Top Private Commercial Banks Essay Example

from all sectors, leading to the emergence of new commercial banks. However, in 1996 there was an uneven growth rate between state securities investments and lending investments, resulting in a crisis in 1998 due to Russia's internal and external debts. This crisis caused a liquidity shortage as Russian banks had invested heavily in state securities. Consequently, panic ensued among customers who withdrew their deposits causing the banking system to come to a standstill. To address this issue, the Central Bank purchased government bonds from major banks and extended direct loans to them while Sberbank received customer deposits and some assets from commercial banks as part of measures taken to alleviate depositors' concerns and avoid default on customer obligations by Sberbank.

Commercial banks adopted new strategies and practices through restructuring programs that helped resolve the banking crisis. The Russian Banking Sector Development Strategy was introduced by the Central Bank in 2001 for better supervision of commercial banks.

Currently, the financial market in Russia has approximately 12 stock exchanges, with most of them located in Moscow where the trading floor of the Moscow International Currency Exchange (MICEX) and the Moscow Stock Exchange are situated. The regional areas outside Moscow, however, have stock exchange centres that exhibit very minimal trade volumes. The Russian Trading System (RTS) in 2000 saw telecommunication (33%), energy (23%), oil and gas (14%), and engineering sector (12%) as its major players (Volkov, 2002). Due to banks being unable to provide corporate financial assistance, the securities markets play a significant role in corporate finance in Russia. The six most liquid companies listed in the Russian Trading System (RTS), comprising RAO UES, LUKoil, NorNickel, Surgutneftgaz, Yukos, and Sibneft,

account for around 80% of value traded on the RTS (Standard and Poor’s, 2003).