Despite statements to the contrary, the Russyan banking world is suffering severe indigestion. This comes after a few years of actions by the Russyan Central Bank. The CBR has been given the job of cleansing the financial system of its problem banks. The number of banks in Russya was about 900 of all types. Now, there are less than 500. What's happening?
As the country's banking system transitioned from Soviet times, the private banks were running amok, amounting to cash cows for owners and investors. The results spoke for themselves: many banks were insolvent and needed rescuing. Enter the CBR. Since 2013, the CBR has been run by Elvira Nabiullina. She has over seen the elimination of 340 banks, and the rescue of 35 more. Recently, she has rescued Otkritie, once the country's largest private bank by assets, and B & N Bank, its 12th largest. According to Fitch ratings Agency, the CBR has spent over $46 Bn to rescued banks and to depositors. Hmmm. And Elvira is supported by Mr. Putin.
The Russyan State now controls about 65% of the banking system. Alexei Marei, a banking executive, says there is an enormous conflict of interest as the role of CBR is one of owner and regulator. In other words: "business as usual in Russya."
Wages in the Russya have shrunken by 30% in the last year or two, making Russya an attractive location for companies to set up operations. Can this fact salvage a country that is on the brink? It remains to be seen.
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