Magazine article Global Finance

Central Bank Chief Unscathed despite Closing Banks

Magazine article Global Finance

Central Bank Chief Unscathed despite Closing Banks

Article excerpt

A slender, soft-spoken woman with a passion for French symbolist poetry may seem an incongruous sheriff for Russia's unruly banking system. But Central Bank of Russia chief Elvira Nabiullina is wearing the badge fearlessly. Last year, two top CBR lieutenants intimated the regulator was nearly finished culling a scraggly financial herd that has shrunk from more than 1,000 licensed banks to about 600. Nabiullina sacked the deputies and announced she had "only traveled half the road."

In reality, Russia's banking sector is heavily concentrated, with the 10 biggest institutions controlling 70% of system assets and the top 100 controlling 94%, says Alexander Danilov, who covers the industry from Fitch Ratings' Moscow office. Many of the smaller banks exist solely to squirrel funds out of the country by dodgy means. Or rather, they existed until Nabiullina combed through their books and started shutting them down. Suspicious capital flight via banks has dropped from $40 billion in 2012, the year before she took over as central banker, to less than $1 billion, Danilov reports.

Lately the 53-year-old central banker has moved on to bigger (and better-connected) game. Last autumn she shut down Peresvet Bank, whose largest shareholder was the Russian Orthodox Church; and last month she revoked the license of Tatfondbank, partly owned by the provincial government in Tatarstan. Nabiullina is herself an ethnic Tatar, raised in neighboring Bashkortostan before winning a place in the economics department of Moscow State University on the eve of perestroika. …

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