"The number of Russian banks will be reduced not owing to administrative rule but as a result of competition", said Alexander Shokhin, president of the Higher Economics School.
He noted that consolidation of the Russian bank system began in 2004 with the launch of deposit insurance as the key factor. "By the middle of next year we'll eventually have a more consolidated banking system", Shokhin said.
Banks outside the insurance system will have to be either liquidated or merged with others. Competition with foreign banks Shokhin sees among other factors of consolidation.
In turn, Alexander Turbanov, general director of the Deposit Insurance Agency, noted that Russia has many "dwarf" banks which are not such in fact. According to Turbanov, every third Russian bank has a capital below one million euros and the aggregate bank capital in Russia is only 24 billion euros. Thus, the aggregate corresponds to the capital of a large European bank, Alexander Turbanov said.
"If 300 such dwarf banks leave the market, nobody will even notice", he said.
He regretted the Central Bank's laxity in withdrawing such licences.
