Russian bank falls victim to crime fears
ByLine: Nick Holdsworth in Moscow
RUSSIAN savers were bracing themselves for a string of bank closures yesterday after another Moscow bank crash.
Credittrust bank executives froze all financial transactions yesterday and started negotiations with the Russian
central bank on how to meet millions of pounds worth of rouble-denominated bond debts.
The bank has fallen victim to weeks of rumours connecting it to Sodbiznesbank, which closed last month after
authorities stripped it of its banking licence. The action followed an investigation into money laundering centring on
the payment of ransom money in the kidnap and murder of two employees of the Russian truck maker Kamaz.
The move came against a background of increasing official pressure to clean up Russia's network of 1,200 banks,
many of which are believed to be involved in money laundering and other criminal activities.
Executives at Credittrust said they were taking the action to prevent further damage to the bank after two weeks in
which other financial institutions had imposed increasingly tight limits on commercial transactions with it.
Credittrust had declared deposits of pounds 160m- pounds 220m and was ranked as the 64th largest bank in Russia in
terms of working capital.
News of the inter-bank lending limits sparked a run on the bank during which an estimated pounds 4m was paid out
before Credittrust managers moved to stem the outflow.
The latest closure led to renewed scenes of crowds of angry depositors beating at a bank's doors demanding back
their money even as government financial leaders welcomed the wisdom of Credittrust's decision to seek voluntary
liquidation.
Igor Provkin, deputy chairman of the financial and money markets committee of the upper house of the Russian
parliament, said the decision to seek voluntary liquidation and co-operate fully with banking authorities was a mature
and responsible one.
"The Russian banking system must become transparent. Depositors must know who a bank's owners are and where
they are putting their savings," he told Russian television financial channel RBK.
Banking analysts in Moscow said more crashes could be expected in the coming weeks and months as central bank
chairman Andrei Kozlov launched an aggressive campaign to register banks under a tight new depositor insurance
scheme.
Dmitri Dmitriev, fixed income and banking analyst with the Moscow office of United Financial Group, predicted
short-term pain but long-term gain for Russian banks and their depositors.
"Only some 30 banks out of 1,200 in Russia are truly stable and more collapses can be expected as the fight
against money laundering continues.
"The Central Bank is clearly demonstrating that it intends to continue with its campaign of taking a close look
at the credit quality, liquidity, ownership and transparency of Russian banks," Mr Dmitriev said.
The clean-out of the Russian banking system threatened to dent depositors' confidence in banks, he warned, but
US dollar "mattress stuffers" lost 17pc to inflation and currency depreciation in the last year, and so would
eventually return.
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