Expert RA

Expert RA: there is no threat of foreign banks expansion

November 6, 2007

The Expert RA rating agency has assessed the influence of the foreign capital upon the Russian bank sector.

The Expert RA analysts think that even though the Russian Federation bank system has became more accessible for the foreign capital there are no reasons to panic. "Most of the largest banks in the world (British and Japanese mainly) haven’t turned their attention to Russia yet," assures Irina Velieva, Expert RA leading specialist of the bank ratings department. "By the time they enter our market it would be mostly saturated". The Expert RA analysts are sure that in a few years natural market barriers will be able to protect the market much better than any institutional restrictions.

There has been a rapid increase of the foreign capital share in the bank sector. Russian banks have became more concerned about the growing foreign presence at the market since the non-resident investors share in the banks’ capital was raised from 12 to 50%. Only in the first six months of 2007 the share of the foreign capital increased from 11.25 to 21.25%.

At the same time, the problem of the bank sector takeover is not as crucial as one might think. At the moment, only 7 out of 30 largest bank groups are present in Russia. Thus, the competition pressure on the Russian market has plenty of room to increase. However, in a few years the Russian market will become much harder to penetrate; it will demand much bigger investments and will pay less return.

One shouldn’t forget that the foreign players have even more problems to face when developing their branch networks and moving into region markets. Besides, the rules on the Russian market are still set by the domineering state banks. We really doubt that the conditions for the foreign credit institutions will ever be as favourable as they used to be for the insures after joining the ITO.

For further information, please contact Nadezhda Largina, Head of PR department, Expert RA rating agency:
tel.: (495) 225-34-44, add. 667
mob.: +79263108266
e-mail: largina@raexpert.ru