A leading financial markets expert, Andrei Barkhota, suggests that a notable number of credit institutions could exit the banking sector this year. He points to a range of influencing factors, including license cancellations, and ongoing mergers and acquisitions where smaller banks are taken over by larger ones. He discussed these dynamics in an interview with 360 TV channel.
Analysts from Expert RA previously warned that sector profits could drop around 13 percent in 2024, with as many as 15 banks possibly withdrawing from the market. Barkhota notes that banks which failed to adjust to sanctions pressures faced withering headwinds, particularly after a period when flexible economic approaches were more common, may not survive without strategic changes.
He emphasized that if banks do not adapt in the current environment, survival becomes unlikely. In some cases, institutions could be sold to other shareholders as a form of corporate consolidation rather than a direct shutdown.
There is also concern about alternative banking models gaining traction. Some banks have placed liquidity at the service of clients in ways that raise concerns about anti money-laundering controls. When regulators identify such practices, licenses can be revoked, a factor Barkhota identifies as a primary driver of sector contraction.
Another crucial factor is the high level of interest rates. With a base rate around 16 percent and yields on government bonds in the same vicinity, the appetite for new credit remains subdued. Barkhota explains that while returns on safe assets are attractive, borrowing demand continues to fall sharply in this climate.
As a consequence, many banks could face significant pressure. Market dynamics may push some institutions toward mergers or force others to surrender their licenses to the regulatory authorities.
Barkhota reassured investors that their interests are not at risk from these developments. He urged Russian residents to diversify deposit holdings, suggesting that amounts exceeding 2 million rubles be distributed across at least three different banks to mitigate risk.
These trends align with Expert RA’s projections, which anticipate that the combined profits of the ten largest regulators in 2024 will total around 2.1 trillion rubles. The outlook underscores the need for prudent financial management and diversified risk exposure in a shifting banking landscape.
Economists have consistently advised Russians to consider spreading funds across multiple institutions, a strategy that remains prudent in times of uncertainty and regulatory upheaval. The current climate underscores the importance of liquidity management, risk awareness, and a careful assessment of credit and deposit strategies in the banking system.