The Russian banking system is comprised of more than 600 banks with the three largest banks (Sberbank, VTB and Gazprombank) amounting to 60% of total assets and 71% of total loans as of 2015. The top six largest banks accounted for 69% of total assets and 83% of total loans to customers in 2015. The rest of the market is distributed among smaller banks, most of which operate at a regional level.

Russian Banking Sector Matrix

The Russian banking sector is strongly concentrated and state-owned banks are, by far, the most important players in the industry. State-owned commercial banks account for more than half of banks’ assets. Sberbank and VTB group together accounted for 46,3% of total assets as of May 2016. Banks are mostly funded by deposits of non-financial corporations and individuals.

Russian banks can be grouped into three tiers depending on their access to the interbank market, rating and exposure to risks. The first group is comprised of large banks with high credit ratings and therefore low funding costs, which rely mainly on the FX swap market for wholesale ruble liquidity and which have access to both secured and unsecured interbank markets. The second group is characterized by mid-sized banks which heavily depend on CBR facilities for funding as they have no access to unsecured interbank markets. The third tier is dominated by small banks with low credit ratings, little or no access to interbank markets and often non-transparent ownership structures and lending practices.

Banks Asset Position