VEDOMOSTI. Five top banks where the government holds directly or indirectly controlling stakes account for around 60% of the entire increase in assets in 2011, the Association of Russian Banks calculated. By January 1, 2012, as CBR data show, they already accounted for 50% of the assets and later they controlled more than this. As of the latest available date (March 1) their assets already exceeded 50.5% of the aggregate amount. The number has so far been modest, the association believes and makes comparison with the United States (61.3%) and Belgium (84.3%), Vedomosti business daily wrote.
Mid-sized and small banks have no such access to resources as major ones do, especially those where the government holds interest in the charter capital, said the association’s bankers, because of which they have to maintain high capital adequacy and reduce lending. Many times major private banks reproved the Bank of Russia that they find it more difficult to compete with state-run banks. The central bank clearly understands these problems, CBR board chairman Sergey Ignatiev previously said admitting that for the time being the regulator does not know how to solve them.
At the same time, major market players could take heightened risks. Meanwhile, major banks bear higher risks, said a report, and credits issued to 20 top borrowers, as estimates of international rating agencies show, were over 100% higher than the capital of state-run banks in mid-2011, or 2x higher than in Europe and 3x higher than in the United States.
“There’s no way out, although we, of course, do not like this,“ admitted an executive at a state-run bank. The cost of resources is to a large extent determined by the area of operation of state-run banks, a commercial bank cannot achieve this, but this is not absolutely profitable for a state-run bank. “Talking about the economic sense, it would be necessary for us to close one third of our network,” Sberbank CEO and board chairman German Gref admitted at a meeting with Russian Prime Minister Vladimir Putin.
