Incomplete staff: the number of operating banks in Russia will decrease
The reduction in the number of banks in Russia will continue at the pace of 2024, and by the end of this year there will be fewer than 300 of them, according to a review by the rating agency Expert RA.The expert community believes that this is a natural process that leads to the recovery of the industry. Izvestia investigated whether conditions for banking products could worsen and what customers could expect in general.
Consequences for customers
A decrease in the number of banks will lead to a further increase in the concentration of assets and profits of the largest market players, Ksenia Yakushkina, Director of Banking Ratings at Expert RA, told Izvestia.
— At the same time, the deterioration of conditions for customers should not be expected, since there are quite a lot of large federal and regional credit institutions competing in the sector, she noted.
The noted reduction in the number of banks will not have a significant impact on the development of the industry, Valery Piven, head of the ACRA Financial institutions ratings group, confirmed to Izvestia.
— The positions of the largest players have not changed with this reduction, and competition remains extremely high. Banking products have a very high level of typing: none of the organizations can offer a product that is fundamentally different in its properties from the products of other banks. With this in mind, even with fewer players than now, the competition between them will be quite high," he believes.
The peak in the number of banks occurred at the end of 1994 and the beginning of 1995, Oleg Akimov, Associate professor of the Department of Banking and Entrepreneurship at the State University of Management, told Izvestia. At that time, there were about 2,500 credit institutions in the country.
— After that, the number of banks in Russia has steadily decreased by an average of 40-50 per year. Although in recent years, it has not been so fast. In 2019, the number of organizations decreased by 38, in 2020 - by 36; in 2021 — by 31; in 2022 - by nine; in 2023 — by two; in 2024 - by 10," the expert said.
At the same time, conditions for banking products are much more dependent on the regulatory and monetary policy of the Bank of Russia, including the key interest rate, and on the amount of funds allocated by the state for various concessional lending programs (for example, on family mortgages or loans for SMEs).
— We would allocate 1-2% of the impact [on conditions for banking products] to reducing the number of banks. The remaining 98% is due to the influence of other factors. We do not accept the situation when a bank that offers banking products or services unique to its customers leaves the market," the expert believes.
The reduction in the number of banks in Russia should not be perceived as a negative trend, Alexey Lossan, an expert at the Compare company, noted in an interview with Izvestia.
— On the contrary, this process is aimed at strengthening the stability of the financial sector and improving the quality of services for customers. Fewer banks means that the remaining players will be more stable, professional and able to offer reliable and transparent products to customers," he stressed. — This trend is related to the tightening of the Bank of Russia's requirements for capital, risk management and transparency of operations, which minimizes risks for customers and reduces the likelihood of bankruptcy.
According to him, reducing the number of banks will not lead to less competition. On the contrary, the remaining players will compete for customers, offering more favorable conditions, high-quality service and innovative products. This may result in lower fees, better conditions for loans and deposits, as well as the development of digital services.
— Large banks that remain in the market are actively investing in digitalization, which means that customers have access to more convenient and modern services such as mobile applications, online lending and remote servicing,— said Alexey Lossan. — Ultimately, reducing the number of banks is aimed at creating a more stable and transparent financial system. This increases customer confidence in the banking sector as a whole and has a positive impact on the country's economy. The conditions for banking products will not worsen, but, on the contrary, will become more profitable.
Sector recovery
The reduction in the number of banks in Russia is a natural process that leads to the recovery of the sector, Valery Tumin, a member of the expert council on the development of the digital economy at the State Duma Committee on Economic Policy, confirmed to Izvestia. Weak players who cannot withstand competition, as well as those who used "gray" schemes, are leaving the market. As a result, large and reliable banks with stable business models remain.
— This will lead to an increase in confidence in the banking system. Large banks have better liquidity, stable sources of funding, and more advanced digital services. They are able to provide customers with high—quality financial products and reduce risks for depositors," he assured.
In his opinion, this may affect the conditions for banking products in different ways. On the one hand, the consolidation of the sector will lead to greater stability of rates and fewer abrupt changes in terms of service. On the other hand, a decrease in the number of players can reduce competition, which sometimes leads to higher loan rates and lower deposit returns. However, the major players also have a regulator that monitors the availability of financial services.
— In general, reducing the number of banks is a step towards a more transparent and reliable market, which is positive for the economy in the long term, the expert believes.
Reducing the number of banks is a natural and evolutionary process. Weak players are leaving the market, which contributes to the improvement of the entire banking system, says Yuri Tverdokhleb, PhD in Economics, Associate Professor of the Department of Regulation of Financial Institutions at the FSB RANHiGS.
— I think this will not negatively affect the stability of the banking system as a whole and individuals,— the expert told Izvestia. — It is expected that the number of banks will decrease by about 10-20 institutions, but this process does not pose a threat to the stability of the country's financial system. With the improvement of the foreign policy situation and foreign economic relations, new players may appear on the market, as the potential for the development of banking products remains high.
Sector change
In recent years, the banking sector has been consolidating capital and competencies in the hands of several dozen major banks, Evgeny Mironyuk, an expert on the stock market at BCS World of Investments, reminded Izvestia. The reduction in the total number of banks will be primarily due to acquisitions by large banks. At the same time, private clients' access to banking products will hardly suffer due to the digitalization of banking operations.
— The greatest competition is observed among the backbone banks. Small credit institutions cannot compete with them due to the modern specifics of the banking business, which implies the need to provide high-quality digital services and a wide partner network. This is possible only for a small number of banks that are ready to scale their business in all regions and even compete abroad," the expert believes.
The process of sector consolidation, in his opinion, can have negative consequences only for regional businesses, which find it easier to resolve issues of transactions and banking services with local regional banks.
However, there is still a small risk that banks will start offering a more limited product line, as they will not need to actively attract customers, and this may lead to standardization of services, Olga Dementieva, financial adviser to insurance broker Mainsgroup, told Izvestia.
— In addition, customers will start looking for more flexible financial solutions, which may lead to the growth of alternative financial non—banking institutions, the expert said.
Izvestia sent requests to the Central Bank and the Ministry of Finance, but no responses had been received at the time of publication.
Переведено сервисом «Яндекс Переводчик»
