Banking crisis looms over Russia again

The threat of a banking crisis again looms over Russia as increased capital flight and plunging retailer confidence have forced several banks to shut their doors and others to slap unprecedented measures to stem fund haemorrhaging.
As queues of irate customers lined up outside branches - reviving painful memories of the 1998 financial crisis that wiped out the savings of millions - analysts blamed the central bank for the current difficulties at a time when Russia's macroeconomic picture is looking better than ever.
While few say today's crisis will reach the magnitude of the 1998 meltdown, most analysts agree that the worst is yet to come and is likely to result in the ruin of as many as hundreds of Russia's 1,300 banks.
"Tip of the iceberg" is how the UFG brokerage described the current problems in Russia's banking sector, which has remained largely unreformed since the Soviet era.
Jitters began to run through Russia's banking system in mid-May, when the central bank pulled the license of and took over Sodbusinessbank that it accused of money laundering and regulatory violations.
Following the fall of a bank thought to have had the same owners, rumours flew that the central bank had a "black list" of institutions that were next to go and interest rates on the interbank lending market shot up.
In the following weeks, a host of small banks suspended or restricted cash payments to customers and amid an atmosphere of paranoia, Guta Bank, one of the nation's top 25 institutions, announced that it could no longer make payments after a partner refused to issue it a credit line.
As queues of irate customers instantly materialised outside of Guta branches, the central bank stepped in, announcing that it had organised a bail-out of the institution.
Meanwhile Alfa Bank, the nation's fourth-largest, faced a run on its branches as well, with customers withdrawing 100 million dollars in less than a week.
In an effort to stop the haemorrhaging, Alfa slapped a 10 percent surcharge on early withdrawals and promised premiums to customers who stayed.