Russia's central bank head: banking cleanup almost done
A cleanup of Russia's banks almost complete, Russia's Central Bank Chair Elvira Nabiullina said today.
"In 2017, the Bank of Russia was forced to revoke more than 50 bank licenses," she said, adding that this is almost half as much as in 2016 and 2015.
"At the same time we had to take three major decisions," TASS cited the head of the Central Bank as saying. Nevertheless, Nabiullina noted that a cleanup of Russia’s banks is more than half completed.
Nabiullina also said that the central bank still saw problems in the banking sector and cases of unfair business practice.
The head of the department of Economics and Finance at the Faculty of Economics and Social Sciences of RANEPA, doctor of economic sciences, Professor Alla Dvoretskaya, speaking with a correspondent of Vestnik Kavkaza, noted the contradictory results of the Central Bank's cleanup.
According to her, indeed, many unsustainable banks were rightly rejected, because they were unstable and inefficient. On the other hand, the expert pointed out, the trend towards an excessive cleanup leads to the fact that licenses of not all the banks put on the list should be revoked.
"In general, as a result of such an active restructuring, there are so few players on the market that such things as competition and market-driven banking system are being questioned. There is an excessive centralization, monopolization and nationalization, which is the negative side of this process," Alla Dvoretskaya explained.
She added that some banks are so dissatisfied with the decisions of Russia's Central Bank that they even come into conflicts with it. "The consumer have little choice when picking, because the number of banks is declining. The private business is experiencing difficult times," the economist admitted.
The expert drew attention to the fact that very many banks really did not have the right to work because they violated the rules set by the CBR, engaged in questionable operations and withdrawal of assets, conducted inefficient management, had huge capital holes and implemented too risky policies.
The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, Konstantin Korischenko, also said that it is impossible to give an unambiguous answer to the question about the consequences of a banking clean-up. "On the one hand, it has become more transparent and reliable, since there is a clear result of the Central Bank's actions. But on the other hand, there is a diminished availability of banking services with a concentration of capital in large banks, primarily state-owned. The issue of the private banking sector perspectives also left open," the expert listed.
The economist explained that the appearance of a significant number of "bad" banks in Russia in recent years can be explained both by objective and subjective reasons. "Objective ones are the worsening of the macroeconomic situation, in particular, declining oil prices, sanctions. And the subjective one is that in the last 10-15 years the risk management system was insufficient to prevent the accumulation of low-quality debts," Konstantin Korishchenko concluded.