FOREIGN LENDING INSTITUTIONS TO HAVE GREATER SAY IN RUSSIA'S BANKING SECTOR

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MOSCOW, May 6 (RIA Novosti) - The role of foreign lending institutions in the Russian banking sector may increase before long, the International Monetary Fund adviser for the Bank of Russia Arneau de Vilpoi opines in the commentary on the current problems of the Russian banking sector.

The commentary is posted on the Central Bank's website on Friday.

To him, Russia's number of operating lending institutions with foreign participation increased from 128 in December 2003 to 131 in December 2004. And besides, Russia has the lowest (less than 10 percent of assets) share of foreign banks' presence among countries in West, Central and East Europe.

Very soon the role of foreign lending institutions may grow up, de Vilpoi believes. In recent time numerous deals, such as the French BNP-Paribas's purchase of 50 percent of the Russian Credit Bank and the American GE Capital's purchase of the Delta-Credit Bank, demonstrate the growing interest in Russia's banking sector, he explained.

In addition, the Italian Unicredito is conducting talks on buying the controlling interest of Rosbank, which belongs to the Interros group and is the fourth largest in the size of assets, the IMF experts said.

Thus, an entire group of European and American banks is eyeing the opportunity of buying a contribution or gaining control over the Russian commercial lending institution, de Vilpoi said.

In his opinion, one reason for such soaring interest is that the banks are following in the wake of their international clients. At that, Russia's attracting investments in such export-oriented sectors of the economy as energy and raw-materials is quite probable: over nine months in 2004, Russia attracted 39.4 percent more foreign investments than over the same period a year before.

The IMF expert believes that the growing presence of foreign banks in Russia could galvanize reforms. This positive evolution could prompt the emergence of several formidable private lending institutions with a big share of the market and the corresponding volume of operations, as well as speed up the demise of weaker lending institutions, de Vilpoi thinks.

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