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. Last Updated: 07/27/2016

Raiffeisenbank Eyes Private Savings

Raiffeisenbank Austria AG, the Russian subsidiary of Raiffeisen Zentralbank Osterreich AG, announced Wednesday that it is continuing its rapid expansion into the Russian market with plans to offer personal accounts.

Raiffeisenbank, which won a general license in 1996 and specializes in trade financing, said it would start opening household accounts for employees of its corporate clients in September and offer accounts to other Russians within a year.

To do that, the bank plans to open three branches and an unspecified number of cash machines by September.

"We need to be competitive and there is a big demand from corporate clients wishing to open accounts for their employees so that they don't keep cash at home," Raiffeisenbank president Michel Perhirin said in an interview.

The bank currently has over 600 corporate clients, 500 percent more than before the collapse of the Russian banking sector in August.

The project to offer personal accounts will be undertaken with the cooperation of another Western bank, the bank said without identifying which one.

Terms for the accounts will be announced Thursday, Perhirin said.

Raiffeisenbank also said it plans to soon start issuing its own Visa charge cards using its new processing center in Moscow.

The 150-employee bank has a capitalization of $165 million, which Raiffeisen Zentralbank Osterreich AG raised from $15 million in March.

Raiffeisenbank joins two other Western banks f BNP Dresdner Bank and Garanti Bank of Turkey f in offering household accounts to Russians.

BNP-Dresdner Bank charges $100 to open a household account, followed by quarterly fees of $50. Garanti Bank only charges a flat fee of $30.

The banks' main rival, Russia's state-owned Sberbank, also does not impose a fee on opening a personal account.

The interest rates at BNP-Dresdner Bank on deposits are "fixed in accordance with market conditions," a bank spokesman said.

Garanti Bank offers from 6.5 percent to 8.5 percent annual interest on hard currency deposits of $20,000 or more placed in the bank for three to six months. Sberbank has rates from 1 percent to 9 percent on different accounts.

Analysts said that while Russians burned by domestic banks in the financial chaos last fall may consider a Western bank to be a safer bet, most of them are certainly not ready to rush over to one and deposit their hard-earned cash.

"Of course, the opening of Raiffeisenbank to Russians will not solve the problem of getting cash out from under the mattresses," said Sergei Sitnichenko, deputy head of the Rating Information Center, an agency that tracking banks in Russia.

"But people now understand how dangerous it is to keep money at home f a fire or theft could destroy their savings," he added.