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World Bank: Russia Banking Sector Remains at Risk Despite Recent State Costly Bailouts

"The banking sector remains afflicted with high concentration and state dominance," the World Bank said in the report

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world bank, russia banking sector
A Russian flag flies over the headquarters of the country's central bank in Moscow (file photo) RFERL

The World Bank says Russia’s banking sector is stabilizing but remains at risk despite recent state bailouts of Russian banks totaling tens of billions of dollars.

In a scheduled report dated June 10, the Washington-based lender estimated that state-owned banks now account for 62 percent of all assets at Russian banks following the closure of hundreds of lenders in recent years and the rescue of several major financial institutions.

“The banking sector remains afflicted with high concentration and state dominance,” the World Bank said in the report. The warning comes less than a week after the World Bank, the lending arm of the International Monetary Fund, cut Russia’s 2019 economic growth forecast to 1.2 percent from a previous estimate of 1.5 percent because of oil production cuts.

world bank, russia banking sector
“The banking sector remains afflicted with high concentration and state dominance,” the World Bank said in the report. Pixabay

While the bank said Russia’s macroeconomic and fiscal buffers were strong, economic growth prospects remained modest. “Downside risks to Russia’s growth outlook stem from the potential expansion of sanctions, deterioration of financial market sentiment, souring global trade environment and a dramatic drop in oil prices,” the report said.

Russia’s business climate faces stiff headwinds for many reasons, including the economic sanctions imposed by the United States, Japan, and European allies for Moscow’s 2014 seizure of Crimea, along with alleged Russian interference in U.S. elections.

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The World Bank projected annual economic growth for the years 2020 and 2021 at 1.8 percent. “On the upside, national projects aimed at strengthening human capital and increasing productivity, if well-implemented, could positively affect Russia’s potential growth in the medium-term,” the bank said in its report.

Russia’s economy expanded 2.3 percent in 2018, aided in large part by one-off projects, buoyant energy prices, and an influx of tourists for the soccer World Cup. (RFERL)

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Russia Accuses Facebook, Google of Election Interference

“This can be considered foreign meddling into Russia’s state sovereignty and interference with the country’s democratic process,” the watchdog said in a statement

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Corporate, America, Climate Change
FILE - In this April 30, 2019, file photo, Facebook stickers are laid out on a table at F8, Facebook's developer conference in San Jose, Calif. The Boston-based renewable energy developer Longroad Energy announced in May that Facebook is building a… VOA

Many materials published on Facebook and Google resources can be considered interference in Russia’s internal affairs, said an official of the Russian Central Election Commission.

On Sunday, municipal and regional elections were held across Russia, with a total of 22 administrative centres electing city parliaments, and three regional capitals electing heads of municipalities, Sputnik news agency reported.

“Much of what is published there can be attributed to those materials that directly affect a person who is making a choice,” said Nikolai Bulayev, Deputy Chairman of the Russian Central Election Commission.

“If there is an influence, I’m sure that this can be considered as interference in internal affairs,” Bulayev told reporters.

google
FILE – A woman walks past the logo for Google at the China International Import Expo in Shanghai, Nov. 5, 2018. VOA

On the day of the elections, Russia’s communication watchdog, Roskomnadzor, said that it had determined that several US Internet giants — Google, Facebook and Youtube — had featured politically charged advertisements on their platforms, which constituted foreign meddling in Russia’s electoral procedures.

“After monitoring various media platforms on the day of the elections, it has been determined that Google’s search engine, the Facebook social media platform and Youtube’s video hosting service featured political advertisements.

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“This can be considered foreign meddling into Russia’s state sovereignty and interference with the country’s democratic process,” the watchdog said in a statement.

The Russian parliamentary upper house’s Commission on Protecting State Sovereignty will look into possible foreign meddling in the country’s local elections in the second half of September, the commission’s chairman Andrei Klimov said on Sunday. (IANS)