Russia moves towards letting foreign banks open branches in Russia

Russian lawmakers gave preliminary approval to proposed legislation on Thursday that would allow foreign banks to open branches in Russia, a step the finance ministry said it hoped would alleviate issues with cross-border settlements.

International settlements have been a problem for Moscow after Western sanctions, imposed over the conflict in Ukraine, blocked major Russian banks' access to the SWIFT global payments system.

"Settlements are the economy's connecting thread," Deputy Finance Minister Alexei Sazanov told lawmakers when presenting the bill, which was passed during its first reading in the State Duma, the lower house of parliament.

To become law, the bill must pass through two further readings in the Duma, win approval in the upper house of parliament, and be signed by President Vladimir Putin.

"Without settlements, the functioning of the economy is not possible," Sazanov said. "Another mechanism is now being proposed that will allow cross-border settlements to happen."

Foreign banks can currently only open subsidiaries or representative offices in Russia, not branches.

The bill would allow foreign banks to open branches, with a security deposit of 1 billion roubles and foreign staff capped at 50%. They would be banned from opening accounts for individuals.

"The main goal we are pursuing with this bill is to simplify settlements, the possibility of making settlements through branches," Sazanov said.