Bank Closings Don't Worry Russians
MITCHELL LANDSBERG Associated Press Writer
MOSCOW (AP) - There is probably no economic event so terrifying as a bank failure. So why aren't more Russians losing sleep over predictions that a third or more of the country's banks might soon collapse?
The fact is, most Russians sleep quite soundly knowing that their savings are stuffed in the mattress beneath them. And some economists say widespread bank closings could only help the national economy by cleansing it of dubious financial operators who scarcely meet anyone's definition of a banker.
Perhaps that explains why there was little panic here Tuesday after the effective devaluation of the ruble, despite the near certainty that it would send many banks into bankruptcy.
''I don't keep my money in banks as a matter of principle,'' said Tatyana Borobyova, a flower seller. ''I don't trust either the banks or our government because they have cheated us many times.''
Hers is a common view. Only about 30 percent of all Russian savings are deposited in banks, according to Inna Francis, an analyst with United Financial Group, a Moscow investment brokerage. And much of that money is deposited in the national Sberbank, which guarantees its deposits and is unlikely to fail.
Moreover, only a few Russian banks meet the Western definition of a bank at all. Many are essentially fronts for highly risky speculation in the stock and money markets. It is this activity that is expected to be their downfall. It also explains why few Russians will shed tears for them.
''They don't do commercial lending, credit cards, hold consumer deposits - nothing of what we would consider banking services. They just move money back and forth,'' said Alan Rousso, director of the Moscow office of the Carnegie Endowment for International Peace.
''More than half the banks may fail,'' he added, ''but this, in some measure, will be good for the Russian economy.''
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