Read about steps and decisions of Russian banks in May 2012.
Sberbank will see some certainty over the planned privatization sale after the new government’s lineup is announced on May 21, CEO German Gref said Saturday.
“It seems to me that, yes, such certainty should emerge [after the Cabinet announcement],” Gref said. “As soon as the market stabilizes, we can go ahead with the deal.”
Sberbank shares fell by up to 9 percent on May 17, their biggest intraday fall so far in 2012. Gref said the share price plummeted because two unidentified investors suffered from margin calls. Sberbank closed at 78.2 rubles ($2.49) per share on May 18, well below the 100 rubles per share that the bank sees as the favorable level for the sale to proceed.
Polyus Gold Int (consists of the assets held by Polyus Gold, No. 1 gold producer in Russia) said it intends to sell 2.5% of its shares to VTB Bank, and another 5% — 1 share stake would be sold to Chengdong, an entity of CIC International Co. Limited, RIA Novosti wired.
The selling price is $2.80 per share, and both transactions would total roughly $635.5 mln. The money from the transactions will be used to repay debt and fund projects.
Chinese sovereign fund China Investment Corporation (CIC), an investment corporation that manages assets worth $410 bln, was established in 2007. This is one of the world’s biggest sovereign investment funds.
Investment bankers at Alfa Bank have reportedly not been paid their bonuses for 2011 after showing its worst result in 10 years.
The denial of bonuses to Alfa Bank’s investment-banking arm was confirmed Wednesday as the outfit became the second major privately owned investment bank to reveal its suffering in less than a week.
Renaissance Capital, the investment-banking arm of Renaissance Group, said Monday that it made a loss of $94 million in 2011, its worst result for 10 years.
A source at Alfa Bank, which is owned by Mikhail Fridman’s Alfa Group, confirmed to The Moscow Times on Wednesday that the company’s investment bankers had not been paid their bonuses for 2011, though they received their annual salaries.
Resentment at the decision was first reported by Finparty.ru last week, which spoke to more than 10 analysts, traders and bankers about the situation. Several bankers left the office in disgust after being informed that bonuses would not be forthcoming, the financial news website reported.
Alfa Bank’s investment bankers were particularly riled by the decision because the group as a whole made a $641 million profit in 2011 — a record figure in their 20-year history. The investment-banking arm was also profitable.
“The shareholders and the board of directors are of the mind that the possibilities of potential growth for the bank are higher than the market average,” Alfa Bank said in e-mailed comments.
“In connection with this, bonuses for the results of 2011 work were not paid to top managers.”
The financial woes are more serious at Renaissance Capital. The investment-banking arm of Renaissance Group — owned jointly by Mikhail Prokhorov and Steven Jennings — was the only part of the organization not to turn a profit.
The bank blamed market weakness. “We believe that Renaissance Capital will return to profitability as markets continue to stabilize,” it said in a statement.
Private investment-banking outfits have struggled against an unfavorable macroeconomic environment and competition from big state-controlled giants.
The investment-banking division of state-owned VTB made 1 billion rubles ($30 million) in profit in 2011, according to its results released April 26.
While customers get cash, fraudsters are obtaining card and pin data.
Banks are reporting a sharp increase in ATM skimming, a fraud in which perpetrators steal information from bank cards to make fake cards.
A total of 362 cases of skimming have been registered in the first three months of this year, compared to just 40 cases in the same period last year and 397 cases for all of 2011, Kommersant reported Friday, citing data from the Russian Europay Members’ Association.
The data on ATM fraud are based on information obtained from about the association’s 20 largest banks, which account for about 90 percent of all ATMs in Russia.
In the scam, the perpetrator typically puts a device over an ATM’s card slot that reads the magnetic strip as the unsuspecting user passes his card through it. Often a small camera is inconspicuously attached to the ATM that allows the fraudster to record the pin number.
The fraudster then uses the information to create fake cards to withdraw money from ATMs or make purchases at stores.
Banking insiders believe the increase in fraud is connected to a significant growth in the number of ATMs in Russia, as well as the fact that skimming is relatively inexpensive and easy to carry out and perpetrators are rarely caught.
There were 184,000 ATMs in Russia as of Jan. 1, Interfax reported, citing information from the Central Bank.
While skimming is on the rise, the situation remains far better in Russia than in Europe, banking experts told Interfax.
Metalloinvest ‘has pegged’ its right to buy from VTB Bank 20% of its shares in exchange for the bank’s promissory notes, Vedomosti business daily wrote citing the company’s IFRS financial statement that in March Metalloinvest paid $2.48 bln for VTB Bank’s ruble-denominated promissory notes due December 2012.
