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Asian banks nibbling at Russia

MOSCOW. (RIA Novosti financial analyst Anatoly Gorev) - In the next few months, the share of foreign capital in the aggregate Russian bank assets may sharply increase.

First Deputy Chairman of the Russian Central Bank Gennady Melikyan announced that the Bank of Russia has allowed some foreign banks to buy more than 20% of the authorized capital stock of several Russian banks. Melikyan explained that potential buyers included banks from South-East Asian countries, and potential sellers are mostly Russian banks, which are not on the top 30 list. This situation is symbolic for the national banks at the current stage of development.

As distinct from American and European banks, Asian financial "tigers" have not evinced much interest in Russia. In the last five to seven years, Russia has hosted several major international credit and financial groups - Citibank (part of Citigroup), the Hungarian OTP Bank, Italian UniCredit and Intesa and the Belgian KBS group. As a result, the share of foreign investors in the aggregate capital of the Russian banks has topped 20 percent.

In the first six months of 2007, the number of banks with 100% foreign capital grew from 52 to 58, and those with more than 50% foreign capital, from 13 to 19. The overall number of Russian banks with any foreign participation went up from 153 to 180 in January-June 2007. Western financial agencies acted as both investors and buyers in the overwhelming majority of cases.

The response of Asian banks to this Western onslaught has been less than commensurate. Only the Indian ICICI is actively working with Russian clients. Other banks from South East Asian countries mostly deal with corporate clients in Russia, that is, a narrow circle of national companies, which have established long-term partnerships with Russian firms.

Therefore, the desire of Asian banks to get a bite of Russia at long last is not a sensation. Experts believe that they have every chance of settling in here. They have no serious problems with funds and are ready to pay a high "entrance fee." Even more important is that the Russian market will be a kind of deja-vue for them - some 10 to 15 years ago, they had the same situation as Russia has today - rapid growth of credits for individuals, accompanied by increasing "bad debts;" reduction in the number of banks due to market consolidation and so on.

The only difference is that in South East Asian countries the people did not mistrust their banks as much as Russians do here. However, experts observe that they can register only repercussions of the Russian crisis. To sum up, the new arrivals from exotic countries may count on a good welcome.

At the same time, they should not hope that the purchase of a leading bank will become their entry ticket. Melikyan made a special reservation about the top 30 banks. This is very typical for our market today - those monsters which wanted to attract a strategic investor have already done so.

The top-30 are the banks that are either only getting ready for an IPO (initial public offering to attract minority shareholders), or are not interested in portfolio or strategic investors. Naturally enough, the demand comes down and concentrates on the banks which can offer potential buyers big clientele, a recognizable brand and, in the best-case scenario - a ramified network of affiliates embracing not only Moscow and St. Petersburg but also big regional centers.

Such banks are not likely to be sold with a six-fold bonus to the capital, as it recently happened with Rosbank. Experts believe that the flow of Asian money may further push up the capital ratios during the purchase of Russian bank assets. Now they do not exceed 2.5-3 times, but the Asian wave of demand may raise them to 3-3.5 and even four times as regards the capital.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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