Sodbiznesbank closure prompts sectoral wobbles
The Central Bank of Russia (CBR) has finally done what critics have been calling on it to do for years. In May, it exercised new anti-money laundering powers and for the first time pulled the licence of a suspect bank. However, rather than prompting congratulations to the CBR, the closure of Sodbiznesbank nearly sparked a crisis.
Russia has about 1,300 banks but the top 400 have more than 90% of the capital. The rest are often referred to as ?bank-like institutions? and survive by offering what are politely called ?exotic services? to their owners. Deputy CBR chairman Andrei Kozlov said that 80% of Sodbiznesbank?s capital was artificial and the regulator was investigating more than $1 billion in ?suspicious transactions?.
?It seems silly to applaud when people are doing their job,? says Bernie Sucher, the head of Alfa Capital. ?But so little has happened in the past. What was remarkable was [the closure] caused so much trouble.?
The market should barely have noticed the disappearance of a bank ranked 112 by assets. But the move highlighted the instability of the banking system and nearly caused the collapse of the interbank market.