Russia's banking system, while relatively large, is dominated by the state. Pressures on the banking system have increased significantly in the past two years as a result of recession and international sanctions related to the seizure of the Ukrainian region of Crimea. The country lacks significant institutional investors because of the limited development of insurance and asset management activities, and of a private pension system. This hampers the development of the securities market.
The industry identified as "financial intermediation" generated 4.3% of overall economic output in the third quarter of 2015, according to the Federal State Statistics Service (RosStat). It employed 1.31m persons, or 1.9% of the employed labour force, in 2014 (latest data available). However, large cuts in staff are expected in response to the current economic and financial crisis.
Russia's financial sector has endured a difficult two years, with both the short-term economic growth outlook and long-term investor sentiment appearing to be bleak. The sector was affected by large capital outflows in 2014, which, worryingly for the long-term economic outlook, predated the current political crisis in Ukraine. These have risen further as a result of Russia's annexation of Crimea from Ukraine and the stand-off with the West. The EU and the US have imposed sanctions on major Russian banks, which have led to a rise in the cost of borrowing from abroad and will limit access to external funding. The sanctions were most recently renewed in December 2015 for a further six months, and we expect them to remain in place until the end of 2016, before they are gradually relaxed.
Industry List: Asset management, Financial Services, Banking, Financial Services, Financial markets and instruments, Financial Services, Financial regulation, Financial Services, Financial Services, Financial Services, Insurance
Industry Codes (NAIC): 52
Industry Codes (SIC): 60 SHOW LESS READ MORE >
Financial Services Report Russia 1st Quarter
Financial services report
Financial markets and instruments
Monetary and currency policy: Monetary policy
Monetary and currency policy: Exchange rates
Russia at a glance