战略与国际研究中心-PONARS-Policy-Memo-105_5页_77kb

Summary of "Hobbling Along: Russian Banking Reform"

Core Content

This document, published in January 2000 by PONARS Policy Memo 105, provides an analysis of the state of the Russian banking sector in the aftermath of the 1998 financial crisis. It highlights the lack of substantial reform and the ongoing challenges in restructuring the banking system, despite some positive economic indicators.

Main Points

• Post-1998 Banking Sector Status:
  One year and six months after the August 1998 crisis, the Russian banking sector has not undergone meaningful restructuring. Over 1,300 banks remained in operation by late 1999, compared to 1,700 at the start of 1998. The number of banks has not decreased significantly, and the process of closing or consolidating weaker institutions has been slow and inconsistent.

• Government Role and Ownership:
  The Russian government continues to play a dominant role in the banking system, with significant stakes in major banks such as Sberbank and Vneshtorgbank. The Central Bank of Russia (CBR) holds 45% of Sberbank, 96% of Vneshtorgbank, and other minority stakes in key financial institutions.

• Functions of Russian Banks:
  Russian banks serve several roles, but they are not functioning as traditional financial intermediaries. These include:

  • Acting as financial arms of large enterprises.
  • Managing quasi-money systems via veksels and promissory notes.
  • Serving as lenders of last resort to the government.
  • Functioning as treasury agents for the central government.
  • Providing short-term credit for the economy.
  • Facilitating capital flight through foreign or offshore accounts.

• Outstanding Issues:
  The document outlines four key areas that require attention for meaningful banking reform:

  1. Mismanagement and Corruption:
     Banks have engaged in asset stripping and fraudulent practices, with some transferring assets to new institutions while evading debt obligations. The government's moratorium on external debt payments and continued support for "socially important" banks have exacerbated these issues.
  2. Government-Led Financial Restructuring:
     The Agency for Restructuring of Credit Organizations (ARKO) was established to address the crisis, but it lacks sufficient resources and political authority. It requires Rur50-60 billion to fulfill its mandate, but only Rur1 billion was allocated in the 2000 federal budget.
  3. Strategic Foreign Investment:
     While foreign capital accounts for 12.6% of the banking system, there is little interest in increasing this share. Political and legal risks, along with limited scope for foreign banks, have deterred further investment. However, some foreign banks have shifted to more regular commercial operations.
  4. Accounting Reform:
     Russian banks use poor accounting practices, often manipulating financial statements. The government's approval of deferring losses and offsetting them against gains has undermined transparency and trust in the sector.

Key Information

• Economic Context:
  The Russian economy grew by 1.9% in 1999, with improved profitability and liquidity, but these factors alone are not sufficient for long-term banking reform.

• Challenges Ahead:
  The document warns that the banking sector is still in crisis and that the next 1-5 years will be critical. The sector is vulnerable to liquidity shocks due to its dependence on commodity prices and unresolved forward contracts.

• International Support:
  Multilateral institutions such as the World Bank, IMF, EU, and EBRD have expressed interest in supporting Russian reforms, but their efforts will only be effective if the Russian government takes decisive action.

Conclusion

The Russian banking sector has not fundamentally changed since the 1998 crisis, and the lack of reform continues to hinder economic development. The government must address mismanagement, improve transparency, and create a more stable and trustworthy financial environment to ensure the sector can serve as a catalyst for growth. Otherwise, the banking system—and by extension, the Russian economy—will continue to "hobble along" without significant progress.