The Central Bank of Russia opposes the establishment of foreign-bank subsidiaries on Russian territory

Thursday, May 26, 2022

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The Central Bank of Russia opposes the establishment of foreign-bank subsidiaries on Russian territory. This was disclosed by Andrei Kozlov, first deputy Central Bank board chairman, who is attending a conference (presentation ceremony) "Investment Opportunities Inside The Russian Banking Sector", which has opened in New York. The opening of foreign-bank subsidiaries is being discussed during Russia's WTO (World Trade Organization) membership talks; Russia voices a clear-cut position on this score, Kozlov said, while commenting on a statement by John Taylor, US Treasury's Undersecretary for International Affairs, to the effect that Russia's admission into the WTO would enhance competition inside the Russian banking sector. We authorize substantial trans-border operations, also allowing the establishment of foreign-bank subsidiaries on Russian territory. Such banks operate in line with the national regime on a par with Russian banks; incidentally, far from every country of the world implements such policies, Kozlov informed those present. At the same time, we don't want foreign banks to establish the so-called direct subsidiaries without the creation of legal entities, Kozlov told his audience. This can be explained by several reasons; first of all, this permission would create an insurmountable competitive advantage in favor of foreign banks, Kozlov pointed out. The Russian banking system is now asserting itself; and we provide this opportunity to it, no matter what, Kozlov said. Big-league, medium-size and small clients would request banking services outside Russia, if we allow the creation of direct subsidiaries, Kozlov added. Foreign banks want to save on the creation of subsidiaries because this is cheaper than to establish a legal entity, Kozlov went on to say. They want to spend little money and to render substantial banking services, which still can't be provided by Russian banks. They want to invade the market and to take part of our banks' clients away from them, Kozlov noted. The state is called on to find a reasonable balance, Kozlov stressed. We believe that we have found such a balance; and we are defending our position during our talks with the World Trade Organization, Kozlov noted in conclusion.

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