Russia Tightens Banking Rules as Economy Reels from Sanctions

Russia's state companies will only be able to have accounts at banks with at least 10 billion roubles (£173m, $296m, €217m) in capital, as the state seeks to protect its biggest assets amid a sharp economic downturn.

A senior finance ministry official said the country's state-controlled companies should also hold accounts at banks controlled directly or indirectly by the state, Reuters news agency reports.

Russia's central bank had previously considered a requirement that they would only be allowed to have accounts at banks with capital of more than 16.5 billion roubles but the bank has softened its stance after talks with the finance ministry.

"Banks must meet one of three criteria - their capital must be no less than 10 billion roubles, or the bank is directly or indirectly controlled by the state, or there is a special situation where the government can put a bank on the list at the request of a strategic company," Finance Minister Alexei Moiseev was quoted by Reuters as saying.

The arrangement would leave state-owned companies with a choice of around 100 banks.

Battered by the global economic downturn and shackled by Western sanctions, Russia's economy has performed dismally in 2014.

Figures released in July showed the economy suffered $75bn in capital flight in the first half of the year, while avoiding a technical recession by the narrowest of margins.

Moscow posted flat growth in the second quarter, following a 0.3% contraction in the first three months of the year.

Russia's state companies are at the heart of the country's economy and include global giants like Gazprom, Rosneft and Aeroflot.

Russia's central bank launched a crackdown on financial crime in the country, some of which takes place through a network of small banks with links to the unofficial economy.

Central Bank chief Elvira Nabiullina has led the campaign to tighten banking supervision.