Central bank of Russia continues with market shake-out of Russian financial sector – 23 banks closed in I/14

The Russian Central bank continues the shake-out operation in the financial industry. In the first quarter of this year 23 financial institutions lost their license, 10 of them in March. The withdrawal of a bank license is usually justified by the lack of capital reserves, different irregularities or questionable business practices as the laundering of funds.

In late March, there were 896 banks left in Russia, further closures or mergers are likely. Earlier this week it became known that the Moscow-based banks “Atlas Bank” and “First Republican Bank” lost their license.
The Central bank policy has mostly consequences for financial institutions that are not among the top 200. The market is dominated by Sberbank, VTB and VTB 24, where the Russian state is majority shareholder. 53.7 percent of assets in the banking system are concentrated in the largest five banks of the country.

At the end of March 723 banks could present positive results. 173 financial institutions reported negative results, ie 19.3 percent. In the first quarter of 2013 the percentage of unprofitable financial institutions was at only 12.7 percent. The situation has thus deteriorated, although a number of unprofitable banks were closed during the period.

In the first three months of 2014 the financial sector could produce a surplus of 248.9 billion rubles (about 41.5 billion NOK or 5.7 billion euro). This is only slightly more than in the same period of last year when 247.7 billion rubles were reported – here we have to take into account that the inflation rate is more than 6 percent, so the result is rather poor.

Source: russland.RU – Internetzeitung, Ullrich Umann Moskau – gtai