12 Oct 2022 10:57

Russia needs more banks as sanctions force segmentation of economic activities - deputy finance minister

MOSCOW. Oct 12 (Interfax) - Sanctions are forcing the segmentation of certain types of economic activity in Russia and more banks are needed now than before the pandemic, Deputy Finance Minister Alexei Moiseyev said.

"There are exactly as many banks as there is need in the economy. But everything else being equal, I would say that more banks are probably needed now than before the pandemic, because sanctions are forcing certain types of economic activity to be segmented," Moiseyev said on radio station Moskva FM.

"In this sense, the old principle of the social democrats of the 1970s, small is beautiful, might be realized now, because concentration creates risks and no one [wants this] now, at any rate that is our position and I know the position of other socioeconomic government agencies - it would be wrong to concentrate some economic types of activity in one place right now. We just make work easier for our comrades from [the U.S. Office of Foreign Assets Control] and other similar organizations," Moiseyev said.

Many of Russia's largest banks were hit by international sanctions in the spring, making it impossible for them to carry out international settlements and weakening their positions in other areas. This pushed some clients to open or more actively use existing accounts at smaller banks, including subsidiaries of banks from "friendly" countries. As a result, the top 15 banks' share of assets in the sector shrank for the first time after more than ten years of growth, dropping to 84.6% from 85.9%, Expert RA reported.

In July, banks with basic licenses were granted permission to temporarily open correspondent accounts at foreign banks, until December 31, 2023.