A Strategy for Russian Commercial Banks to Achieve International Standards and Competitiveness
Acosta, F. Martin
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In 1993, the World Bank and the European Bank for Reconstruction and Development launched the Financial Institutions Development Project (FIDP) aimed to support the Russian Government long-term strategy to reactivate its economy. The FIDP finances twinning agreements between indigenous commercial banks from Russia and Western prestigious commercial banks, where the Russian banks receive advisory assistance. This paper gives a complete overview of the Russian economy, and particularly its financial sector. It contains information regarding the economic and political situation of Russia and the in depth transformation of the financial system that started in 1987. In addition, it describes the characteristics, functions, objectives, costs, and implementation procedures of the FIDP. Moreover, it defines how twinning could become a beneficial strategy for indigenous banks of Russia, following the Polish experience, to achieve international (or Western) standards and competitiveness. Although only a few banks are already participating in twinning projects, the majority of selected banks still awaits for a Twinner and the authorization from the World Bank and the EBRD. It is expected that in a few years this group of leading banks will form the core of a renewed, more efficient banking system, and thus, strengthen the Russian economy.