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. Last Updated: 07/27/2016

Putin Signs New Banking Law

President Vladimir Putin has signed a law making it easier for foreigners to gain exposure to the country's booming banking sector ahead of a major share offering by two giant, state-owned banks, the Kremlin said Tuesday.

The new rules put foreign and domestic investors on an equal footing when buying shares in domestic banks, obliging both to inform regulators if they purchase more than a 1 percent stake and to seek permission to build a stake of over 20 percent.

The rules put an end to the practice of selling shares known as "blessed" shares, which are cleared by the Central Bank for purchase by foreign investors, and will put Russian banks on the radar screen of a wider circle of institutional investors.

The amendments should pave the way for a $7.6 billion additional share issue by the country's largest bank, state-owned Sberbank, as well as a $4 billion initial public offering by domestic rival VTB.

"The sheer magnitude of the upcoming placements makes foreign participation in them critical, as the ability of resident investors to absorb billions of dollars of new shares is untested," said MDM Bank analyst Alex Kantarovich.

Earlier, Putin had signed a law allowing VTB to lower the government's stake to 50 percent plus one share from the current 99.9 percent and crossing it off the list of designated "strategic enterprises."