PwC Says Russian Bankers Report Different Concerns

Bankers don't think alike after all.

Amid a worldwide banking crunch, Russian bankers and their counterparts abroad view liquidity shortage as their biggest risk, according to a new report by PricewaterhouseCoopers.

But the similarities stop there, with the Russians ranking other main risks differently from the rest of the world.

Russian bankers are more concerned about equity risks and interest rate risks than their foreign colleagues, who ranked credit risks and the widening of the credit spread higher, according to the report, which surveyed 376 banks, including 25 medium-size and large banks in Russia. Half of the banks were in Britain.

"In general, Russian banks emphasized market risks and were less concerned about the quality of risk management and regulation," said Chris Barrett, head of PwC's financial services department for Central and Eastern Europe.

Russians' increasing appetite for loans, and a decrease in deposits, make banks increasingly dependant on capital markets to fill their portfolios, while the interest rate is expected to change as the Central Bank grapples with rising inflation, the report said.

The country's bankers also view currency exchange risks as more important because they have large shares in foreign currencies, rather than rubles, it said.

For the first time, back-office risk was seen as a concern -- more so for Russian bankers than other participants -- as many banks are restructuring and switching to more traditional activities, dropping riskier enterprises that depend on the economic situation.

In addition, Russian banks have to deal with changing salary and rent levels, both of which rose by up to 30 percent last year, the report said.

As expenditures rise, banks see the need to make operations more efficient to keep profits from tumbling, it said.