Russia may have more than 1100 banks but the country is still underbanked and its financial sector, which has come a long way since the crisis 10 years ago, remains immature. Long-term finance resources are meagre, banks are highly dependent on foreign funding, institutional investors are thin on the ground and other mechanisms of a developed financial system are notably absent. Although individual banks in Russia have made enormous strides in improving corporate governance, being more open about their structure of ownership, reducing related-party lending and diversifying funding sources, the financial system as a whole is still a cause for concern. The Central Bank of the Russian Federation's pro-active stance during the current liquidity crisis has been applauded and has been compared favourably with the response to a similar situation in 2004, but nevertheless, the predicament of the banking system is usually listed as a constraining weakness by rating agencies in their sovereign assessments.
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