The promissory notes were bought “in order to invest available funds in high-liquidity instruments of a reliable bank with a high credit rating,” a Metalloinvest spokesman assured. This is a part of the company’s deal to buy Vasily Anisimov’s equity stake from VTB Bank, said a source at a bank that is Metalloinvest’s creditor. The promissory notes would be swapped for 20% of Metalloinvest. The bank has already provided the right to vote by this stake to the company, the newspaper’s source said. He did not say why the company did not promptly buy back its shares from the bank. He pointed out that one of the reasons behind the use of the promissory notes is additional protection against a lawsuit filed by Boris Berezovsky.
Vasily Anisimov has sought a buyer for 20% of Metalloinvest since 2010. At the end of 2011 VTB Bank acquired the shares for $2.5 bln. In fact, Vasily Anisimov personally received only $600 mln. But the funds have so far been frozen until the completion of the legal proceedings with Boris Berezovsky. The latter demands 10% of Metalloinvest from Vasily Anisimov in the Supreme Court of London. According to Boris Berezovsky, in the early 2000s he and his partner Badri Patarkatsishvili lent $500 mln to Vasily Anisimov to buy 25% of Mikhailovsky GOK (one of Metalloinvest’s primary assets). Allegedly as repayment of the debt Anisimov was to return 5% of Metalloinvest after the consolidation of the ore enrichment plant. Initially Berezovsky’s claims concerned only 5% of the company, but later they increased to 10%.
After the acquisition of an equity stake in Metalloinvest VTB Bank CEO Andrey Kostin said that this is an investment for 2—3 years. The equity stake could be sold in case of the company’s IPO. But in late April Metalloinvest beneficial owner Alisher Usmanov (controls 45% of the company) acknowledged that the company itself could buy the bank’s block of shares. The entrepreneur himself is not interested in buying VTB Bank’s equity stake. Metalloinvest has already been examining together with the bank an option to buy its own shares. A deal could be closed until the end of the year, and Metalloinvest could also go public during this period, Usmanov said.
In line with a March 19, 2012 report by Veles Capital, the yield on VTB Bank’s 9-month promissory notes equals around 8%.
Alfa-Bank announces the appointment of Alexey Marey to the position of the lending institution’s chief executive officer and board member.
Rushan Khvesyuk, who previously held this position, will become CEO of banking group Alfa-Bank.
“This reshuffle is a planned action and was brought to the attention of the market and the bank’s employees in early autumn 2011. The appointment of the new CEO is designed to boost business expansion and solidify Alfa-Bank’s positions as the country’s No. 1 private bank that reported record profit for 2011,” the lending institution said in a press release.
In his new capacity Marey will be responsible for the implementation of the bank’s approved long-term strategy, set priority areas and oversee Alfa-Bank’s development in all segments and units.
“The decisions taken also reflect the banking group’s HR policy geared towards providing senior executives with the opportunities for professional and career development within the group,” the bank’s press service added.
Khvesyuk’s task will be to manage business expansion, improve the quality of management and enhance integration processes at the banks that make up the banking group.
Alfa-Bank is Russia’s No. 1 privately held bank and a core of industrial and financial consortium Alfa-Group. Its beneficial owners are Alfa-Group co-owners Mikhail Fridman, Herman Khan and Alexey Kuzmichev (who control 36.47%, 23.27% and 18.12%, respectively), and also the banking group’s chairman Peter Aven (13.76%), former Alfa-Bank top manager Alex Knaster (4.3%) and Andrey Kosogov (4.08%).
As Banki.ru data show, as of April 1, 2012 the bank’s net assets stood at Rub 987.84 bln (7th place in Russia), the credit portfolio totaled Rub 697.62 bln and liabilities to households amounted to Rub 236.26 bln.
Russian state development bank VEB may extend a $500 million loan to Belarus to help finance the construction of a new nuclear power plant, the bank said Thursday.
“We expect the work [on the loan deal] to conclude within two months,” said Pavel Kallaur, head of VEB’s Belarussian subsidiary. “The interest rate will be slightly below the market one.”
Russia, whose companies will build the power plant, has promised to lend Belarus $10 billion to finance the project, but the former Soviet republic needs additional funds to make prepayments for some of the work.
Russian banks lost 198 billion rubles ($6.5 billion) on equity and bond markets last year, the Central Bank said Tuesday, describing the losses as “moderate” in a year when the country’s benchmark stock index fell 17 percent.
Banks lost 33 billion rubles on stocks and another 165 billion from bond investments, but the sector as a whole still turned a profit of 848 billion rubles, Central Bank figures showed.
