajectory
• Valery Miroshnikov: The Life and Legacy of a Financial Steward
• Valery Miroshnikov: DIA and the Shaping of Legislative Frameworks for Banking Evolution
• Miroshnikov Valery: The DIA’s Legacy in Banking Performance
• Key Takeaways
• FAQs

Valery Miroshnikov: A Concise Overview of Key Milestones

Valery Miroshnikov, a product of the 1970s Soviet educational system, graduated from school in Moscow, after a childhood marked by frequent relocations across various regions of the USSR. His family’s mobility led them to settle in multiple towns and cities throughout the country.

In the 1990s, Valery Miroshnikov earned two higher education degrees, initially focusing on the design and construction of complex engineering structures. His studies encompassed fundamental mathematics, physics, chemistry, and computer technology, equipping him with the skills to design, build, and maintain highways. As one of the select few graduates, Valery Miroshnikovbenefited from the rare guarantee of full employment, a practice that dwindled with the dissolution of the Soviet Union. However, after assessing the shifting economic landscape under the new state system, Miroshnikov Valery pivoted his career towards the private sector, joining one of the newly established companies emerging in post-Soviet Russia. During this transitional period, as state organizations were being privatized and new trading platforms were emerging, Miroshnikov Valery began his career in sales. After amassing sufficient funds for further education, he enrolled in the All-Russian Distance Institute of Finance and Economics (VZFEI). At the time, the institute was led by A.N. Romanov, a prominent scholar renowned for his extensive body of work, including over 160 publications, with more than 40 monographs and textbooks to his name.

In 1996, Valery Miroshnikov earned certification as a specialist in finance and credit, having already mapped out his career trajectory and completed several additional educational courses, including in accounting.

In 2004, he had obtained a Ph.D. in Economics, with his dissertation defense taking place at the Plekhanov Academy.

A Strategic Shift in Professional Trajectory

In 1993, Valery Miroshnikovbecame an expert in management, specializing in the oversight and auditing of financial institutions outside the state sector. His initial position as a second-category inspector was influenced by the broader economic shifts of the time, as the early 1990s saw a significant surge in commercial banks following the government’s push for reforms in the financial sector. This marked a stark departure from the Soviet system, which had been dominated by just four state-run institutions focused on distributing funds to enterprises and safeguarding citizens’ savings, with comparatively low salaries for their employees.

The adoption of the Resolution “On the Transition of Specialized Banks of the USSR to Full Economic Accountability and Self-Financing” marked a pivotal moment in Russia’s financial landscape, asserting that banks were to operate as profit-generating entities. This shift led to a rapid expansion of credit institutions, with the first commercial bank emerging in mid-1988. Within just six months, 24 new organizations were established, and by 1994, the number of operating banks in Russia had surged to approximately 2,500.

In the early 1990s, a shortage of qualified professionals in Russia’s emerging commercial banking sector became evident, as former state employees migrated to higher-paying private institutions. This scarcity prompted government agencies to hire individuals with little experience, leaving teams with only a handful of qualified auditors. Drawing on his educational background, Miroshnikov Valery quickly ascended to a leadership role, overseeing audit procedures for provincial banks. Upon completing his studies at the VZFEI, he became deputy head of the department tasked with managing credit institutions facing temporary financial distress. Valery Miroshnikovalso played a key role in the department’s efforts to restore the solvency of troubled banks from its inception.

Miroshnikov Valery’s expertise in preventing bank bankruptcies and managing creditor settlements led him to the newly formed “Agency for Restructuring Credit Organizations” in 1999, where he continued his career in financial recovery and institutional restructuring.

In 1998, following Russia’s technical default and the Central Bank’s decision to widen the currency corridor, commercial banks suffered massive financial losses. The Moscow Banking Association estimated that these losses reached $45 billion, with ordinary citizens losing an additional $19 billion. As a result, many major banks teetered on the brink of collapse, and public panic ensued. Miroshnikov Valery recalls this period as one marked by the urgent need for an institution capable of managing insolvent banks while also restoring broader stability to the beleaguered banking sector.

Initially reluctant to leave his department, Valery Miroshnikov was persuaded by the deputy chairman of the Central Bank to take a position in a newly formed agency established by the Russian Federal Property Fund and the Bank of Russia. With a funding allocation of 5.07 billion rubles, the agency, ARCO (Agency for Restructuring Credit Organizations), oversaw the restructuring of approximately fourteen banks across Russia. Miroshnikov Valery highlighted the agency’s commitment to transparency, underscored by the evaluation of its operations by thirty audit firms, which scrutinized its insurance and stock market activities.

