The 30 or so mid-sized institutions that comprise Russia’s second-tier of homegrown universal banks are well practiced at beating the odds. They are over-shadowed by state-owned giants that can raise capital at preferential rates and are largely unable to break the hammerlock that their Western counterparts hold on the country’s largest capital-hungry corporates. However, not only have they separated themselves from a crowded field, most have emerged from the turmoil of the 1990s to occupy important – and profitable – positions among leading agents of wealth transfer in the country’s crude-driven economic renaissance.
To be sure, these banks do have concerns that go well beyond heady sector competition and the threat of yet another potentially bank-breaking currency crisis of the type that hit the sector in June and July. Constrained by higher capital costs, their balance sheets burdened by short-term liabilities, and coping with the demands of an increasingly price-sensitive corporate client base, Russia’s medium-sized banks have, of late, also been forced to manage skyrocketing growth.
