First Deputy Chairman of the Central Bank of Russia Gennady Melikyan (foreground)
Photo: Kirill Tulin
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400 Banks’ Licenses in Danger
A third of Russian banks may lose their licenses, if amendments to the law “On Banks and Banking Activity” prepared by the Central Bank are passed. The amendments will allow the Central Bank to cancel the licenses of banks engaged in unscrupulous dealings. First Deputy Chairman of the Central Bank Gennady Melikyan said yesterday that a new minimum capital level of ˆ5 million will be set. He said that would reduce the number of credit organizations in Russia by 400. They now number 1125.
This is not the first attempt by the Central Bank to reduce the number of players on the market. A year and a half ago, it introduced an amendment into law that required banks opening on the Russian market to have minimum capital of ˆ5 million. But bankers convinced lawmakers not to make the law retroactive. Instead, banks already operating with capital below that amount were forbidden to reduce their capital. That was about half of the banks in Russia.
Although the capitalization of the Russian banking system has grown by 1.3 trillion rubles since then, the Central Bank is still concern about the large number of banks on the market. “There is a group of banks in Russia in which one group of people shifts money around from one to the other and carries out dubious operations,” Melikyan noted. Imposition of the new requirements for capital may be imposed in steps, he added. Most banks are closed for violating laws against money laundering. That was the case on 44 out of 54 closures last year. “The majority of those 400 banks that do not meet the new requirements of the Central Bank have risky credit policies and are engaged in legalizing criminal income. It will be easier for them to close than to increase their capital,” said Sobinbank chairman Vladimir Rykunov.
www.kommersant.com
All the Article in Russian as of Aug. 22, 2008
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