Regulation of Foreign Banks in Russia

In this paper, the issues of foreign investment in Russian banking sector are addressed. The study aims to shed light on foreign banks challenges in Russia and analyze their roots. The paper confirms the fact that fast development of new banking system, corruption, weak law enforcement and highly vulnerable banking legislation as well as undeveloped institutional infrastructure have a harmful effect on banking sector in Russia and it attractiveness for foreign investors. The history and current situation with foreign investment into banking sector in Russia are examined. The author argues that development of strong and internationally competitive banking sector requires a state policy shift: from protectionism to regulated market competition. Current legal frame and infrastructure are analyzed, with special emphasis to different form of foreign investments into banking sector. Several proposals on legislative improvement are made.MAS