Europe’s biggest bank, HSBC, has started retail lending in Russia. Analysts say, HSBC is one of the few foreign lenders taking the chance to enter the local market.

The bank launched its first retail branch in Moscow on Tuesday and plans to open 3 more, including one in St. Petersburg, within a month. The lender is targeting Russians able to deposit at least $2400. Tony Mahoney, Head of International business at HSBC, says the Russian middle class has been relatively unscathed by the crisis.

“There was a survey recently that suggested that, in three years, there will be approximately 30 million people in Russia earning over $20 000 a year.  Now, if that proves to be correct, that makes Russia such an attractive market.  So yes, there will be a lot of foreign banks looking to come in.”

The bank says it’s cheaper to enter the market at the moment – prices for everything from real-estate to advertising have plummeted. But analysts say, not many foreign lenders are using these chances to enter the local market.

Central Bank data shows the market share of foreign lenders is falling, as the rate of bad loans grows according to Rustam Botashev, Senior Bank Analyst at Unicredit.

"Two years ago any foreign bank would pay 4 times book just to enter the market.  Now the prices are much lower and even they dont have to purchase anythin, they can start up their operations from scratch, starting lending to retailers and get market share like this.  But they don’t do this obviously because, in terms of their risk management, they probably think that it doesn't make sense."

However, many Russians find established foreign names more reliable than domestic private lenders. Retail deposits in subsidiaries of foreign banks have increased over the past six months.