Foreign capital will be able to expand its presence in Russian banks

By Russia’s accession to the WTO the banking sector and engineering industry cause greatest concern about the stability level on free and competitive market. Among other things it was said that multinational financial corporations could easy take over domestic banks and dictate own terms to clients, as it was done in a number of Eastern European states. In large part our credit organizations are on development stage up to the present, and their capital is incomparably small in comparison with Occidental competitors. This is surely a significant minus for our country, which is included into TOP-10 economies of the world.

After much debate the parties reached a compromise about the limitation of participation of foreign capital in Russian banks, which should not be more than 50% of its volume.

Following these agreements, at the end of June the State Duma passed in a first reading the bill about fixing up the quota for foreign capital in total authorized capital of credit organizations, being in force on the territory of the RF, in the rate of 50%. Thereby, foreign banks and capital will be able to be involved in this business in a greater degree. However, having no majority interest by this, they won’t be able to carry out those or other decisions in their sole discretion.

According to the bill, by exceeding the quota the Bank of Russia will have the right to refuse the registration of credit institutions with foreign investments and to forbid the increase of authorized capital of a credit organization using the funds of non-residents.

In total, the passage of the bill can be considered positively. On the one side it will allow to protect our banking system from foreign control, and on the other side – to attract additional investments to it and foreign executive experience.

Information agency Credinform has developed an independent estimation of financial strength of banks, based on the analysis of key indicators of activity and the degree of conformance to standards of the Central Bank. With the help of bank financial strength index it will be easier for users to make a conclusion about the degree of risk of cooperation with a credit institution and about the safety of their savings.