Accessibility links

Breaking News

Russia: Three St. Petersburg Banks To Oppose Moscow

St. Petersburg, 17 September 1997 (RFE/RL) - St. Petersburg's three largest banks -- including two long-time rivals -- have formed a consortium to stand up to Moscow financial powerhouses.

Promstroibank, Bank Sankt-Petersburg and Bank Petrovsky announced last week that they are forming Bankovsky Dom Sankt-Petersburg, or St. Petersburg Banking House. The three banks are the largest banks by capitalization in the city.

Each bank will maintain its autonomy. They will join in the Banking House to finance large projects in the city and the surrounding Leningrad Oblast. These will include housing projects, city infrastructure, and city center reconstruction.

Andrei Yashchenko, a financial analyst at United City Bank in Moscow, said that the agreement seems to be an evident response to an invasion by Moscow banks of the St. Petersburg area investment market. He said the alliance will allow the three local banks "operate on a larger scale and provide better service on major projects. Natalya Petrova, a spokeswoman for Bank Sankt-Petersburg, said that is just the point. She said that the local banks want to keep the city's investment business and funds in the city.

Moscow banks dominate Russia's financial markets. Interfax news agency's latest quarterly ranking of Russia's banks based on total assets lists all but one of the top 37 as in Moscow. The highest rated non-Moscow bank in the survey -- in 24th place -- is St. Petersburg consortium-member Promstroibank.

In the past, the capital's mighty banks were kept at bay by the administration of former mayor Anatoly Sobchak. Sobchak's government protected the local market in hopes of turning his city into a financial capital. Governor Vladimir Yakovlev, elected last summer to succeed Sobchak, opened the doors to Moscow capital. Analysts say the influx of Moscow rubles left the local banking industry vulnerable.

Since summer Moscow banks have been coming in droves, prompting the national newspaper "Kommersant Daily" to hail an investment revival. Moscow's Inkombank, SBS-Agro Bank, Bank Rossiisky Kredit, and Menatep and the investment fund Pioneer Perviy all have announced that they will funnel large amounts into St. Petersburg's infrastructure projects.

Promstroibank and Bank Sankt-Peterburg are old rivals in the city, competing for commercial clients and political influence. The consortium agreement seems to end a long-standing and sometimes bitter conflict between the two banks.