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RUSSIAN BANKING: Bank reform still a low priority

New Russian president Vladimir Putin is waving the reform banner but there are fears that the problems of Russia's beleaguered banks are going to be swept under the carpet.

Putin's economic reform programme, being drawn up by economics strategy minister German Gref and a clutch of liberal thinkers at the Centre for Strategic Planning, is being hailed as one of the most radical plans Russia has ever seen.

But the plan is expected to dodge the problems facing the banking sector, according to Moscow sources close to the team.

At a weekend retreat in the palatial Vatutinki hotel resort outside Moscow in May, Gref padded around in slippers and tracksuit bottoms with his team trying to put together a workable plan for fixing Russia Inc. The final version was approved at the end of June after a prolonged round of horse-trading. The section on banking reform already considered poor has been cut further.

The group consists of what some analysts have called a dream team of economic minds, but, according to one participant in the talk, banking reform was tossed around the room "like a hot potato". No one in the Gref team wanted to tackle this thorny problem.

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