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Russia: Banking Improving; Investment Opportunities May Grow

New York, 9 October 1996 (RFE/RL) -- The head of the Russian Central Bank says that while less than half of the country's banks now meet international standards, the situation of the Russian banking sector is "not catastrophic."

Central Bank governor Sergei Dubinin told reporters in New York yesterday that an estimated 40 percent of Russia's more than 2,000 banks are now in full compliance with all Bank of International Settlements standards. Another 50 percent, he says, are only slightly below those standards.

Dubinin acknowledged that between 10 and 15 percent of Russian banks have "negative capital" -- meaning they lost more money in the past year than they started out with.

He said that this is a serious situation, but that with the help of Western bankers and international groups like the World Bank, the Russian Central Bank is working to improve the operations of these banks.

Dubinin also said the government expects real economic growth to begin next year.

Growth in Russia should reach 2 percent next year and inflation over the next few years should average 10 percent annually, he said. Dubinin called this a new stage of economic development and said it would open new opportunities for foreign investors and traders.

Dubinin said he expected the chemical, metallurgy, oil and service sectors to be the main engines of growth in Russia.

The central bank chairman said that Moscow wants to encourage more foreign bank involvement in the country, noting that while the law limits foreign banks to 12 percent of the market, they currently account for less than three percent.

Dubinin was in New York for a conference sponsored by the U.S.-Russia Business Council.