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‘Banking clean–up’ is healthy, more license withdrawals ahead – VTB head

Published time: January 23, 2014 18:10
Andrey L. Kostin, Chairman and Chief Executive Officer of VTB Bank.(Reuters / Ruben Sprich)

Andrey L. Kostin, Chairman and Chief Executive Officer of VTB Bank.(Reuters / Ruben Sprich)

The revoking of licenses from 32 banks in Russia in just 6 months of last year is a vital measure to improve the country's investment profile, and "shouldn't be a concern" Andrey Kostin, the head of Russia’s second largest bank VTB told RT in Davos.

“If you take the World Economic Forum report that was prepared before this meeting, the relative weakness of the Russian banking sector was mentioned as one of the weak points of the Russian investment climate. And this is because we still have quite a big number of very weak financial institutions and banks,” said Kostin.

The 32 bank licenses withdrawn last year isn’t something huge, as it represents only one percent of retail deposits in the system the VTB boss explained.

“It’s less risky for both individuals and huge companies to work with such [more reliable] banks. So, it’s a healthy process,” Kostin added.

The Russian government is perfectly capable of compensating insured Russian who have up to 700,000 rubles in deposits, Kostin explained.

“I expect more licenses to be withdrawn,” he added.

Russia in global reshuffle

The world economy is reshaping its way to a recovery, and it’s crucial for Russia to get on the “priority list” of global investors and get its fair share of international money, Kostin said.

“A lot is now being said here about the need to reindustrialize western economies, about a new course for developing countries,” said Kostin.

“Reconstruction of the world economy has outlined, and investors are thinking that, following a row of years of instability and uncertainty, a new era is emerging, when one can invest in future economic development,” the VTB head added.

And to grab its share of the international investment that is growing, Russia needs to become a more active partner in the international dialogue.

Russia recently joining the WTO, and beginning its G8 presidency in 2014, means the country is increasingly integrating into the international processes, Kostin added.

Comments (6)

 

Yew Kid 25.01.2014 13:14

The Russian Central Bank can set a deadline for all domestic banks to consolidate to 90 banks in the 1st round of consolidation and later round to 60 or 30 and ultimately 10 strongest banks. There is no need to revoke some innocent bank licenses without a chance for them to have a fair bargain for merger or acquisition with bigger players.

 

John Baker 24.01.2014 10:26

Big banks don't like small banks because they often serve the local community and only relativey small amounts of money are involved.

A ll of which means they are trusted and there is not much opportunity for corruption or interest from mafia.

 

Viva Che 24.01.2014 09:51

Removing unhealthy, corrupted banks before they fail themselves is a good thing.

And if theres so many banks in Russia that 32 (!) lost thier license, then it sound like theres a clear overestablishment of banks. And by removing those actors that are weakest, you'll get a more healthy and controllable number of banks.

View all comments (6)
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