January 2003
Taking on the big two
Bank reform in Russia is hampered by the dominance of the two big state-owned banks, neither of which can be speedily rationalized or sold off without disruption. So although the central bank is now intent on regulatory activism it is seeking to enable competition rather than enforce it.
THE KREMLIN IS faced with a nasty problem.
State-owned Vneshtorgbank (VTB) is the second-largest bank in
the country and is not a great commercial success but needs
to be. State-owned Sberbank, Russia's biggest bank, has
become too successful and is squashing the rest of the
sector.
These two banks sum up the problems the Central Bank of Russia
(CBR) is facing as it makes the first ever concerted effort to
reform Russia's ailing financial sector.
Between them the two state-owned banks account for over
one-third of the entire sector's assets but the state can't get out
of either bank quickly and their very existence is making reforms
harder.
Ironically, the government is pitted against itself in trying to
boost VTB's attractiveness. Despite its size it still only does
about 4% of corporate banking business, on a par with all the other
leading private commercial banks. Thanks to a big injection of cash
after the...
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