State-owned banks of Russia have an interesting history and specific features of work in our country. Let's see how the segment of the relationship between the government and the banking sector works.
The Central Bank and the State Bank: the ratio of concepts
In a narrow-minded environment, the terms āCentral Bankā and āState Bankā are sometimes identified. On the one hand, there is no particular mistake here: the Central Bank is a state bank, wholly owned by the authorities. On the other hand, there is another common interpretation of the word āstate bankā - it is a commercial credit institution, the majority of which (more than 50% of the shares) is owned by the state (usually represented by the government). The second interpretation is commonly used in the Russian press and journalism. Modern large banks with state participation are VTB24, Sberbank (SB RF), Gazprombank, and Rosselkhozbank. In turn, non-governmental (ācommercialā) will be the credit institution, the controlling stake in which belongs to private individuals (one or more).
Why is the "Central Bank" called the state bank? Mainly because he, like a power institute, stands apart from commercial credit institutions, manages the issue of money, regulates the national financial system, generally solving problems, mainly not related to making profit, but rather, close to the functions of the state.
State and non-state bank: the main differences
The size of the stateās share in the ownership of the bank is only a formal distinguishing feature. State-owned banks and commercial credit institutions are unlike each other due to many other indicators, which are usually caused by business practices. The following can be distinguished. The state bank most often offers loans with an interest rate lower than that of private financial institutions. The reason for this is preferential working conditions guaranteed by the government.
Nobody gives such privileges to a commercial institution, and it is forced to compensate for losses due to increased credit rates. State banks have lower interest rates on deposits than private institutions, and this is also understandable: the former enjoy the traditional trust of the population, and the latter are forced to attract working capital. State-owned banks, as a rule, are more flexible in forming a mortgage tariff policy due to reduced risks (which is a consequence of the noted preferential conditions that the government gives).
History: State Banks of the Russian Empire
The appearance of state banks is not connected with the era of socialism, when the state controlled everything, including credit institutions. The banking system with the leading role of the state in Russia has a long history. The prototype of modern state-owned banks was the so-called state-owned institutions (which appeared in the XVIII century). Among the well-known are the āLoan Bankā (formed in 1733), the āBorrowed Bankā for the nobility and the āBank for Commerce and the Merchantsā (both appeared in 1754). An interesting fact is that all three institutions were faced with "bad debts" and went broke because they could not repay the issued loans.
At the end of the 18th century, state-owned banks appeared that accepted deposits (safe cash registers), and the practice of accumulating capital through deposits appeared. In 1786, the State Land Bank was established, where prototypes of today's mortgage programs begin to work. The first money transfers in the Russian Empire appeared at the beginning of the XIX century. They began to conduct "State Commercial Bank." In the middle of the century, credit institutions were actively privatized, the share of power in them was declining. By the beginning of the twentieth century, less than ten state-owned banks remained in Russia, about 50 private financial organizations, several hundred mutual aid societies, and thousands of small partnerships functioned. After the revolution of 1917, the system of credit institutions underwent a massive reorganization.
History: State Banking System in the USSR
The Bolsheviks declared an exclusive monopoly of power in banking. Commercial credit institutions have been nationalized. The Peopleās Bank of the RSFSR, reporting to the Peopleās Commissariat of Finance, became the leading financial organization in the country; the work of foreign structures was banned. In the first few years of Soviet power, credit institutions were given some independence, but at the end of the 1920s, their work actually became a subspecies of national planning. The "State Bank of the USSR" appeared, as part of the party line, control was exercised over the issuance of loans and the acceptance of deposits.
In the middle of the 20th century, very few credit institutions worked in the USSR. The main ones were State Bank, Stroybank, Vneshtorgbank, as well as savings banks. During the years of perestroika, several industrial financial organizations appeared - Promstroibank, Zhilsotsbank, Agroprombank, as well as Saving Bank. A credit institution for servicing foreign trade settlements, Vnesheconombank, was created. By the beginning of the 90s, laws appeared that created a banking system close to modern realities.
History: state-owned banks in modern Russia
The Law "On Banks and Banking Activities of the Russian Federation", adopted after the collapse of the USSR, established that there is a "Central Bank", there is a "Sberbank", as well as independent commercial institutions. The latter could operate on the basis of a license from the Central Bank, had the right to set interest rates and conduct currency transactions themselves. The number of such institutions grew by leaps and bounds, each year several hundred appeared. The financial stability of these āfast banksā left much to be desired, many went bankrupt. At the same time, the state banks of the Russian Federation turned out to be the most stable.
History: the main state bank of the country
Sberbank, the leading bank in Russia, positions itself as an institution with a history of more than a century and a half: in 1841, by order of Emperor Nicholas I, savings banks appeared in Russia. Their work began to be "advertised" among the subjects of the state, they were explained what the advantages of deposits are. In the period before the revolution, several million savings books were issued in these institutions ; there were several thousand savings banks in the country. Despite the complex transformations in the early years of the construction of socialism, the box office greatly helped the country's economy. Especially during the Great Patriotic War, when citizens could help the ruble with the ruble, and then restore the destroyed economy.
Savings banks existed before the reforms of the banking system of the late 80s - it was then that a credit institution with the usual name āSavings Bankā appeared, the state, despite the market trends of perestroika. The first ATMs appeared. Largely due to the infrastructure developed back in Soviet times, Sberbank of Russia became the country's leading lending institution.
The benefits of state banks to the economy
Socialist times are behind, now our country is building a capitalist economy. It would seem that it does not matter which banks are state-owned, who owns these or other shares in ownership. There is, however, among economists the point of view that this is not so. The fact is that the interests of private banks, as a rule, do not always coincide with the national ones: the latter imply that monetary processes do not burden the economy too much, and the population receives adequate loan and deposit services. Commercial banks, in turn, care about profit, and the social role in their understanding is fading into the background. They are interested in inflating inflation, which stimulates the demand for money, an increase in interest rates, and an increase in the flow of speculative capital to banks. The country's economy and social stability may be accompanied by crisis phenomena. This is not in the interests of the government and is not needed by most citizens. Therefore, in order to maintain stability in the country, state-owned Russian banks are needed. The presence of such does not contradict the principles of a market economy: state-owned banks also play a significant role in developed Western countries.
The negative role of state banks for the economy
There is a point of view on which some harm is nevertheless inflicted on the activities of state banks. Several years ago, experts analyzed the banking systems of several dozen countries for the relationship between the work of state banks and the budget deficit (that is, the level of public debt). It turned out that the authorities' obligations on external loans are lower in those countries where credit institutions are mostly private.
Where state-owned banks play a leading role, government debt averages 45% of GDP. In countries dominated by commercial financial institutions, external borrowing obligations are lower by 7%. The budget deficit, however, is slightly higher in states where private credit institutions dominate, but not by much ā about 0.4% of GDP.
State Banks Abroad: German Experience
Germany is a country where state-owned banks are very different in practice from private banks, despite the fact that the second type of institutions is the majority. The main task entrusted to German state-owned banks is lending to projects that are significant for the entire economy. In state banks of Germany, you can get a pretty attractive loan for business: rates are about 1.5-2% per annum. It is interesting that foreign investors can also count on these conditions, it is only necessary to show the credit institution that the project is able to create a significant number of jobs and will benefit the German economy.
There are German state banks, no matter how fantastic it may sound, loans without interest and even those that can not be repaid under certain conditions. All these facts indicate that the dividing line between an organization of the type āstate bankā and a credit institution of private ownership in developed capitalist Germany is much more pronounced than in Russia.