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Russian Prime Minister Vladimir Putin said in a speech in the middle of September that foreign banks are welcome to buy into Russia's banking sector, leaving experts to wonder whether this will have any bearing on the upcoming sale of big state-owned stakes in Sberbank and VTB Bank.

In the 1990s, the Russian parliament capped the total amount of foreign capital in the banking sector at 25%, but Putin lifted the restrictions in the middle of the last decade as Russia attempted to reform its creaking financial sector. "We're ready to take these relations forward and have no objections to serious financial institutions from the US or our European partners entering into the capital of our leading banking institutions," Putin said in a speech in the Russian Black Sea resort of Sochi. "We're considering this possibility, and there's nothing unusual about it."

Although Russia's bank sector was amongst the hardest hit of all the emerging markets, it has bounced back and is recovering well. Putin informed earlier in September that the state had spent around RUB2 trillion (€48bn) on the banking sector, but the money was well used; unlike the 1998 crisis, no major banks collapsed. Since the middle of this year, both lending and deposits have started to recover on the back of returning confidence and rising incomes, which were up 5.6% over the first half of this year.

Foreign banks are already drifting back into Russia in expectation of a return to the 40% a year growth in assets that Russia enjoyed before the financial crisis hit in 2008. Norway's SpareBank 1 Nord-Norge is amongst the first, announcing in September it plans to enter the Russian market later this year.

Putin poured praise on foreign banks that are already operating in Russia. He met with JP Morgan Chase CEO Jamie Dimon, and commended the bank's commitment to Russia. "It is very pleasant that you are building up your relations with your Russian partners, with major Russian financial institutions, and carry out transfers all over the world in various currencies. The approximate sum is $10bn. This year alone, the bank has pulled off inputs of more than $7bn into the capital of Russian companies and has helped place various investment instruments for raising loans to a total of $4bn," Putin said in a meeting with Dimon.

Interest in Russia's banking sector is growing fast as investors start scouring the earth for growth markets and profits. As part of the state's recently stepped-up privatisation programme, the state intends to sell off significant stakes in the state-owned banking giants of Sberbank and VTB Bank, which between them account for about a third of the entire banking sector. "Without reading too much into Putin's comments, they do suggest that various options are being considered for the sale of government stakes in Sberbank and VTB, and a European or US bank buying into one or the other is one plausible scenario (of several)," says Andrew Keeley, a bank analyst at Troika Dialog.

Sberbank CEO German Gref said at the Sochi conference that he hoped to see the sale of a 9.3% stake happen in 2011. And TPG Capital, one of the world's largest private equity firms, is in talks to buy a 10% stake in VTB in a deal that could be closed before the end of this year.