Foreign banks branches may appear in Russia again

Mikhail Ershov commented to the Stolypin Club's telegram channel on the possibility of opening branches of foreign banks in Russia.

- The topic of branches has been around for a long time – since Russia joined the WTO, and at that time they were banned. The ban was quite motivated: at that time, the Russian banking system was small, shallow, it was only gaining strength, and branches of foreign banks that are associated with parent banks could easily crush them.

Today the situation is somewhat different. We have quite large advanced banks. In the current circumstances, it seems that branches in Russia will be opened rather by small banks in order not to be subject to secondary Western sanctions.

But we must also keep in mind that, in fact, we are letting companies that are non-residents into the country, and their actions may also be dictated by their regulators.

Branches can probably help with international payments, but it is important to offset all the risks that may arise in this case, given the conditions of sanctions. Authorized branch operations should also take into account the fact that the current status of their country of origin as "friendly" may change. Let me remind you that the withdrawal of foreign subsidiaries from Russia after the events of 2022 was dictated primarily by political reasons, not economic ones. Therefore, with branches, these risks must also be borne in mind.

The intentions of the Bank of Russia to limit the operations of branches seem justified. At the same time, in order to prevent unjustified capital outflow, it is necessary to fully use the mechanisms of currency control. And it seems that branches of foreign banks should be monitored by the law on currency regulation and currency control even more closely than Russian banks.