Russia Cleans Up Its Banks on Borrowed Time

Turbulence has characterized the Russian banking sector since the fall of the Soviet Union. In the economic free-for-all of the 1990s, newly minted oligarchs, politicians, business executives and criminal groups opened private banks to grow their asset bases, massage their books and funnel money to their various interests. More than 2,500 banks had popped up in Russia by the middle of the decade. With no clear rules or strategy to guide it, the sector grew unchecked, contributing to the financial crisis of 1998. The Kremlin began trying to bring order to Russia's banking system, and over the past 20 years, the Central Bank of Russia has shrunk the sector by closing, consolidating or nationalizing hundreds of failing banks. But deep problems persist. A stagnant economy and depleted resources are increasingly limiting the Kremlin's ability to intervene, stoking fears of a looming systemic crisis and threatening to exacerbate dissent in the...