Stock and bond holdings accounted for about 13.4 percent of total banking assets.
Russian President Vladimir Putin made some appointments in the Kremlin’s administration.
As the presidential press service reported, Evgeny Shkolov, former Deputy Minister of Internal Affairs and the ex-head of the ministry’s economic security department, was appointed a presidential aide and Vladimir Tolstoy, director of the Yasnaya-Polyana Museum-Estate, was appointed an advisor. Alexander Abramov who engaged in procuring the State Council’s activity took the position of an advisor instead of a presidential aide.
Oleg Markov who was responsible for HR issues left office as a presidential aide, and Yury Laptev and Evgeny Yuriev who oversaw cultural and social development issues as advisors stepped down as well.
Sberbank is the stronger of two Russian brands that made it into a top 100 ranking, with a value of $10.6 billion.
Sberbank whizzed past Mobile TeleSystems to become the strongest Russian brand in the world, according to an annual global brands ranking. The nation’s largest bank was among the fastest risers on the list, jumping 25 spots to 74th place.
But Sberbank’s great leap is an exception among Russian brands, whose presence in the ranking has stagnated at only two representatives for four years running. MTS itself fell five spots on the list, settling in 85th position.
The findings are part of the seventh annual Top 100 Most Valuable Global Brands rating that Millward Brown Optimor published Tuesday. The rating measures brand value based on a combination of the brand’s contribution to corporate earnings and expected future earnings. The research covers more than 50,000 brands in more than 30 countries.
The value of Sberbank’s brand is pegged at $10.6 billion, while MTS has a $9.5 billion brand value.
The bank’s progress on the ranking is partially credited to the ambitious rebranding campaign it launched in 2009. In addition to emphasizing its 170-year heritage, Sberbank is upgrading 22,000 branches to include VIP centers, business centers, 24-hour self-service lobbies and kiosks for doing transactions.
“The high appreciation of the Sberbank brand is due to the bank’s record-breaking financial results as well as the changes in the perceptions of the bank’s customers, related primarily to the changes in the level of service,” said Denis Bugrov, the bank’s senior vice president, in a statement. “A new image of Sberbank is being formed as a modern, high-tech and customer-friendly company,”
The rebranding campaign allowed Sberbank to outpace multinational lender Citi on the list. Citi, which began working in Russia in 1992, has significantly more assets than Sberbank — $1.87 trillion as opposed to Sberbank’s $337.3 billion — but its global brand ranking is below its Russian competitor at 82nd place.
Other Russian brands, including Aeroflot and Russian Railways, have also recently undertaken rebranding efforts but so far failed to make it to the top 100.
MTS slid in the rankings despite reporting a 59 percent increase in its first-quarter net profit earlier this week. The company explained the fall by the worldwide stall in the telecommunications sector.
“The decrease in the value of the MTS brand in 2011 was influenced by a number of objective market factors, not related to brand development,” said MTS spokeswoman Valeria Kuzmenko. “About 40 percent of MTS shares are traded on the New York Stock Exchange, and so MTS is affected by the same trends that are characteristic of the international financial markets in general.”
The total value of the brands in the 2012 rating reached $2.4 trillion. Apple kept its grip on the top spot with a brand value of $183 billion. Other brands in the top five included IBM, Google, McDonald’s and Microsoft.
In the near future Sberbank will announce a transaction on the Turkish banking market, Sberbank deputy board chairman Andrey Donskikh told journalists.
Sberbank CEO and board chairman German Gref said in an interview with Kommersant business daily on Thursday that the Turkish market is of priority for the largest Russian bank in terms of global expansion. For the record, in February 2012 Sberbank closed a deal to buy Austrian VBI.
“We have so far been ready to make a statement, but it will be made in the days to come, maybe today,” Donskikh said.
In the past two years the media has regularly wired that Sberbank is eying various banking assets in Turkey.
Gazprombank has pulled out of Volodga-based Severgazbank, Prime-TASS wired.
Until November 2011 Severgazbank, a Top 200 bank by assets, was a subsidiary of Gazprombank, which sold a majority stake in the bank to an outside investor. Currently Severgazbank’s largest shareholder (86.81%) is Nordinvest, while Gazprombank held an 11.55% stake.
The Ministry for Economic Development has prepared a draft federal law to establish on the basis of the Deposit Insurance Agency (DIA) a guarantee fund for private pension funds (PPFs), the ministry said in a press release.
The agency would form the guarantee fund, including to accumulate guarantee fees and control their allocation to the guarantee fund, would examine applications of insurers responsible for mandatory pension insurance to pay guarantee reimbursement. The agency would also pay guarantee reimbursement.
