The Bank of Russia and the government have begun work on the restoration of the banking system. But if it is restored in its previous form,

then we will end up with nothing other than new 'oligarchs'}


The Russian banking sector has largely remained in post-crisis limbo since the August 1998 financial collapse. A year later, it is arguably more rather than less difficult to assess the prospects for the sector's restructuring. Immediately after the crisis, the severity of the banks' problems and the urgency of addressing certain issues, most notably the paralysis afflicting the payments system, were clear enough. Two months later, discussion centred on the ambitious restructuring plan unveiled by the Central Bank of Russia (TsBR).2 By the first quarter of 1999, however, the TsBR's restructuring drive was flagging, the restructuring plan looked increasingly like a dead letter, and official statements concerning the sector's future exhibited less and less urgency about the situation (Whitehouse 1999).3 There was, moreover, clear evidence of different players in the process moving in different directions.