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Bank of Russia (CBR) has started aggres- sively closing banks and enforcing regulations more strictly since the start of this year. The collapse of Financial Corporate Otkritie and Binbank (aka B&N Bank) in September nearly caused a crisis and the banks have already cost the state some RUB1.1 trillion ($18.8bn) to bail out. The takeover of these two banks by the state using the new Bank- ing Sector Consolidation Fund (BSCF) has increased the state’s share in the sector to close to 70%.
“There is no banking crisis in Russia, but it is going through a difficult time. Bank- ing goes in cycles and this is another one of the downturns. The state has increased its share [in the banking sector], but the same thing happened in the US after they went through their big crisis in the 70s. The key element to look at is if there is change in the attitude to allowing private enterprise to create wealth. And that has not changed,” says Vardanian.
He points out that things have changed dramatically in the banking sector over his long career and the CBR’s campaign to clean up the sector, as well as the cur- rent pressure on the leading commercial banks, have to be seen in that context.
“In the early days it was easy to make money: banks just needed to speculate against inflation. Now the economy is entirely different. Growth is slow. Cli- ents are not making money. Consumers are not borrowing. The equity market is flat. It’s very hard for banks to make money now,” says Vardanian.
Of the 4,500 banks set up at the peak
of the “wildcat banking” early phase of Russian banking, there are only some 600 left and Russia is on course to
have just 300 in about four years' time. Fitch recently released a report argu- ing that Russia only needs 50 banks. The CBR has made it clear it will allow six times this number, but the major-
ity will be given a new “basic” banking license, a cut down service that severely restricts international foreign exchange operations, amongst other things, and is clearly targeted at reducing money laun- dering and illegal tax avoidance scams that hide clients’ money overseas.
Russia’s It-Girl to run for president but opposition leaders are banned
bne intellinews
Dubbed Russia’s Paris Hilton, celebrity TV personality, journalist and socialite Xenia Sobchak announced that she is going to run for president in Russia's 2018 elections, according to a letter outlining her programme published on October 18 by the Vedomosti daily.
Well known in Russia for her appearances on reality TV shows, she has also been an outspoken critic of the Kremlin, speaking at numerous opposition rallies. However, there is concern that she will be more of a faux opposition figure designed to inject some drama into the 2018 election. She is said to be president Vladimir Putin’s god-daughter, who served as deputy mayor to Sobchak’s father in St Petersburg in the 90s. The two met a week before the announcement where it is widely believed Putin asked Sobchak to stand.
In the same week the undisputed leader of the real opposition was barred from standing not only in the upcoming elections but in the following elections too.
Russian opposition leader Alexey Navalny will not be allowed to run in 2018 or in the 2024 elections either where Putin will be forced to step aside according to the Russian constitution, the BBC Russian Service reported on October 17, quoting an unnamed Kremlin official.
Navalny is barred from political office for ten years following a controversial conviction. In February 2017, Navalny was given a new five-year suspended prison sentence in a retrial of an embezzlement case, despite the charges being dropped against him in November 2016.
Navalny was not expected to do well in the 2018 elections, even if he were allowed to run, but the campaign is seen as important for establishing his legitimacy for the 2024 elections where he should have been a real contender.
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