Updated August 7, 2008

As of July, 1 nonresidents stake in an aggregate authorized capital of all Russia's lending institutions totaled 26,8%, and increased by 1,7% since early year.

Foreigners own 100% in 70 banks, and they own controll

ing interests in 26 more.

"On the one hand, foreign capital expansion positively influences on the development of the banking services market, as it stimulates competition, pushes the Russian lending organizations to develop technological basis and offer various products range to clients", as Prospekt Investment Company analyst Veronika Chekina marks.

"On the other hand, the Russian banking system becomes more dependent on political or economic risks, as in case problems at the Russian market arise or the world financial situation worsens, foreigners are inclined to funnel funds out of the developing countries".

In the expert opinion, as long as the international financial markets will "run a fever", and foreign investors' fears for "business safety" in Russia will grow, one should not wait substantial foreign presence increase in capital of the

Russian banks. "However, as soon as the situation improves, foreign capital inflows back, as the Russian banking services market is far from saturation and possesses the enormous potential", as Veronika Chekina forec

asts.

"Whatever happens, the foreign capital stake will gradually grow, but one should not expect accelerated rates here", as Barrel Investment Company analyst Sergey Yurov supposes.

In his opinion, foreign investments inflow means foremost that Russia continues to penetrate into the world financial system.