The headquarters of the Central Bank of the Russian Federation, Moscow
Photo: Ivan Makeev
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Central Bank Goes Gangbusters after Third of All Bank Licenses
The Central Bank of Russia intends to purge the market of unscrupulous organizations that it has been unable to delicense so far. A single amendment to the law “On Banks and Banking Activity.” will do it by establishing a minimum capital level for banks of ˆ5 million. It is assumed that about 400 banks of the 1125 in existence in Russia today will be unable to meet that requirement.
The Central Bank has been concerned recently about the large number of banks that groups of people rotate between while carrying out dubious operations. The Central Bank is not always able to use legislation against money laundering against them, but it has not been idle in the fight either. Experts say the Central Bank’s efforts could succeed, since it would be simpler to close the banks in question than to raise their capital to the required minimum.
It is possible that banks that observe the law will be hit by the new amendment as well. They could merge or reorganize themselves into noncommercial organizations, but that process is complex and it is unlikely they will have sufficient time to do so. The Central Bank may create a flexible timeline for reaching the minimum capital level, but that is the only concession foreseen.
www.kommersant.com
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