Putin’s Central Banker Is On a Tear
When Elvira Nabiullina needed backing for a new phase in her crackdown—one that could hit some of Russia’s biggest lenders—she went straight to the top. ‘I agree,’ said the president.
In Russia, Peresvet Bank had an edge no other big private financial institution could match. Its largest shareholder was the powerful Russian Orthodox Church. In a 2015 pitch to investors, Peresvet said the backing of the church and the bank’s other big owner, Russia’s Chamber of Commerce and Industry, gave it a “quasi-sovereign” status. For more than two decades, big state companies stashed their cash with the bank, whose ponderous full name—Joint Stock Commercial Bank for Charity and Spiritual Development of Fatherland—suggested its grand standing.
Even so, it took less than a month last fall for the bank, one of Russia’s 50 largest, to come undone and be taken over by the central bank. Peresvet was just the latest casualty in a financial purge presided over by Central Bank chief Elvira Nabiullina, a bookish economist who’s a favorite of Vladimir Putin. The regulator closed almost 100 banks in 2016, and in a cleanup with few precedents, Nabiullina has shut almost 300 over the past three years. This may be only the beginning. There are about 600 banks left across the world’s largest country, but Fitch Ratings analyst Alexander Danilov, adjusting for population, calculates that as an emerging market Russia would be fine with about 1 in 10 of those.