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Siluanov Backs Higher Russian Capital Requirement After 2015

Russian Finance Minister Anton Siluanov said he supports a proposal under discussion by the government for a more than five-fold increase in the minimum capital requirement for banks after 2015 to spur consolidation.

Raising the limit to 1 billion rubles ($34 million) from the current 180 million rubles would be “possible and normal,” Siluanov said in Moscow today. The minimum is already scheduled to rise to 300 million rubles by 2015 and no decision has yet been made to increase it from that level, he said.

Siluanov, who pledged last September to “continue the work that was already started” under former Finance Minister Alexei Kudrin, is affirming his ousted predecessor’s stance to lift capital buffers to 1 billion rubles. Kudrin said in October 2010 that the proposal, which he estimated may halve the number of banks to about 500, would be delayed because of continued “tension” in the financial industry.

The country had 974 lenders on March 1, down from 1,058 at the start of 2010, central bank data show. Only 309 Russian banks exceed the capital level of 1 billion rubles as of March 1, Interfax reported, citing central bank Deputy Chairman Mikhail Sukhov.

The Micex Financials Index (MICEXFNL), which includes seven of the most liquid Russian bank stocks, was little changed at 5,431.31 at 2:58 p.m. in Moscow, in line with the broader market. The gauge has gained 10 percent so far this year. The ruble advanced 0.2 percent against the dollar to 29.20.

‘Large Banking Groups’

The government expects further consolidation of the financial industry, “with the creation of large banking groups, including some that control a large share of the market,” according to a document published by the Finance Ministry in March 2011 outlining a state strategy for banks to 2015.

“As the consequences of the financial crisis are overcome, the banking sector will develop amid tougher competition in the most profitable segments,” the government said in the document.

Russia’s five largest lenders controlled a combined 50.5 percent of total assets in the banking system on March 1, compared with 47.7 percent at the start of 2011, according to Bank Rossii.

“I think that the capital requirements to 2015 have already been set in law,” Sukhov said, Interfax reported. “To change them before 2015, the reasons would need to be beyond serious.”

To contact the reporter on this story: Scott Rose in Moscow at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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