Although the liquidity crisis that threatened the very stability of Russia’s financial sector did not take hold until mid-2008, there were already some clear trends by the end of 2007 that intensified in the turbulent year that followed. Above all, the strength of the three large state-owned banks – Sberbank, VTB-Bank and Gazprombank – has become more entrenched, with the top two more than doubling their Tier 1 capital ratios. These three banks control about 70% of Russian corporate and retail deposits, so when capital market funding became scarce in 2008, they retained the ability to grow their assets in a way that the rest of the sector will find difficult.
In practice, the capital base in the Top 50 banks is generally strong, with an average Tier 1 capital/assets ratio of 15.1% comparing very favourably to western Europe or the US. However, asset quality and liquidity have become the major concerns that can even threaten the solvency of Russian financial institutions (see pages 64 to 66).