State-owned financial institutions in Russia can be divided into commercial banks, hybrid banks, and development institutions. The main ones include Sberbank, VTB Bank, Gazprombank, Russian Agricultural Bank, and VEB group. These institutions operate like private banks but with specific policy mandates. The government should gradually privatize state-owned commercial banks and consider restructuring hybrid and development institutions. Financial subsidies are managed well, but coordination could be improved. Corporate governance reforms are needed, especially in the composition and functioning of state-owned bank boards. State-owned banks should lend to state-owned enterprises at arm's length and on commercial terms, not to bail out struggling commercial banks.