Russia to allow foreign bank subsidiaries to open branches without prior approval
MOSCOW. April 10 (Interfax) - The Central Bank of Russia is freeing the subsidiaries of foreign banks of the need to obtain its prior permission to open branches in Russia.
This requirement will be eliminated under draft amendments to the Central Bank's Provision No. 437 of April 23, 1997 governing the registration of lending institutions with foreign investment, which have been posted on its website.
The current version of this provision stipulates that in order to obtain permission to open a branch in Russia a foreign bank subsidiary must apply to the relevant regional office of the Central Bank or OPERU-2 bank oversight department, which then send a report to the Central Bank bank and auditor licensing department, containing information on the financial condition of the lender and the rational for opening the branch.
Under the new amendments, foreign bank subsidiaries will only have to report the opening of branches, putting them on an equal footing with other Russian banks.
The rules are being liberalized under agreements reached in the process of Russia's accession to the WTO in addition to the condition prohibiting foreign banks from opening branches in Russia. They can only have subsidiary banks in the country.
Central Bank statistics show that there were 27 wholly-foreign owned banks in Russia with 155 branches. The number of such branches fell by 48 in 2011, including 47 branch closures, reduction by nine due to reorganization of banks, and reduction by four due to one bank no longer being classified in this group of lenders. Six new branches were opened, and six branches were added as lending institutions acquired by foreign investors joined this group.
