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Russia loses one after another of the Western banks
Material posted: Publication date: 05-11-2017
If August passes without any major upheavals, usually Russian sigh of relief. Still fresh memories of what it was in this month in Russia was a major catastrophe, like the putsch against Gorbachev or the collapse of the ruble in 1998.

So it was this year. The Russians were ready to rejoice in the fact that this eighth month has passed, how suddenly August 29, the government had to support the Bank "Opening", the second private Bank in the country. After only three weeks it was the turn of another Bank, namely "Bank", the second largest financial institution of the country.

Although the head of the Central Bank of Russia Elvira Nabiullina already openly discussing the issue on the stock exchange of the shares of these banks after the rehabilitation, which cost the state nearly twelve billion euros to the result, the already high share of government ownership in the banking sector has grown even more. It is the record sum of more than two thirds of the assets of all banks, based on balance sheet total.

Foreign banks, too, are leaving the country

Foreign banks are leaving Russia for several years. The most recent example is the Swedish Bank Nordea is the Bank that is going to leave Russia. The Swedes themselves have not yet commented on this information, voiced by many market participants, including in an interview with the newspaper Die Welt.

They reduced their activity during the recession, which lasted for two years. However, to sell such a large market participant, which, according to the rating of Interfax, is to balance result of 39 place among all firms in Russia, currently not so easy, due to the suddenly big changes.

However, many banks have already left Russia, despite the fact that in the years of rising prices for raw materials they acted aggressively and often made an expensive acquisition in the country. Already the beginning of the financial crisis made them think about the feasibility of the business in Russia.

In 2010, Goldman Sachs abandoned its mortgage Bank in Russia, as well as the Spanish Santander. Almost a year later their example was followed by Barclays and Rabobank Netherlands. From all of these sales won Russia's "Orient Express Bank", almost 45% of the shares in which are now owned by investment company "Baring Vostok".

One after another, banks are leaving Russia

The next push came in 2012, when WestLB, Swedish Handelsbanken and Belgian KBC Group said goodbye to Russia. Recently sold its Russian business "structures" public Corporation "Russian Railways".

Those foreigners who are still held, with the onset of economic crisis in Russia was dealt a new blow. Because of the collapse in oil prices and the announcement of the sanctions the country for two years has plunged into recession from which it is beginning to get only now, in 2017.

The dramatic depreciation of the ruble and the decline in real income — for the first time since the beginning of the new Millennium — has led to the fact that it is in the area of private customer business was significantly reduced. After in 2013 surrendered Swedbank in 2014, followed by GE Money, Indian Bank ICICI Bank Royal Bank of Scotland and Garanti Bank. Nordea Bank in 2017 completely sold its portfolio of private loans, Deutsche Bank after a variety of scandals has reduced its business in Russia.

In Russia there are only four major foreign Bank

Today, the field is almost bare. In 2008, foreign banks have covered 6.1% of the carrying amount of the 30 of the strongest institutions in the past year, it was only 3.8%. In fact, of the first thirty foreign banks, today there are only four: UniCredit, Raiffeisen, Rosbank (controlled by the French Société Générale) and Citi.

And yet they are not included in the top ten. Because in Russia the right to vote before any state giants like Sberbank or VTB. They benefit most from the current economic recovery and constantly increase your earnings.

One only Sberbank with its 260 thousands of employees and thousands of branches 16 to provide 70% of the total profit in this sector, which, according to the Central Bank of Russia, should make this year to one trillion rubles. This has not happened since 2012. Most of the banks on average earn well, but can't be with the state giants.

The Central Bank of Russia owns half of Sberbank

That is a state octopus is so widely spread their tentacles, some market participants feel uneasy. First of all bankers is confusing the fact that the Central Bank, which already owns half of the savings Bank, is forced to assume the functions of the new banks. "Be wise and be strong and not give in to emotions and pressure the state banks, because they are constantly reinforced" — calls for Oleg Tinkov, one of the smartest private bankers of the country. A few days ago, he told the head of the Central Bank Elvira Nabiullina: "all of us want to, all banks complied with the equidistance in relation to the leadership of the Central Bank, and that there was a real market relations".

The withdrawal of foreign market participants that, unfortunately, it does not. Their share over the years declined rapidly. Why foreign banks are so uncomfortable to work in Russia, asks Pavel Samiev, managing Director of the National rating Agency, in its analysis. According to him, the Russian market offers banks potential for growth. "But if you look at the ratio between yield and risk, our market even for powerful global players does not look attractive."

Their share in subsequent years will be reduced, but still remain a demand for their services because they were known for their reliability, continues Samiev. According to him, it is not excluded that the next months will be more successful for remaining in Russia for foreign financial institutions.

The reallocation of assets because of problems in the Russian private banks can benefit not only the domestic public but also remaining in Russia to foreign banks. To Western banks once again actively work in Russia, the most important factors are economic recovery, rising real incomes and improving the investment climate. While all are sitting on the fence.

Eduard Steiner (Eduard Steiner)


Tags: Russia , Europe , finances

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