A guarantee event is a shortage of pension accruals that are recorded in the special section of an individual personal account of a person insured or on a pension account of the cumulative part of the labor pension of a person insured on the day starting which the cumulative part of the labor old-age pension is established for a person insured and (or) term pension payment, one-time payment of pension accruals compared to the aggregate amount of guaranteed funds.
Guaranteed funds are money subject to records in a special section of the individual person account and on a pension account of the cumulative part of the labor pension throughout the period of pension accruals.
Insurers responsible for mandatory pension insurance are the Pension Fund of the Russian Federation and private pension funds.
“It is evident that the key aspect of any system of guarantees is questions regarding the amount of guarantees, costs required to keep the mechanism operational, terms for the receipt of reimbursement and sources of funding,” thinks Ivan Evstifeev, deputy executive director and head of the internal control department at PPF KIT Finance. With regard to the draft law presented, these issues, as Evstifeev thinks, are not fully resolved or their resolution looks quite doubtful.
Russian issuers should be more aggressive in discussing financial legislation, Deputy Finance Minister Alexey Savatyugin voiced this aspiration on Thursday at the “Dialogue between Issuers and Investors” conference held by MICEX-RTS.
According to him, currently Russian corporate issuers whose interests, as a rule, are affected in the first place in case of any changes in laws related to the stock market, express their positions considerably late.
As an example he mentioned the Federal Law “On the Central Depositary”, which was long discussed by professional participants of the securities market.
“Prior to the law’s adoption discussions with regard to the law involved registrars, depositaries and regulators. After the law has been adopted we began to receive letters from our largest issuers. It turns out that their viewpoints substantially differ from those of professional participants, but this was done too late,” he said.
According to Savatyugin, currently the State Duma and the Russian government have a sufficient number of draft laws and statutory acts that require active involvement of securities issuers. At issue are a draft law on bondholders, which was adopted in the first reading in 2009 as an anti-crisis measure against bond defaults, a draft law seeking to make board members responsible for decisions adopted, a law on the securitization of assets and a draft law on simplifying the securities issue procedure.
“I call for issuers to keep an eye on these draft laws and express their opinions about them in a timely manner,” the deputy finance minister noted.
On Friday members of the State Duma decided to leave on the agenda a draft law on taxes to be imposed on operations carried out with Eurobonds and bank secrecy for households despite the government’s objections.
While discussing the agenda the Duma members voted against a proposal made by Fair Russia member Andrey Krutov to remove this issue. The proposal to remove the draft law from the agenda was backed by the Russian government’s representative Andrey Loginov by explaining that it is necessary to hold an additional meeting with regard to the draft law with the participation of the vice PM.
Acting Justice Minister Alexander Konovalov stated on Thursday that the law on collector activity should be drafted as soon as possible.
The media reported earlier that the draft law was planned to be submitted to the government in May.
Meanwhile, there are disagreements between state authorities about the lawfulness of banks transferring the right to lay claims upon individuals to collectors.
The Federal Service for the Supervision of Consumer Protection and Welfare and prosecutors consider such a transfer of rights without the debtor’s consent to be illegal.
At the same time, the Supreme Commercial Court believes it corresponds with civil legislation.
The Second St. Petersburg International Legal Forum opened on Thursday and will run until May 19.
The forum will mostly address the fight against corruption, the WTO legal space, antimonopoly regulation, the execution of international commercial court rulings, the legal basis of global trade relations, Internet legal regimes, the development of an open government as a tool to attract civil society to lawmaking, and the development of civilized lobbying.
Representatives of over 50 countries will participate in the forum.
National Bank of Greece S.A.
Bank of Moscow
Bank of Moscow
Milstream Black Sea Wines
Air Baltic Corporation (airBaltic) and Baltijas Aviacijas Sistemas (BAS)
The Moscow Commercial Court will hear on June 27 the Moscow-based Prado-Bank’s lawsuit against the National Bank of Greece S.A., in which the plaintiff seeks the rights to the i-bank international trademark.
The lawsuit was filed on April 5. The third party in the case is the Russian patent watchdog Rospatent. The judge earlier suspended Prado-Bank’s lawsuit until May 11, as the plaintiff did not submit documents proving that it notified the defendant about the lawsuit and the payment of state duties.
Rospatent registered the i-bank trademark for 10 years for the Greek bank in 2008.
The Russian Legal Information Agency has yet to reach the parties for comments.
Prado-Bank is a multipurpose credit institution in Moscow. It ranked 446th among Russian banks as of February 2012, according to the Banki.Ru website.
