Letting foreign banks into Russia?
Unprecedented move hinted by premier may coax out money hoarded under a distrusted system.
Millions of Russians who literally keep their savings in mattresses might finally get the opportunity to deposit them in a real bank. But, as Prime Minister Yevgeny Primakov tacitly admitted last weekend, it will probably have to be a foreign-managed bank.
Speaking in Moscow to the World Economic Forum, a gathering of about 200 global corporate and financial chiefs, Mr. Primakov acknowledged that Russia faces a crisis of confidence brought on in large part by the chronic failure of domestic financial institutions to extend the most elementary protections to their clients.
"The Russian banking system proved weak and artificial, able only to feed on the state budget," he says, referring to bank failures in August that decimated the savings of millions. "The toughest consequence of the crisis is a total credibility gap."
That may be stating the problem mildly. For many people, still waiting for compensation nearly four months after most private banks closed their doors and froze depositors' accounts, banker is synonymous with bandit.
"I will never again trust a Russian bank, and I will tell my grandchildren never to trust one," says Yelena Prohovets, an unemployed accountant who lost her entire savings - about $3,000 in hard currency - in a Moscow branch of Bank Rossisky Kredit, formerly Russia's seventh largest financial institution.
"This disaster has ruined my family. Our money is gone, and all they do is put us off with false promises."
Oleg Nikitsky, a pensioner, says he lost 9,000 rubles in Inkombank, once the country's third largest.
Before the crisis about 6 rubles fetched $1; by early September the rate had slipped to around 15 rubles to a dollar. Today it's more than 20, and falling fast.
"That money was for my grandchildren," says Mr. Nikitsky. "If I could get my hands on it now, I might be able to buy something worthwhile with it. By the time they give it to me, if they ever do, I know it'll be nothing."