Page 20 - bne_Magazine_September_2017

20 I Cover story bne September 2017
Russia’s banking sector on the edge again
bne IntelliNews
Russia’s banking sector came close to a meltdown in August as Otkri- tie Financial Corporation, the sec- ond biggest private bank in the country and one of ten “systemically important” banks, was taken over by the Central Bank of Russia (CBR). Had Otkritie gone to the wall it could have taken the whole system with it.
A joke doing the rounds at the end
of August said Otkritie, which means “discovery” or “open” in Russian, should change its name to Zakritie, which means “closed”.
What happened? Russia’s banking sys- tem has been making next to no money for much of the last two years, but over the first half of this year it returned to profit and nearly all the major banks have enough capital.
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A combination of hubris, ambition and mismanagement are probably to blame for the bank’s collapse. The inside nature of Russian business where the elite play by different rules from the hoi polloi is a cancer that continuously undermines the system. Otkritie was owned by well-connected insiders and
The immediate causes of Otkritie’s col- lapse were two bad deals – the acquisi- tion of leading insurer Rosgosstrakh and the attempted rescue of Trust bank.
Another contributing factor is the barely reported fact that for years Otkritie was widely seen as the pocket bank for one-
..“A combination of hubris, ambition and mismanagement are to blame for the bank’s collapse”
its supervision was lax while abundant funds were available from both the central bank and state-owned banks that allowed it to make a string of deals that lead to the bank’s explosive growth.
time young reformer Anatoly Chubais, who became a shareholder while still running Rusnano, the multi-billion dollar technological promotion agency. Moreover, Chubais is close to Central