Cistran Finance Exploring the Spirit of Capitalism's New Frontier

Monday, June 26, 2017

Russian market clean-up hits full swing

Cleansing in the Russian banking market began after the recent bankruptcy of Master-Bank and the revocation of its license.

Master-Bank's bankruptcy was completely unexpected, with deposits worth $1.5 billion. Master-Bank, however, had repeated problems with the law, and its abundance of ATMs, zero interest rates and large business were only an appearance, Pravda.ru reports.

The troublesome news began long before the Master-Bank debacle. Another credit institution, Chelyabinsk bank UralLiga, lost its license the same day, and a week earlier Interregional Samara Volga-Kama Bank for Reconstruction and development and the Moscow Stroyindbank were declared bankrupt.

Experts rushed to alleviate the fears of the citizens.

"Of course, Russia has developed a fairly small banking system with numerous players," Professor of the Department of Stock Market and Investment of HSE Alexander Abramov said, according to Pravda.ru. "The Master Bank crisis is generally an alarming signal in relation to the Russian banking system because now the issue of non-performing loans that banks issued to the public causes significant concerns. This is really quite an alarming phenomenon, it should not be disregarded. But I think the Central Bank now has the power to overcome the issues. There is no need to worry about the entire banking system based on the precedent of Master-Bank."

According to the deputy director of the Banks and Credit Policy Department at the Institute of Europe, the policy pursued by the Central Bank could make the Russian banking market much more focused and responsible with very few, but large, significant players with a stable financial component.