Bad Rap on Russian Banking? Russian Regulators and Bankers Address Reports of Renewed Bank Failures and Explain How the Latest Crisis Was Actually Part of a Weeding out Process
2004; American Bankers Association; Volume: 96; Issue: 12 Linguagem: Inglês
ISSN
0194-5947
Autores Tópico(s)Banking stability, regulation, efficiency
ResumoSince collapse of Soviet Union, people have been trying to make capitalism work. Yet, with virtually no business experience or even an inherited legal infrastructure for protection of property rights, most capitalist enterprises have struggled to find their way in a hostile world. Perhaps as ongoing fallout from Cold War, commercial failings have usually been viewed by westerners, not merely as growing pains, but as collateral evidence of chaos and deceit. With only a few recent exceptions, financial press tends to ignore booming economy and writes more often of intrigues of the mob and sophistication of Russian Internet scams, as well as chaotic banking system. Indeed, to average reader, banking system always seems to be just a half step from The Next Crisis. Russians have come to understand that good banking--and a good banking reputation--are as necessary to long-term economic success as formation of durable enterprises. Furthermore, they now appreciate that stable banks rely on a stable national reputation, and vice versa, in ways not always apparent to bankers operating in developed market systems. This recognition grew, according to bank regulators, as they took up notion of adopting reformed Basel capital accord (Basel II) as their means to both ends: a better reputation, plus a more stable and efficient banking system. Right now, says Andrei Kozlov, first deputy chairman, Central Bank of Federation, we are in line with nearly 95% of all recommendations made by Basel Committee. Our goal is to be in exact conformity, always. However, one of our problems is very low transparency of ownership in banking system. Often, there may be five or six intermediaries separating bank and its beneficial owner. The inherent opacity of post-Soviet property rights makes it extraordinarily difficult to adopt consolidated reporting requirements of Basel II. Initially, banks are becoming more transparent to us, says Kozlov. But it's a difficult process. At present, law does not require full reporting of ownership structure of banks. Koslov says that goal of central bank is to provide transparency to point of owner's identity as a government, individual, or public company. The same rules will be applied to foreign-owned banks. Foreign bankers welcomed It is generally understood that bankers are eager to participate in privatization programs of many former Soviet allies in eastern European transitional market economies. bankers believe their credibility in other markets will be easier to establish if they are certifiably in compliance with international bank solvency standards. At same time, their government officials believe that Basel II compliance will help to foster a stable environment in market itself, partly by encouraging solid foreign banks to partner with correspondents. In late October, Prime Minister Mikhail Fradkov told an audience at an international conference that he believed foreign bank competitors were an important part of establishment of a modern banking system. Restoration of wide-scale banking linkages, regulators know, will not be easy until they can first restore reputation of their banks. After 1998 sovereign bond default that ended with Long Term Capital Management debacle, many foreign bankers equated credits with smallpox. And for many, that view will likely continue in near term. To illustrate, one writer at a western credit rating agency, instead of praising banking reform, recently cited adoption of a depositors' safety net as a desperate government measure proving that banking system had again fallen into a state of crisis. This is wrong, according to Andrei Kozlov, who explains that safety net legislation was enacted by Duma in 2002 to take effect in 2003, after being under discussion by regulators for nearly ten years. …
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