Russia’s Elvira Nabiullina and Ukraine’s Valeria Gontareva have between them closed a staggering 384 banks – 190 in Russia and 94 in Ukraine – since they took on the job of running their countries’ central banks in 2013 and 2014 respectively.

Reasons given for individual licence withdrawals have varied, but the basic reason is the same: the need for a massive overhaul of the two post-Soviet countries’ fragmented banking sectors, which have long been a haven for money laundering and organised crime.

While the number of shuttered banks would make a Western central banker turn pale, there’s still a long way to go: Russia has a staggering 800 banks, of which another 100 are expected to see their doors closed each year for the next five years, leaving 300, according to Andrei Kostin, head of VTB, Russia’s second-largest state-owned bank. Ukraine has 118 banks, many of them tiny operations run out of a single office.

The proliferation of banks in both countries is astounding given that their banking sectors remain so weakly developed, apart from a few major state-owned banks. It can be explained only by the use of ‘pocket banks’ for fraudulent lending, laundering illegal revenues and engineering illegal capital flight – all for the benefit of the bank owners, who, in turn, often hide their ownership behind proxies to avoid legal consequences.

This means that both central bankers are treading on the toes of organised crime and other shady individuals, and face very real threats to their own lives as a result. The last official to attempt a clean-up of Russia’s banking sector, former Central Bank of Russia (CBR) deputy head Andrei Kozlov, was gunned down by hired killers on a Moscow street in 2006. Police identified a banker as having arranged the hit, after Kozlov had ordered the bank’s licence to be withdrawn for money laundering.

This time round, Nabiullina has likewise thrown down the gauntlet to organised crime, closing banks linked to the illegal export of $2bn over five years, and arresting the alleged ringleader. She has also imposed lifelong banking bans on nearly 5000 rogue financiers.

The National Bank of Ukraine's (NBR) clean-up has already seen blood shed: the owner of one West Ukrainian bank was found shot dead in a burnt-out car in September 2015. Another of Ukraine’s most notorious ‘black bankers’, a former MP wanted in connection with over five murders, including a disembowelment and a defenestration, was successfully extradited to Kyiv in 2014 from Hungary, only to walk free from a secure facility after having apparently bribed guards.

Both women have also shut banks owned by politically-connected tycoons. Gontareva not only closed a number of oligarchs’ banks – such as those of  Konstantin Zhevago and Oleg Bukhmatyuk, iron ore and grain oligarchs respectively – she is even demanding that they come good on personal guarantees they gave for refinancing loans, by selling off assets. Nabiullina closed Kremlin-linked Vneshprombank in January 2016, with the bank’s CEO now under arrest for fraud.

Lock up bankers, free the currency

The crackdown on money laundering and insider lending is not the only courageous and correct policy both women have pursued. They have floated their respective currencies in an effort to ride out the collapse in commodity prices, in both cases leading to dramatic devaluations. Despite the shock therapy, the policy has helped avoid a 1990s-style balance of payments crisis.

The CBR remains the most Westernised and least nationalist of its institutions: Nabiullina, an ethnic Tatar, was trained by Russia’s preeminent pro-market liberal economist Yevgeny Yashin, a reformist minister under Boris Yeltsin in the 1990s.

She has valiantly fought back proposals by Kremlin-loyalist, economist Sergei Glazev, one of Russia’s most nationalist and statist figures, to pursue an inflationary growth policy. Nabiullina’s trusted first deputy governor, Ksenia Yudaeva, holds a PhD in economics from Massachusetts Institute of Technology.

In Ukraine, Gontareva has attracted the ire of the country's jingoistic Verkhovna Rada for speaking the language of the enemy, Russian, which is her preferred tongue. She has allowed Kremlin-owned banks, such as Sberbank, to grow their operations in Ukraine, and gave the green light for Kremlin-backed oligarchs to acquire Ukrsotsbank, Ukraine’s seventh-largest bank, in 2015.

Both women thus stand above their male colleagues in pursuing what is good for their countries instead of scoring cheap political points – and may in the future reap political reward for doing so. According to the latest opinion polls in Russia, two-thirds of Russians want women to hold top positions, and a third of respondents want to see a female president in the next 10-15 years.

Alaco Dispatches is the business intelligence consultancy's take on events and developments shaping the CIS region.