The Central Bank of the Russian Federation Has Reduced Requirements to Russian Banks with Foreign Participation in Opening of Branches

Within the frameworks of Russia's accession to the WTO, the Bank of Russia has abolished the requirement which obliged Russian subsidiaries of foreign credit institutions to secure permit to open a branch in the Russian Federation.

It is to be reminded that earlier a credit institution of a foreign bank had to secure a preliminary permit of the Bank of Russia to open a branch in the territory of the Russian Federation, while other Russian credit institutions did not have to. With conditions regulating establishment of branches becoming equal to all, it would be easier for subsidiaries of foreign credit institutions to expand their business in the Russian Federation.

At the same time, it is to be noted that under the terms of Russia's accession to the WTO foreign banks are not allowed to open branches in the Russian Federation as Russian banks' position on the domestic market could otherwise be significantly impeded. Due to the above, no rapid growth in the share of banks with foreign participation in the capital of the Russian banking system should be expected.

P.V. Trunin, PhD (Economics), Head of the Monetary Policy Department