Currently, there is only one outstanding fundamentally important issue that concerns the de facto ban on the opening of branches of foreign banks in the Russian Federation, bypassing the creation of a subsidiary bank. The government and the Central Bank of the Russian Federation based on the fact that at the current stage of development of the banking sector, the establishment of branches of foreign banks, bypassing the establishment of a subsidiary bank, should be considered premature, primarily on the basis of the need to maintain a level playing field for all credit organizations providing banking services. In all the other moments of the conditions of admission of non-residents in the Russian banking system fit into a worldwide licensing practices of banking and do not cause significant objections on the part of foreign investors. The inflow of foreign capital is considered by the monetary authorities of the Russian Federation as an important factor in the development of the banking sector. They assume that foreign capital brings to the Russian banking market modern technology, new financial products, enhances the culture of corporate governance in credit institutions, the development of competition between credit institutions and the improvement of banking.
Given the above limitations, in the 1990s, foreign banks are in principle not considered buying a participation in the capital of the Russian credit organizations as a way of entering the Russian market. Business of all foreign banks present in Russia for more than 10 years, began with the establishment of a wholly owned subsidiary of the structure and obtaining a banking license. The operations of these banks concentrating generally on the service of foreign companies operating in Russia, as well as investments in the stock market. Only in the early 2000s, when the Russian banking sector entered the path of sustainable growth, foreign banks began to focus their strategy in Russia to the rapid increase in the volume of operations and the development of new market segments.
In these circumstances, the question of the acquisition of finished business as an alternative to organic growth was already practical significance. At present, we can say that the role of foreign investors to increase the capitalization of the Russian banking sector is becoming more pronounced. In 2006-2007, the growth rate of non-resident investment in the authorized capital of credit institutions significantly outpaced the growth rate of the total registered share capital of credit institutions.
Estimates and projections indicate that the extent of participation of foreign capital in the Russian banking system, including through mergers and acquisitions, in the short term can greatly expand. The trend towards the liberalization of the banking market and strengthening the position of foreign capital is becoming more apparent. Bank of Russia continued to take a tough stand on only one issue, namely, the discovery (or rather - banned) direct branches of foreign banks in the Russian Federation.
The rest of its recent decisions he has balanced the rights and procedures for Russian and foreign investors for the acquisition of minority (20%) of shares and stakes in Russian banks. Since the second half of 2005 has increased dramatically the proportion of credit institutions with the predominant participation of foreign capital. Currently, he approached 25% of the total share capital, compared with 6.5% in the early 2000s.
The rapid growth of this indicator due to the acquisition of control by non-residents or full stake in a number of major Russian banks. In the near future we can expect an increase in the share of non-resident participation in the aggregate authorized capital of the Russian banking system to 30-35%, both due to their entry into the capital of the banks, and because of the greater capacity of own funds of banks under their control.
Against the backdrop of an abrupt increase in the share of non-residents in the aggregate authorized capital there is still a slow but steady increase in the level of activity of banks with foreign participation in key segments of the financial services market. The share of transactions of banks with foreign participation in key segments of the market do not exceed 12-13%. With the exception of surgery for placement of funds in the interbank market, where banks with foreign capital have traditionally been one of the main operators. Here, the proportion is 18-22%. Nevertheless, the overall trend is quite obvious.
Foreign-owned banks are expanding their numbers, and their share in total assets subject to possible major acquisitions may, according to available estimates, in the near future to increase to 25-30%. The number of banks controlled by non-residents for the period 2005-2007 increased from 42 to 88. Some of them have been able to make significant progress. Among the 30 largest Russian banks 6 under the direct control of foreign capital.
In many ways, this is due to the fact that the Russian banking sector is seen by foreign financial institutions as an attractive investment. In a still low saturation of the market of financial services profitability of bank capital in Russia significantly higher than in the countries of Eastern Europe.