Small banks in Russia can unite with each other or around a large universal credit institution, such a topic is being discussed at the Central Bank of the Russian Federation. There are two types of associations – “Alliance” and “Umbrella”, writer The newspaper Vedomosti referred to Alexander Danilov, Head of the Department of Banking Regulation and Analytics of the Central Bank, who explained these models at a meeting of the regulator with representatives of banks with the participation of the Russian Banks Association.
Within the framework of the alliance, banks with a basic license can create a management company (MC), its capital will be formed at the expense of their contribution. In this type of association, its members are jointly and severally liable for each other’s obligations. The Criminal Code is needed to coordinate the activities of the association. It will manage the activities of the “Alliance” as a “head bank” and operate as a one-stop shop while interacting with the Central Bank.
As part of Umbrella, a large universal player will take small banks under their wing, regardless of license type. Participants of such an association will either pay royalties (license fees) to a major bank or become minority shareholders. In return, the parent bank will provide them with operational and commercial support.
The Central Bank believes that the partnership of small banks can “help improve business models – reduce costs (for example, for IT and marketing), increase business scale and customer base.”
According to the Central Bank of Russia, as of April 1, 2023, there are 327 banks operating in Russia: 226 banks with a universal license, 101 banks with a basic license. Banks with a capital of 1 billion rubles or more are granted a universal license, and banks with a capital of 300 million rubles or more are given a basic license. Simplified regulation is provided for banks with a basic license, but there are a number of restrictions. In particular, they cannot transact with foreign companies, as well as with foreign companies. Universal banks can run the full spectrum of operations, but must comply with the regulator’s regulations.