Founded in 1841, the National Bank of Greece S.A. is the largest bank in Greece.
The Greek government owns 23 percent of the bank. It accounts for 30 percent of the private bank accounts in the country.
The Moscow Commercial Court recovered $38.24 million in credit debt from the Strakhovaya Gruppa insurance company under a lawsuit filed by the Bank of Moscow, the court told the Russian Legal Information Agency (RAPSI/rapsinews.com) on Friday.
The court has also decided to recover from Strakhovaya Gruppa 587,000 rubles ($18,700) in penalties for the non-execution of obligations under a suretyship contract.
It was reported at the hearing that the lawsuit also concerns five credit contracts signed by the bank with Stroykontrakt. The insurance group served as the guarantor under the contract. The borrower did not fulfill its obligations, and the Bank of Moscow then referred to the guarantor.
The bank’s lawyer said the total debt under the five contracts amounts to 1.236 billion rubles ($39.4 million), but the limitation under the suretyship contract stands at 1.2 billion rubles ($38.24 million). Thus, the bank has requested to recover this amount from the guarantor.
Strakhovaya Gruppa is a major shareholder in Stolichnaya Strakhovaya Gruppa, owning a 50 percent minus one share stake. Stolichnaya Strakhovaya Gruppa manages an insurance holding that includes Strakhovaya Gruppa MSK, the Moscow Reinsurance Company and MSK- Life.
The Bank of Moscow is restructuring its finances with the assistance of the Deposit Insurance Agency and the VTB Group, which holds a 94.8-percent interest in the bank. In December, VTB raised its share in the Bank of Moscow from 80.57 to 92.22 percent by acquiring shares from Strakhovaya Gruppa MSK.
The Moscow Commercial Court postponed until July 17 the consideration of the lawsuit by the Bank of Moscow against Milstream Black Sea Wines to recover $26.36 million in loans.
The parties have said they are negotiating the settlement. The bank said on Thursday that the parties need time to finalize certain debt restructuring issues and therefore asked the court to suspend the case once again. The settlement is expected to be submitted to the court during the next hearing.
This is the largest of four lawsuits filed by the bank against wineries in June. The damages requested in the claims total over 1 billion rubles ($32 million).
In a previous statement, the bank told the Russian Legal Information Agency that it is “following its plan to protect its legitimate interests.”
According to the source, the plaintiff seeks the repayment of the outstanding principal amount plus interest under loan agreements, as it is not a shareholder of its debtors, but rather its lender.
The media has alleged that former Bank of Moscow President Andrey Borodin owns the wine companies.
The Moscow Commercial Court set July 17 for the first hearings of two Investbank lawsuits to recover 12.5 million euros from Latvia’s national airline Air Baltic Corporation (airBaltic) and Baltijas Aviacijas Sistemas (BAS), the court told the Russian Legal Information Agency (RAPSI/rapsinews.com) on Tuesday.
The bank is claiming 2.2 million euros in one lawsuit and 10.3 million euros in the other.
The plaintiff’s representative said that in the summer of 2011 the bank signed loan contracts with Baltijas Aviacijas Sistemas worth 2.1 million euros and 9.9 million euros.
The first loan was set to mature on July 4, 2012 and the second on June 29, 2012.
AirBaltic was the loan guarantor. The contracts stipulated that the company was to pay interest on a monthly basis, but in November 2011, the borrower ceased to pay interest and the bank took the matter to court, claiming the premature repayment of the loans and corresponding interest.
AirBaltic’s vice president Janis Vanags told the Russian Legal Information Agency (RAPSI/rapsinews.com) that “airBaltic does not have any documents stating its liability in regard to the Russian bank in question.”
Following the collapse of Latvijas Krajbanka, the government bought a 47.2 percent stake in airBaltic, pledged by BAS at the par value of 224,000 lats, since BAS, airBaltic’s shareholder, could not meet its liabilities.
Investbank was founded in the city of Kaliningrad in 1989. Its head office moved to Moscow in 2011. Investbank is a multi-purpose bank which serves over 20,000 companies and 200,000 private individuals in 84 cities and towns in the Russian Federation.
Air Baltic Corporation (airBaltic) is a joint stock company, founded in 1995. The Latvian government holds 99.8 percent of the company shares. In 2011, airBaltic served over 3.3 million passengers and owns over 34 planes.
Contact person: Conference Secretary
ICIFE 2012 will be published in the IPEDR (ISSN: 2010-4626) as one volume, and will be included in the E&T and indexed by EBSCO, WorldCat, Google Scholar, and sent to be reviewed by ISI Proceedings.
Organized by: IEDRC