Banks in Russia and other CIS countries display very high single-client concentration levels in loans and deposits, materially above the levels seen in other markets.
For deposits, it compared the 20 largest corporate depositors to total customer funds.
Banks in the CIS region have historically had very high risk appetites, loosely defined concentration limits and aggressive expansion strategies. During the very rapid credit expansion of 2001-2008, most banks were opting to grow their loan books through single large transactions, whilst retail and SME lending lagged far behind lending to large corporates, due to infrastructure, IT and staff limitations.
CIS banks have among the highest single-client concentrations globally, as a result of the relatively low level of development of CIS banking systems, banks' high risk appetites, risk management deficiencies and regulatory weaknesses that understate concentration levels.
On average, CIS banks' ratio of top-20 loans to total capital stood at around 230% at mid-2009. At the same date, the top-20 deposits accounted for 36% of customer funds. These concentration levels are three times higher than those seen in the US and Canada and 50% higher than those in Asia, exposing CIS banks to very high credit and liquidity risks.
Comparing the various CIS countries, Belarus had the highest single-client concentration levels, followed by Kazakhstan and Russia (top 20 loans/capital at mid-2011). The lowest level was reported in Ukraine , thanks to material capital increases mainly at foreign-owned banks.
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These uncertainties plus the ever increasing complexity, and other necessary reporting, means banks need to use audit firms with truly global resources who will deliver high quality audits on time for you.
Our team’s experience includes not only audit but also working for global banks and major CIS banks, plus extensive experience of internal audit and we take the approach of total commitment required in meeting the needs of our global clients to all of our Banks in CIS.