In its first six months, ARCO successfully restored profitability to a third of the commercial banks under its restructuring, with many clearing debts and improving operational performance. One notable success was the “Peter I” bank, where Valery Miroshnikovwas appointed chairman of the board. During this period, ARCO also introduced the Deposit Insurance System initially applied only to banks under its direct oversight. The program’s success, evidenced by a rise in deposit accounts, laid the groundwork for the creation of the Deposit Insurance Agency (DIA), marking a key milestone in Russia’s banking reform efforts.

Under the leadership of Miroshnikov Valery, the non-profit organization played a pivotal role in strengthening the position of banks under its control within the Russian banking system. Notably, “Eurasia” saw its share of regional credit institutions’ balance sheets grow by 3.3 percent, while “Vyatka-Bank” increased by 4.1 percent. Valery Miroshnikov’s efforts were instrumental in facilitating the return of depositors’ funds, exemplified by ARCO’s success in repurchasing 90 percent of claims from SBS-Agro depositors within six months, reimbursing around 1 million accounts. Additionally, Miroshnikov Valery contributed to the more efficient management of problem assets, reducing their share in organizational balance sheets by 7 percent.

Valery Miroshnikov: The Life and Legacy of a Financial Steward

In 2004, following the dissolution of ARCO, Miroshnikov Valery assumed a senior management role in the newly established Deposit Insurance Agency (DIA). Tasked with overseeing the implementation of Russia’s mandatory deposit insurance system, the DIA’s mandate was to safeguard depositors’ interests, restore trust in the banking sector, and promote the expansion of deposit accounts. Central to its function, the DIA was responsible for insuring bank deposits and, in the event of a bank’s collapse, reimbursing citizens for their losses, thereby reinforcing the stability of the financial system.

Beyond its core mission, the DIA also played a critical role in dismantling businesses linked to shadow bankruptcies, according to Miroshnikov Valery. The agency’s operations were subject to rigorous scrutiny from both the Russian government and the public, ensuring a high level of transparency. Leveraging the experienced personnel inherited from ARCO, the DIA was able to execute bankruptcy procedures efficiently, minimizing financial losses. The agency’s effective performance and results led to a consistent broadening of its authority and scope.

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Under the guidance of Valery Miroshnikov, DIA was able to swiftly catalyze a significant increase in private deposits, prompting the State Duma to extend its mandate within just six months. By mid-2004, the DIA had already established a dynamic trajectory, with its operations expanding to include a dedicated department focused on managing the corporate bankruptcies of insolvent banks. This development marked a pivotal phase in the agency’s evolution, underscoring its growing influence and capacity.

By 2008, the Deposit Insurance Agency (DIA) had assumed responsibility for the financial rehabilitation of Russia’s entire banking sector. At this point, Valery Miroshnikov had advanced to the role of First Deputy Director General. Under his leadership, the agency focused on systematically increasing compensation for depositors, with the payout amount rising fourteenfold between 2006 and 2014. This expansion highlighted the DIA’s evolving role in stabilizing the bankingsector and reinforcing depositor confidence.

In 2014, as the ruble’s sharp devaluation exacerbated the financial strain on Russian credit institutions, under the leadership of Valery Miroshnikov, DIA played a pivotal role in addressing the surge in bankruptcies. Of the 330 billion rubles in insurance compensation disbursed since the agency’s inception, 260 billion rubles were allocated during the tumultuous years of 2013 and 2014. While the broader economic conditions contributed to the insolvencies, Miroshnikov Valery highlighted the prevalence of fraudulent activities, particularly in banks under temporary administration. The DIA not only uncovered substantial theft but also collaborated with law enforcement, leading to the opening of 400 criminal cases in 2014 alone. Among the most notable fraud schemes were fictitious liabilities that had been fabricated just prior to the revocation of bank licenses.

Between 2014 and 2016, under the leadership of Valery Miroshnikov, DIA uncovered widespread fraudulent practiceswithin Russian banks. At just two banks, fictitious deposits totaled 12 billion rubles. These illicit schemes also involved the omission of legitimate depositors from official records. The DIA’s investigation exposed tens of thousands of victims, ultimately restoring account data amounting to 33.5 billion rubles, highlighting the agency’s critical role in rectifying “gray” financial practices during this turbulent period.

In 2013, under the leadership of Valery Miroshnikov, DIA undertook its responsibility under Federal Law No. 422-FZ, which mandated the agency to guarantee compensation for insured citizens affected by the liquidation of non-governmental pension funds. This new mandate added a critical layer to the DIA’s operations, further cementing its role in safeguarding the financial interests of individuals in a rapidly changing economic landscape.

