Central Bank supports concept behind Finance Ministry's proposal to relax rules for foreign banks to open branches in Russia - first deputy governor

ST. PETERSBURG. July 3 (Interfax) - The Central Bank of Russia backs the draft bill put together by the Finance Ministry to relax the requirements for foreign banks to open branches in Russia and extend the list of transactions which they can perform, First Deputy Governor of the CBR Vladimir Chistyukhin told journalists at the sidelines of the bank's Financial Congress.

The bill, which allows foreign banks to open branches in Russia, came into effect on September 1, 2024. It currently only permits the branches to work with legal entities and prohibits transactions with private individuals and individual entrepreneurs, with the exception of money transfers which do not involve opening a bank account and the purchase and sale of foreign currency. To date, no foreign banks have made use of the opportunity.

"We are in maximum and full support of this draft bill. If I'm not mistaken, it is currently at the stage of being approved between ministries. The first step was made some time ago - in effect, a law was passed which allows foreign banks to open branches in Russia. But the initial approach to this more practical discussion turned out to be quite conservative, quite strict," Chistyukhin said.

"Under consideration currently is a draft bill that will soften the requirements for entering the Russian market as well as allow the branches to function more smoothly. Fundamentally, we support this; branches of foreign banks from friendly countries are something that we need today - our financial market would benefit," he said.

A source familiar with the Finance Ministry's draft bill has told Interfax that the document lifts the current ban on foreign bank branches opening internal structural units and on engaging banking payment agents. The draft also increases the allowable share of non-resident employees from 50% to 75% of the total number of employees, and reduces the required minimum period for a foreign bank to have held a banking license in its home country from three years to two years for those planning to open a branch in Russia.

According to the law adopted last year, to open a branch in Russia, a foreign bank must place a minimum guarantee deposit with the Central Bank in the amount of at least 1 billion rubles. The draft bill proposes reducing the minimum guarantee deposit to 90 million rubles.