Putin signs law banning opening of foreign bank branches in Russia

Russian President Vladimir Putin has signed the law introducing a ban on the opening of branches of foreign banks in Russia, the Kremlin website reported on Friday. According to the amendments, the notion of branches of foreign banks is removed from the Laws “On banks and Banking Activity,” “On the Central Bank of the Russian Federation (Bank of Russia),” “On Currency Regulation and Currency Control.” The RF Government that proposed to introduce such a ban explains it by the impossibility for RF regulatory authorities to fully supervise operation of branches of foreign banks due to the fact that the order of functioning of branches of foreign banks does not fall within the jurisdiction of the Russian Federation. Such specifics of activity of foreign bank branches in the conditions of Russia’s WTO membership may negatively affect the competitiveness of Russian banks. The RF Government therefore considers it premature at the current stage to establish branches of foreign banks in Russia. This position was a condition of the negotiations on Russia’s accession to the WTO. However, the ban on the opening of branches of foreign banks in Russia is actually already in place because of the absence of the order of their registration, set by the Bank of Russia, and at the moment not a single branch of a foreign bank has been registered in Russia.