Russia pushes to rid itself of 'Potemkin' banks by 2019 | WHAT REALLY HAPPENED

Russia pushes to rid itself of 'Potemkin' banks by 2019

Russia plans to extend a review of bank licenses for another two years, shutting down scores more banks after closing hundreds in the past four years, mostly for committing fraud or other crimes, a central bank deputy governor said in an interview.

Vasily Pozdyshev, a deputy governor at Russia's central bank, says despite the large number of lenders closed so far, his team is still finding more propping up criminal activity and would need until 2019 to finish a crackdown.

The review by the central bank over the past several years has already reduced the number of banks in Russia to around 570 from 900. At that pace, Russia would end up with around 400 banks in 2019, although the central bank says it has no numerical target.

The closure of so many banks has helped strengthen Russia's few large lenders, such as Sberbank (SBER.MM) and VTB (VTBR.MM), which have gained clients from banks whose licenses have been withdrawn. Sberbank now holds more than a third of Russia's banking deposits.

Pozdyshev said many of the banks already shut or now in the crosshairs of the regulator were guilty of giving out loans to fake companies or stealing depositors' money. Others support a shadow economy for goods and services bought and sold outside of official, taxable channels.

"Our work to clean up the banking system is sometimes much more like the work of a financial investigator, an investigator of financial crimes, than the work of a modern banking regulator, which checks whether a bank is sufficiently capitalized or not," Pozdyshev told Reuters.

Webmaster's Commentary: 

Sounds like the Russian government is doing what it can to clean out its financial system, and the Russian economy will probably benefit greatly from this.