Pledging to support economic reform in the former Soviet Union, the U.S. Federal Reserve and major commercial banks have set up an advisory group to help restructure the Russian financial system.
Formation of the group, known as the Russian-American Bankers Forum, was announced at the Federal Reserve Bank of New York on Friday.
The 17 U.S. members include senior Fed officials and executives from some of the biggest U.S. banks and law firms.
Some Prominent Names
The bankers are Natasha Gurfinkel, vice president, Bank of New York; Charles J. Lebrun, vice president, First National Bank of Chicago; William J. McAndrew, senior vice president, Chemical Banking Corp.; and Carlos Palomares, president and managing director in Rome for Citibank.
Also, Donald B. Riefler, consultant, J.P. Morgan & Co.; Lawrence W. Stirling, vice president, Chase Manhattan Bank: and Bankers Trust Co. managing director Quentin Van Doosselaere.
The forum will be chaired jointly by E. Gerald Corrigan, president of the New York Fed, and Yuli Vorontsov, an adviser on foreign affairs to Russian President Boris N. Yeltsin and permanent representative of the Russian Federation to the United Nations.
At the news conference Friday, Mr. Corrigan said the group's main task would be to draft recommendations to reform the Russian banking system and to provide badly needed technical assistance.
Although the Fed and the U.S. Treasury provide occasional advice and assistance to a number of countries, including several Eastern European countries, formal U.S. government participation in an overseas economic-advisory program is highly unusual.
However, Mr. Corrigan stressed that the unusual move comes in response to the enormous problems Russia and other former member states of the Soviet Union face in converting their economies to market-based systems.
"Americans fail to realize how big Russia is," Mr. Corrigan said. "This is hard work."
Size of Tasks a Factor
The initiative has the support of both U.S. Treasury Secretary Nicholas F. Brady and Fed Chairman Alan Greenspan. It caps several ealier and more informal Fed moves to assist the Russian government, Mr. Corrgian said.
In March, Mr. Corrigan headed a delegation of U.S. bankers that visited Moscow to discuss business opportunities in Russia after presiding over a seminar on banking in Russia in Moscow in November.
Members of the group have been working in Moscow since May 26 and are due to present their initial recommendations on June 25.
The recommendations will cover the development of retail banking and payment services, the development of an interbank market and a system for large-value third party payments, and the formation of a market for government securities.
Some Goals Described
U.S. bankers involved in the program in Moscow were unavailable for comment. But a number of U.S. banks have indicated in recent months that they are hoping to develop correspondent banking relationships and financial advisory mandates.
A spokesman for Bankers Trust New York Corp. said that his bank had joined the working group in response to a request from Mr. Corrigan for assistance.
"We're developing some signficant advisory assignments over there," the spokesman said. "We see further possibilities for doing business in Russia."
Bankers Trust is already acting as an adviser to Russia's state-owned natural-gas company on a number of initiatives, including private investment, and has assigned one of its senior experts on derivatives to the Fed-sponsored working group.
Other U.S. banks are also developing business in Russia. Chase Manhattan and Bank of New York supply Russian commercial banks with money transfers, cash management, letters of credit, and information services.
Chase, which maintains a representative office in Moscow, also assists U.S. and foreign companies investing in Russia.
Mr. Corrigan suggested that U.S. banks were likely to develop more business in Russia soon and indicated that some are looking to establish banking offices as well.
"I wouldn't be surprised in the foreseeable future to see one or two U.S. banks thinking of establishing a representative office in Moscow," Mr. Corrigan said.
Mr. Corrigan however, stressed that any decision by U.S. banks or corporations to invest in Russia would be a "private decision based on their own business judgment."
U.S. bankers on loan to the program will have their salaries and expenses paid by their employers.
Private Conduit Needed
Announcement of the working group came on the heels of last week's visit by Russian president Boris Yeltsin to the United States.
Soviet officials at the Fed's press conference said they were also seeking to form a privately run Russian-American Investment Bank to facilitate the flow of American private capital to Russia.
The officials warned that political reform in Russia risked collapsing if the accompanying economic reforms is not adopted and implemented.