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BANKING SYSTEM IN RUSSIA DOES NOT CAUSE APPREHENSIONS

NEW YORK, April 16 (RIA Novosti) - The banking system in Russia is stable, Andrei Kozlov, the first deputy chairman of the Bank of Russia, said at the opening of the "Investment Possibilities in the Russian Banking Sector" conference in New York.

He said that 98% of the Russian credit institutions were financially stable now.

According to his data, in 2003 the banking system in Russia was rapidly developing. Within a year, the assets of the banking sector grew by 35.1% to 5,601 billion rubles (28.5 rubles = $1), and the capital grew by 40.3 % to 815.6 billion rubles, Mr. Kozlov said.

The share of the banks' assets in the Gross Domestic Product (GDP) increased from 38.2% in January 2003 to 42.1% in January 2004, and of the share of capital increased from 5.4% to 6.1%, he said.

Mr. Kozlov said that the importance of the banking system for the country's economy was constantly growing. The share of loans to non-financial enterprises and organisations in the GDP increased from 14.6% in the beginning of 2003 to 17.3% in the beginning of 2004. The total amount of loans to private individuals in 2003 increased by 47.4% to 299.7 billion rubles. In 2003, private savings in banks grew by 47.1% to 1,540 billion rubles.

According to Mr. Kozlov, this year, when the system of obligatory insurance of the deposits goes into effect and credit institutions begin submitting their financial accounting records in accordance with international accounting standards, "will clearly show the situation of the Russian banking system."

He also said that there were no plans to transfer supervisory functions in the banking sector from the Central Bank to the Federal Service for Financial Markets.

"We had plans for cooperation and coordinating the activity, but not anymore," Mr. Kozlov said.

In an interview with RIA Novosti, Mr. Kozlov said that the main goal of the conference "is to change our American colleagues' attitude to the Russian banking system."

"We want to show our partners the positive trends that are now going on," he said. "Today the situation in our banking sector is much better than two or three years ago."

John Taylor, a U.S. Treasury under secretary, said that the United States attached very great importance to the American-Russian banking dialogue.

Mr. Taylor said that the United States supports Russia's entry into the WTO because it would be in the interests of American business, including the banking business. He said that the U.S. actively contributes to the development of mortgage lending in Russia, including work on the secondary housing market. He also said that through the European Bank for Reconstruction and Development the U.S. granted $40 million to finance the Russian small and medium businesses, which is very important for the growth of the private sector in Russia.

The conference is the third in the series of foreign forums that were organized by the Association of Regional Banks of Russia. The previous conferences were held in Frankfurt am Main and Budapest in 2003.