ST. PETERSBURG, July 1./ITAR-TASS/. The Russian banking sector’s financial health is improving as the regulator continues to restructure the country’s financial system to make it stable, Central Bank Chief Elvira Nabiullina said on Tuesday.

“This work (for the banking sector’s restructuring) cannot be judged only by the number of license revocations. In our estimate, the banking sector is becoming healthier. Overtly weak or criminal players are quitting,” Nabiullina told an international banking congress in Moscow.

“Banks are beginning to manage risks more effectively and assess their assets adequately,” the Central Bank governor said.

The regulator’s ongoing efforts have cut considerably the number of dubious banking operations while banks have been able to beef up their loan impairment provisions by over 20% in the first five months of the year, Nabiullina said.

Financial health stress tests held by the regulator have showed that the banking system remains stable, which can be evidenced by the banking system’s readiness to introduce the international Basel III standards setting tighter requirements for bank capital, Nabiullina said.

The Central Bank chief stressed the need to continue work to clean the banking sector of unscrupulous players.

“The accumulation of risks and failure to clear backlogs are fraught with the banking sector’s inability to show resilience to external shocks in the future and ensure continued financing of the economy’s needs and the proper protection of the rights of depositors and creditors,” Nasbiullina said.

The Central Bank chief said that the regulator had revoked licenses from 33 credit institutions in 2013 and 38 banking senses in the first half of 2014.

“The regulator is revoking licenses exclusively from banks, which have their business based on servicing the shadow or criminal economy, and from banks that are experiencing serious financial problems and whose managers or owners do to want or cannot remedy the situation,” Nabiullina said.

 Russia's Central Bank will support domestic banks if Western authorities imposed sanctions, Governor Elvira Nabiullina told journalists.

“Sanctions risk is hard to estimate. It is important for us to be prepared. We believe we’ll be able to bolster the banking system if sanctions are enacted,” she said.

The bank pledged in March to use “all standard instruments” to support bank liquidity as demand for domestic lending grew against limited access to foreign funds.