New bank established in Russia for first time in four years

New bank established in Russia for first time in four years

Russian Central Bank will register and grant a basic license to Bank 131 (Kazan), according to the central bank's statement posted on the website.

According to the statement, the bank was granted a license to conduct all banking operations in rubles and foreign currency, not having the right to attract funds of individuals in the form of deposits and conduct operations with precious metals.

The regulator made a decision on March 13, 2019, after which the documents were sent to the authorized registering authority. On March 21, the inspection of Federal tax service N18 of Tatarstan registered the bank at the state registry.

According to website of the Russian Central Bank, for the last time a new bank was registered in Russia on April 28, 2015 - CMRBank.

The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, former deputy chairman of the Central Bank of Russia Konstantin Korischenko, speaking to Vestnik Kavkaza, noted that this is a one-time event and we shouldn't expect a new wave of bank registration after several years of cleaning up the banking sector. "Four years of interruption in the establishment of new banks were connected only with the fact that there were no attractive conditions for business development," he noted.

"Of course, there are no common, abstract motives to establish a bank. The market has reached the level of development when the creation of banks is an exclusively individual process, when everyone is motivated by a specific goal," Konstantin Korishchenko added.

The former deputy chairman of the Russian Central bank, head of the finance, monetary circulation and credit department at RANEPA, Alexander Khandruev, agreed that in Russia nobody wanted to establish new banks all these years. "That is, there are the requirement of capital formation, the need for investors, the Central Bank’s verification of sources of funds, but the main reason is that no one just wants to do it. Before, a bank could be established to get money back quickly for example, but now the requirements for banks have become real," he pointed out.

"Moreover, the loss of interest in the banking business can be traced even at the level of microfinance organizations, the requirements to which are much lower than to banks. To survive, the bank needs capital not less than 50 billion rubles, to find a niche - at least 10-15 billion rubles. And investing such funds to banks is a big risk, therefore, investors turn to other sectors of the economy," Alexander Khandruyev concluded.