The Banking Sector Rescue in Russia

...........................................................................................................................3 Introduction .........................................................................................................................4 Structure .....................................................................................................................5 1 The Russian Financial Crisis of August 1998 ..............................................................6 The impact of the crisis on the banking sector............................................................7 Why banks were so vulnerable ...................................................................................9 A case study: Tokobank ....................................................................................11 2 The Rescue of the Financial System: 1998-1999 .......................................................13 The 90-day moratorium and the transfer of personal deposits to Sberbank ..............13 The policy of ‘Stabilisation Loans’...........................................................................14 Restructuring ............................................................................................................16 ARKO ...............................................................................................................17 Examples of Asset Stripping and ‘Bridge Banks’.....................................................19 The never-ending bankruptcy of Inkombank.....................................................20 Too-big-to fail: SBS-Agro.................................................................................21 Oneximbank fades into BaltOneximbank and Rosbank.....................................22 Bank Menatep and Rosprom group ...................................................................24 3 The Evolution of the Banking Sector after the Crisis: 2000-2001..............................25 Recent Trends...........................................................................................................25 Market Structure.......................................................................................................29 The consolidation of state banks........................................................................29 Pocket and ghost banks .....................................................................................32 Tiny institutions.................................................................................................33 The Reform Agenda .................................................................................................34 Conclusions .......................................................................................................................35 Bibliography ......................................................................................................................36 Filippo Ippolito The Banking Sector Rescue in Russia Bank of Finland / Institute for Economies in Transition BOFIT Online 12/2002 www.bof.fi/bofit 3 Filippo Ippolito The Banking Sector Rescue in Russia