Recently, Bank of Russia Chair Elvira Nabiullina announced good news for those who are discouraged with dismal conditions of the Russian banking sector. The policymaker said that the regulator would be able to invigorate the ailing sector in 1-2 years.
In the latest two and a half years, millions of retail investors have been defrauded and the Bank of Russia has revoked licenses from over 300 banks. Nevertheless, it would be wise to brace for further turbulence in the banking sector as the way to full recovery is always thorny. “We launched measures to revive the banking sector 4 years ago. Over this time, we removed permanently weak banks and banks based on a dubious financial scheme. 350 licenses have been revoked. A bigger part of the work has been over. Nevertheless, we have 1-2 years to sort out the mess,” Elvira Nabiullina commented. For a long time, most Russian banks used to take easy credits in the West and lend Russian nationals, setting two-digit interest rates. However, Russian banks were barred from global financial markets due to sectoral Western sanctions. No wonder fishy banks went bankrupt one after the other, being unable to gain benefits from sanctions.
In an effort to tackle a series of bankruptcies, the Bank of Russia enlarged a government’s share in the banking sector. “Polls have revealed that people’s trust in a bank depends on whether it is owned by the government. When the active stage of the banking sector’s consolidation is completed and the regulator does not voice concern over certain private lending institutions, we will be able to resume this discussion,” stated the central bank’s chair. “Basically, we aim to privatize banks on condition that the market is ready for it,” she added.