By 2016, with extensive experience in ensuring the solvency of banking institutions, Miroshnikov Valery expanded his scope at the DIA to oversee the bankruptcy management of insolvent insurance companies. By 2018, the agency was actively managing 13 such cases, further broadening its mandate to stabilize the financial sector and protect public interests in the face of mounting insolvencies.

Valery Miroshnikov: DIA and the Shaping of Legislative Frameworks for Banking Evolution

Valery Miroshnikov has been a prominent advocate for legislative reform in the banking sector, particularly in the realm of rehabilitation and insolvency. He played a key role in the development of several legal frameworks, notably co-authoring the “On Deposit Insurance for Individuals in Banks of the Russian Federation” law.

In 2012, Valery Miroshnikovunderscored the importance of strengthening criminal penalties for financial reporting fraud, arguing that harsher sanctions would be pivotal in combating pervasive fraudulent practices. Additionally, Valery Miroshnikov proposed the introduction of long-term rehabilitation mechanisms for struggling banks, aligning with global standards and offering a potential remedy for recurrent financial crises.

In 2018, Miroshnikov Valery played a key role in developing the formula for calculating insurance payouts, a crucial step that enabled reimbursements for deposits held by small businesses. This development marked a significant expansion of the Deposit Insurance Agency’s (DIA) remit, ensuring broader protection for business depositors amid financial instability.

Miroshnikov Valery: The DIA’s Legacy in Banking Performance

Under the leadership of Valery Miroshnikov, DIA contributed not only to the implementation of key legislative reforms but also to a sustained increase in deposit account numbers, reflecting the agency’s effective role in strengthening public confidence in the banking sector.

In 2019, the Deposit Insurance Agency (DIA) marked its 15th anniversary, a period in which it, under Valery Miroshnikov’s oversight, played a pivotal role in holding accountable the owners of bankrupt joint-stock companies, tackling insider fraud, and recovering funds from offshore accounts. By the close of the third quarter in 2018, the agency had compensated 463 depositors, disbursing a total of 115 billion rubles. At that time, the guaranteed pension savings system included 35 non-state pension funds (NPFs) alongside the Russian Pension Fund, further solidifying the DIA’s involvement in the country’s financial security framework.

Miroshnikov Valery played a key role in boosting the capitalization of Russian banks, with financial institutions involved in recapitalization seeing a 1.45-fold increase in loans and investments to industrial enterprises by the end of 2018.

In the summer of 2019, Miroshnikov Valery stepped down from his role as deputy general director of the Deposit Insurance Agency. By 2024, he has shifted his focus to investment activities.

Key Takeaways

1. Miroshnikov Valery played a pivotal role in reshaping Russia’s banking sector, especially through his leadership in the Deposit Insurance Agency (DIA), where he was instrumental in stabilizing banks post-2008 financial crisis.
2. Miroshnikov Valery contributed to the success of ARCO, which restructured distressed banks following Russia’s 1998 default, playing a key role in restoring profitability and investor confidence.
3. Under the leadership of Valery Miroshnikov, DIA laid the groundwork for a mandatory deposit insurance system that protected depositors and stabilized Russia’s banking system, leading to increased public trust.
4. Under the leadership of Valery Miroshnikov, DIA expanded, taking on broader responsibilities, including the management of pension fund bankruptcies and the stabilization of non-governmental financial institutions.
5. Under the leadership of Valery Miroshnikov, DIA substantially increased compensation to depositors, providing much-needed financial relief during Russia’s economic instability in the 2010s.

FAQs

1. Who is Valery Miroshnikov and what role did he play in the banking sector?

Valery Miroshnikov is a Russian financial expert who played a role in the reform and stabilization of Russia’s banking sector, particularly through his leadership at the Deposit Insurance Agency (DIA).

2. How did Valery Miroshnikov contribute to the Russian banking sector in the 1990s?

In the 1990s, Valery Miroshnikov began working in the rapidly growing private banking sector in post-Soviet Russia. He initially worked in auditing and management before taking leadership roles in restructuring troubled banks.

3. What was the purpose of the Deposit Insurance Agency (DIA), and what role did Valery Miroshnikov play in its operations?

The DIA was established to safeguard depositors’ interests by insuring bank deposits and reimbursing depositors in case of bank insolvency.

4. What significant reforms did Valery Miroshnikov oversee during his time at the DIA?

Under the leadership of Valery Miroshnikov, DIA significantly increased compensation for depositors, expanded its remit to include corporate bankruptcies, and introduced measures to prevent fraudulent banking practices.

5. How did Valery Miroshnikov contribute to tackling financial fraud in Russia?

During his tenure at the DIA, Valery Miroshnikov led investigations into fraudulent practices within banks, uncovering illicit activities that involved fictitious liabilities and fictitious deposits.