The CIS banking systems are marked out by the abundance of small banks; weak capitalisation; lack of transparency (particularly with regard to ownership); concentration of business to associated companies; and rapid asset and loan growth. Allied to the possibility of economic and political shocks, this puts them among the riskiest in the world.

The region covers an area five times the size of the EU and has a population of some 281 million people – half that of the EU. At year-end 2003 there were approximately 1690 banks in the region, of which 1277 were in Russia. However, this number is considerably lower than the figures of a decade earlier – Russia in particular having nearly halved the number of banks in that time.

In some countries, for example, Turkmenistan, Uzbekistan, Belarus and Russia, the major state-owned banks dominate their domestic markets and thus allow governments to dictate lending policy, possibly to the detriment of competing private banks. Although there has been a limited float of shares in Russia’s Sberbank, the governments in these four countries have been reluctant to contemplate full privatisation.

The Top 50 fastest growing banks in the CIS are shown in the accompanying table, which is headed, as in the main table, by Alliance Bank from Kazakhstan – possibly benefiting from the banking reforms started some years ago. In contrast to the central European listing, only seven of the banks in the Top 50 are majority foreign-owned. The 213 banks analysed from the region had aggregate Tier 1 capital of $22.8bn and aggregate assets of $169.5bn.

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