Bank Austria Gets Permission to Upgrade Office
Bank Austria said the Russian government approved the upgrading of the banks Moscow representative office to a branch. It thus became the first foreign bank to get such permission.
The approval may clear the way for the 70 foreign banks operating in Russia, including a number of U.S. banks, to convert their offices to branches.
However, U.S. banks are expected to expand in Russia more slowly than European banks.
U.S. Banks Seen as Holding Back
Approval for Bank Austria "clearly opens the door to others, but I don't think you're going to see U.S. banks leading the charge," said Paul M. Sacks, president of Multinational Strategies Inc., a New York-based international advisory firm.
"U.S. banks have to date been quite cautious about becoming involved in anything other than [guaranteed] credits."
Among U.S. banks, Citicorp, BankAmerica Corp., and Chase Manhattan Corp. maintain representative offices in Moscow. Officials at the banks were unavailable for comment on whether they plan to upgrade the offices.
Arthur F. Ryan, Chase's president and chief operating officer, recently said in a recent speech in Moscow that his bank plans to take "a more aggressive posture toward opportunities in correspondent banking, trade finance, and the energy sector in Russia."
Bank Austria said its branch will be used to transact business between Western companies and financial institutions being established in Russia.
Branches are able to offer all banking services, while representative offices can only refer business to home offices.
While branches were banned, some foreign banks operate wholly owned or joint-venture banks in Russia. Branches are less expensive and easier to operate than separate banks.
France's Credit Lyonnais holds a 12% stake in Moscow International Bank, a joint venture set up by Russian, French, Italian, Austrian, and German banks.
Late last year, it set up a wholly owned subsidiary bank in St. Petersburg. In Paris, a spokesman for Credit Lyonnais said the bank was considering expanding in Russia.