Putin’s Creeping Nationalization of Banks

The Russian central bank reports that the state’s share of banking assets hasn’t increased, even though it has been taking over and closing private lenders for the past year. The Russian banking system is on a path toward almost total nationalization, and the central bank is pushing it along.

The Bank of Russia relies on an accounting trick to buttress its claims about the sector’s performance in 2017. It analyzed banks by ownership type, but created a separate category for lenders under external management that didn’t exist in previous years. Even though the central bank itself and the state deposit insurance agency took over over these allegedly distressed financial institutions, they aren't counted toward the government-owned quota. That allowed the central bank to say that the state-controlled lenders’ share of total assets only increased to 58.5 percent from 58.3 percent in 2016.