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Scandinavian Nordea Bank Leaves Russia

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BM.GE
24.12.20 00:00
516
One of the once largest private foreign banks in Russia, Nordea bank, a member of Swedish Nordea Group, made its final decision to leave the Russian market. The reasons for the closure of the bank in Russia is the group's desire to focus on the Scandinavian region. Meanwhile, while talking about reducing number of foreign banks on Russian market, some points to the increased role of state-owned banks on the market.
 
“In accordance with the Nordea Group`s strategy, the business focus is on core customers from the Nordic region. Consequently, Nordea has decided to reduce its network of international branches, incl. closure and liquidation of Nordea Bank Russia,” official statement of the Group, released last week, states. 
 
According to the statement, “the closure process will focus on securing a smooth migration and closure of customer activities and taking care of our staff in this process. During the liquidation process, Nordea Bank Russia will strictly comply with all requirements of the Russian legislation”.
 
Nordea has been operating on the Russian market since 2006 - then the group acquired Orgresbank. The group was one of the few who, after 2008-2009 crisis, did not announce intentions to leave the Russian market.
 
“Revenues of department of Banking Russia in 2019 were 63 million euros that is insignificant value in comparison with the general indicators of bank, equal 8.635 billion,” says Tadviser. Pursuant to the same source, “the Nordea Bank was included into number 30 of the largest Banks of Russia by the amount of assets and the capital. The bank had the highest rating of the international rating agency Fitch Ratings in the Russian market and was called the most reliable Bank of Russia in the Rating made by the Forbes magazine”.
 
Overall, there are 371 operating banks (249 banks with a universal license and 122 banks with a basic license) and 40 non-bank financial institutions in Russia, the data of the Russian Central Bank of Dec 1, 2020 says. 
 
Nordea bank began to wind down retailing on Russian market since 2015, when the bank analyzed the dynamics of the population's incomes, the impact of devaluation, inflation and the unemployment rate. According to Vedomosti, in 2017, Nordea sold its retail portfolio at 16 billion rubles to Sovcombank, 97% of loans were mortgage, the rest - car loans and consumer loans. 
 
“One of the reasons that affects the compression of the segment of foreign banks is the increased role of state-owned banks in the market,” says Rusletter. “The concentration of bank assets in Russia is increasing in favor of credit institutions with state participation, and in many key parameters. Thus, the growth rate of assets of banks with state participation is much higher than the average market”.
 
It is obvious that the growth in the market share of state-owned banks is not due to their particularly high-quality services and products, an article of the Rusletter reads, adding “the fact is that, against the backdrop of market cleansing from financially unstable banks and revocation of licenses, a number of credit institutions are transferring clients to banks with state participation, and private banks, and especially banks with non-residents, are losing ground”.