Where Is the Russian Banking Crisis?

Sanctions were supposed to kill the Russian financial sector. It did, and it didn’t.

It did insofar as any globally ambitious Russian money center bank or asset manager had their expansion plans curtailed by sanctions. Doing business as a Westerner with a Moscow or St. Petersburgh-based bank is next to impossible now. Sanctions hurt.

“Because of the sanction environment, global banks, vendors, partners are extremely careful in dealing with Russia-based or connected counterparts, and always ask a lot of questions,” says Neri Tollardo, a former executive at Tinkoff Bank in Moscow, now living and working in Mexico as of mid-2022. “Banks do not process or accept payments in and out of Russia, and often times global counterparts have self-imposed compliance standards that are much stricter than the law,” he says.

So in this way, sanctions have hurt Russia’s financial institutions.

But a Russian banking crisis, one that looks like we have seen in the U.S. recently with Silicon Valley Bank and in Switzerland with Credit Suisse, has not occurred. There were never any runs on Russian banks. The ruble strengthened. And while most banks are protected by the state – led by Sberbank and VTB – the Russian Central Bank has spent much of the last decade working to clean up the financial system. This house cleaning, led by Central Bank president Elvira Nabiullina, which led to the closure of hundreds of private banks, is arguably why sanctions didn’t ruin Russian finance. Elvira had already taken the weak links out of the system. And there were many. For this reason, Russian banks have survived the West’s sanctions regime and stock market delistings better than anyone would have imagined. For a cynical Russian, watching Silicon Valley Bank and Credit Suisse burn down while their bankers are gainfully employed is like smirking before the camera lens in front of a burning building. (Read more from “Where Is the Russian Banking Crisis?” HERE)

Delete Facebook, Delete Twitter, Follow Restoring Liberty and Joe Miller at gab HERE.