BANKING
Risks and Crisis Issues for
International Corporations in the Banking
Sector – BRICS Countries
The banking sector in BRICS nations presents both scale and complexity for international corporations seeking market entry or partnership. While the expanding middle class, rising digital adoption, and underbanked populations offer attractive growth potential, these markets are governed by opaque regulatory environments and strong political oversight. Central banks often prioritize domestic financial stability over liberalization, and foreign institutions may face tight capital controls, limited ownership rights, and inconsistent licensing processes. Additionally, state influence—particularly in China, Russia, and India—can distort market dynamics, favoring local champions over global players.
Over the past five years, success and failure have hinged on regulatory navigation and adaptability. HSBC and Citibank have streamlined or exited retail operations in India and Brazil, citing high costs and regulatory friction. In contrast, Standard Chartered and Santander have successfully expanded in select BRICS markets through targeted digital banking and SME lending, leveraging local partnerships. Russia's exclusion from the SWIFT system in 2022 following the Ukraine invasion effectively cut off Western financial institutions, freezing billions in cross-border assets. Meanwhile, China has encouraged foreign joint ventures in wealth management, but operational control remains limited. South African banks, though relatively open, continue to grapple with reputational risks tied to political instability and systemic inequality.
Systemic risks remain high, particularly in light of volatile macroeconomic conditions. Currency devaluation, inflation, and political instability can quickly erode capital positions or lead to government intervention. The rise of fintech and state-backed digital currencies introduces competitive and regulatory unknowns. Moreover, corruption, cybersecurity vulnerabilities, and lack of transparency in non-performing loan reporting challenge risk assessment and crisis readiness. International banks must apply rigorous due diligence, scenario planning, and compliance strategies before entering or expanding in BRICS financial markets.
5 Key Risks
to Consider before Entering BRICS Banking Markets:
1. Regulatory and Licensing Risk – Restrictive or shifting frameworks limiting ownership, operations, and capital repatriation.
2. Geopolitical and Sanctions Exposure – Vulnerability to global sanctions, particularly in Russia and China, impacting asset mobility and partnerships.
3. Currency and Sovereign Risk – Exposure to local currency volatility, inflation, and sovereign debt instability.
4. Political Influence and State Dominance – Government intervention in credit allocation, interest rate controls, or crisis-era bailouts skewing market conditions.
5. Cybersecurity and Financial Crime Risk – Elevated threats of digital fraud, data breaches, and anti-money laundering compliance failures.
TO GO FURTHER
CRISIS MANAGEMENT
Know-How, Tools & Resources for Crisis Resolution
-
Crisis Assessment & Source Identification
-
Crisis Management Coordination
-
Crisis Containment & Damage Control
-
Crisis Communication & Media Kit
-
Crisis Cell Infrastructure
-
Crisis Simulation Training [New]
-
Business Recovery Plan & 361° Review