Top 75 Russian banks: State banks still dominate
The state giants still dominate the banking landscape in Russia, with private-sector institutions having much smaller market shares. The system remains largely Russian-owned, but a number of foreign-owned banks have gained a foothold and are earning a decent profit.
Foreign-owned banks make up roughly 12% of both the Tier 1 capital and the assets of the Russian banks in The Banker's database, but account for 27% of the profits. So while Russia maintains a largely nationally owned system – in contrast to many central and eastern European markets, where foreign banks dominate – overseas banks are now holding on to a significant share.
What is more, the foreign-owned banks are turning a good profit on the assets they have, with an average return on assets of 1.65%, more than 50% higher than the top 75 average of 1%, and profits on average capital of 18.13%, compared with 7.11% for the top 75. Capital ratios, by contrast, are broadly similar at about 15% for both types of bank.
When looked at in terms of individual market shares, Russian private-sector banks, both domestically and foreign-owned, all look small.
The largest foreign-owned bank in Russia is ZAO Raiffeisenbank, which, with just under $17bn in assets, accounts for only 2.5% of the total assets of the top 75. UniCredit and Rosbank (majority-owned by Société Générale) have similar asset shares, while the other foreign banks are about one-third the size of these three, or smaller.
But ZAO Raiffeisenbank does not look so tiny in comparison with The Banker's Top 1000 World Banks ranking, where its Tier 1 of $2.24bn would bring it in at 290th position – in the top third, in other words.
State domination
The Russian situation is distorted, of course, by the considerable might of the state-owned giants – Sberbank, VTB, Gazprombank and Russian Agricultural Bank – which dominate the system and make other banks seem smaller than they really are.
Moves by the Central Bank of Russia to promote consolidation among the smaller banks – by making mergers easier, raising capital requirements and clamping down on connected lending – are unlikely to change this dramatically.
State banks account for more than 50% of total assets but, ironically, in global terms they are not so large. Russia is the world's 12th largest economy but Sberbank, its largest bank, only comes in 43rd in The Banker's Top 1000, and in fact the country is underbanked, with only one bank branch per 3500 inhabitants.
Even with a slight dip in Tier 1, Sberbank is untouchable as the Russian leader with $24bn, putting it 505 places higher up the Top 1000 ranking than Russia's second-placed VTB, which in turn is three times larger than Gazprombank. However, Gazprombank is the leader in pre-tax profits with $2.61bn, a figure 2.5 times larger than Sberbank's profits.
