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Saturday, May 19, 2007

The Russian Insurance Industry is Non-Competitive and its Banks are Increasingly Unstable

RosBusinessConsulting reports: Russian Prime Minister Mikhail Fradkov has expressed concern about the possible takeover of Russia's insurance industry after its accession to the World Trade Organization (WTO). The PM pointed out that Russian insurance companies were could not compete equally with large international insurance companies. Therefore, Fradkov believes that the Russian market is facing the threat of having no Russian insurance companies on the domestic market when Russia joins the WTO.

Meanwhile, INTERFAX reports that Russia's banks became dramatically more unstable over the past year, with the number of financially imperiled institutions skyrocketing 33% from 3.9% of the total in 2005 to 5.2% of the total in 2006. The share of profitable banks dropped to 98.4% from 98.9%. The number of lending organizations working at a loss grew to 18 from 14, or to 1.5% from 1.1%. The level of capital adequacy on average in the banking sector dropped to 14.9% in 2006 from 16% in the previous year.

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