RIP Russian Banks
Watching the drama of Russia’s private banks collapsing one by one naturally triggers fear: of more than 3,000 registered banks, about 2,600 have already lost their licenses. After the bailout of Otkritie and BIN, the government’s share in Russia’s banking system assets exceeds 80 percent. Fixing Russia’s banking system requires addressing the deep and systematic flaws in the central bank and the financial sector at large. The contemporary Russian financial system began to emerge twenty to thirty years ago on the ruins of the Soviet banking structure, which was unable to serve the evolving demands of the nascent free market. In the “wild 1990s,” the financial system was rife with profitable but gray activities, including the accumulation of liquidity for privatization investments, the illegal export of capital, tax evasion, and money laundering. Every local “oligarch” had his own bank, and geographic expanse and the informality of economic ties helped create a very fragmented banking