Foreign banks will continue to be banned from opening branches in Russia, President Vladimir Putin said on Wednesday, as the country reached an impasse with the World Trade Organisation (WTO) over its accession bid.

"The activity of branches of foreign banks in the Russian Federation should be limited," Putin said during a visit to the Siberian city of Novosibirst on Wednesday.

"In essence, it should be forbidden," he added.

At present, foreign banks hoping to open outlets in Russia can do so only by establishing a Russian-registered subsidiary in the country, creating greater costs for the parent bank.

Russia is aiming to join the WTO next year, but some key WTO members, the United States in particular, make it a prerequisite that foreign banks and insurance companies be allowed to open branches in the country. However, Russia will not give in, and the two sides have now reached a deadlock.

Putin said it is impossible for Russia to allow large amounts of foreign capital to flow in at the moment, though Russia is on good terms with other countries' financial sectors.

"This isn't only connected to competition but also the struggle against terrorism and money laundering," Putin said.

Financial experts in Russia argue that developing countries should have a transitional period in their bid to join the WTO, to enable them to prepare their financial sectors for after-accession competition.

Source: Xinhua