Russia in need of banking revolution

Flaws in Russia’s banking system have been exposed by a mini-crisis in May, which forced several retail banks to fold and bond prices on the sector to nosedive. But how has this incident affected investors in the sovereign? Simon Pirani reports

While investors tend to have short collective memories and emerging market investors have perhaps the shortest, no one has forgotten that six years ago last month, Russia defaulted on $44 billion worth of ruble-denominated bonds. So the recent sight of queues of customers waiting patiently to withdraw their savings from some of Russia’s largest privately owned retail banks understandably caused some concern among investors. In the space of a week—July 12 to 19—spreads on privately owned bank