Understanding Banking Russia and Global Commerce

Russia's banking system is heavily regulated, with a significant portion of the country's banking assets controlled by the state. The Russian government has a significant stake in many of the country's largest banks, including Sberbank and VTB Bank.

The Central Bank of Russia plays a crucial role in regulating the country's banking system, setting monetary policy and maintaining financial stability. The bank has implemented various measures to prevent the country's banks from engaging in risky lending practices.

Russia has a relatively small but growing number of international banks operating in the country, including foreign banks such as HSBC and Citibank. These banks offer a range of services, including corporate and investment banking.

The Russian government has implemented various measures to attract foreign investment and promote the country's economic growth, including the creation of the National Wealth Fund and the introduction of a number of tax incentives for foreign investors.

Russian banks have been in the news lately due to international sanctions. Over 50 small-to-medium Russian banks have been designated by OFAC to prevent Russia from abusing the international financial system.

Several major Russian banks have been affected by sanctions, including Gazprombank, which has been designated by OFAC for operating in the financial services sector of the Russian Federation economy. Gazprombank's foreign subsidiaries have also been sanctioned.

You can still open a non-resident bank account with some Russian banks, but you'll need to attend a bank branch in person to give a signature sample. Some major national banks in Russia include Sberbank, Rosbank, Raiffeisen, and Gazprom.

Gazprombank (Gazp) is Russia's third-largest bank by assets, with a market capitalization of ₽4.06 trillion. It's a subsidiary of Gazprom, the Russian natural gas giant.

The bank was founded in 1990 to provide banking services to the energy industry, and it's predominantly owned by Gazprom and related entities, including Gazprom's pension fund. Gazprombank has expanded lending to other sectors of the Russian economy.

Gazprombank is a significant player in the Russian financial market, with a revenue of ₽10.2 trillion and a net income of ₽579.8 billion. The bank's 1-year trailing total return is -9.42%.

Here are some key statistics about Gazprombank:

The bank is listed on the Moscow exchange, and it continues to focus on energy financing, although it has expanded its lending to other sectors of the Russian economy.

Sberbank (Sber) is Russia's largest bank network, making it easy to find a branch. With over 107 million retail customers, they account for approximately half of Russia's deposits and credit card accounts.

Sberbank has a long history, dating back to 1841 when Russia established a network of state-owned savings banks. The Russian government owns a stake of just over 50% in Sberbank.

Sberbank's market capitalization is ₽5.5 trillion (rubles), making it the largest Russian bank by market capitalization as of July 2023. They generate a significant amount of revenue, with ₽4.1 trillion (rubles) in revenue (TTM).

Here are some key statistics about Sberbank:

Sberbank's 1-year trailing total return is a remarkable 93.1%, indicating significant growth in the company's value over the past year.

VTB (VTBR) is a Russian bank with a significant market presence. Founded as Vneshtorgbank in 1990, the bank was later renamed VTB.

The Russian government holds a majority stake in VTB, with 92.2% of the bank's share capital, including 60.9% of its ordinary shares.

The bank's financials are substantial, with revenue reaching ₽1.2 trillion and net income of ₽303.4 billion in the last reported period.

Here are some key financial metrics for VTB:

VTB has faced international sanctions, with the U.S. Treasury imposing full-blocking sanctions in February 2022 and the European Union excluding it from the SWIFT messaging system in March 2022.

Dozens of Russian banks are under sanctions, with over 50 small-to-medium banks being designated by OFAC to prevent Russia from abusing the international financial system.

These banks were identified as posing a significant sanctions risk, making it essential for foreign financial institutions to be aware of the potential consequences of maintaining correspondent relationships with them.

Promsvyazbank, one of the banks mentioned earlier, has a significant presence in Russia, with a net income of ₽25 billion in Q1 2023 and assets of ₽6.3 trillion.

The bank was founded in 1995 by brothers Dmitry and Alexei Ananyev and has undergone several acquisitions, including one in 2015 that helped it become one of the fastest-growing Russian banks.

Here's a list of some of the Russian banks under sanctions:

The state took ownership of Promsvyazbank in 2018 to finance the defense sector and military activities, indicating the close ties between the bank and the Russian government.

Russia has a sophisticated banking network with an easy availability of ATMs, making it convenient for foreigners to access their money.

You can start the process of opening a bank account from abroad, but most banks will require you to visit a branch and provide a signature sample to activate your account.

There are many large international banks operating within Russia, so it's worth checking if your home bank has branches there. This can make it easier to transfer to a local branch rather than starting again with a new bank.

Russia has designated over 50 small-to-medium banks to prevent Russia from abusing the international financial system, so it's essential to choose a reputable bank. Here are four major national banks in Russia to consider:

Russia has designated more than 40 local securities registrars, requiring the transfer of certain securities to these entities via Presidential Decree 840.

These registrars are being targeted by OFAC for their role in potentially evading or avoiding sanctions.

OFAC has updated FAQ 1197 to provide guidance on securities held at or involving these registrars.

The Russian government's attempt to circumvent sanctions by using these registrars has led to the designation of these entities.

OFAC has also designated 11 additional officials from the Central Bank of the Russian Federation (CBR), including those involved in maintaining Russia's international financial connectivity.

These officials are being targeted for their role in supporting the Kremlin's unprovoked war against Ukraine.

Banking fees and charges can be a real challenge in Russia. Regular charges are levied to keep your account open or use a credit or debit card, which might seem small but can add up over time.

You'll also be charged a fee for withdrawing cash from an ATM operated by a different bank. This is a common practice in Russian banking.

Not all payment cards can be used to make web payments to foreign firms. Visa cards should be fine when used internationally, but it's essential to check with your bank.

Fees can be particularly steep if you need to move money between accounts that use different currencies. This is another area where expats might struggle.

Banks often make a profit by using an unfavourable exchange rate when processing international money transfers. This can be a costly mistake for those who don't shop around.

Wise is a better option for international money transfers, as it uses the mid-market exchange rate with no markup or hidden fees.