Russian banking system still unstable

If the external circumstances that were in the 1998 financial crisis happened now, the Russian banking system would overcome them with "fewer losses", Russian Central Bank Chairman Sergey Ignatyev declared at an annual conference organized by Renaissance Capital today. At the same time he stressed that the country's banking system was still unstable and the Central Bank was preparing a great number of bills aimed at strengthening Russian credit organizations.

Among the most important bills is the bill on currency regulations and currency control, which is to be considered on its second reading by the State Duma in fall 2003, Ignatyev said. Although Russian banks fear that this bill will put them in unequal conditions with foreign competitors (due to the liberalization of cross-border financial operations), the Russian Central Bank head believes that this document would promote the coming of Russian credit organizations to the international market and make it easier to service operations with foreign clients.

Ignatyev also noted that the Central Bank was "very interested" in Russian banks entering the stock market. According to him, the main problem is that the owners of banks are not ready to make them transparent. Moreover, in some cases the coming to the stock market results in a decrease in dividends paid to shareholders, and the owners do not want to lose profits, Ignatyev added.