Russian Lenders Need Western Money, Top Banker Says24 июня 2018
Success depends on how Moscow build relations with the outside world
ST. PETERSBURG—To fix Russia’s broken banks, the Kremlin needs improved relations with the West and to regain access to foreign capital.
This is according to Mikhail Zadornov, a former finance minister and the man now in charge of cleaning up some of Russia’s biggest private banks, which went bust and required a 2.6 trillion ruble ($40 billion) bailout last year. That is equivalent to 16% of Russia’s federal budget this year.
“A lot of the success of our strategy in the next few years will depend on how Russia will build its relations with the outside world, and how the economy will grow,” Mr. Zadornov said in an interview. He serves as President of Bank Otkritie, which had been the largest privately held bank until it was nationalized. Russia’s central bank is folding half a dozen ailing financial institutions under the Otkritie umbrella.
“If the sanctions are tightened, the price of our assets will fall” he said.
The collapse of Otkritie and the other private banks has proven a major economic test for President Vladimir Putin as he confronts the West. The failures brought the financial system to the brink last year—requiring swift intervention from the central bank. It also exposed a multi-billion network of chummy insider deals by Moscow’s financial elite, according to central bank chief Elvira Nabiullina.
Russian companies have struggled to access capital abroad since the U.S. and EU imposed financial sanctions on the country for annexing Crimea in 2014. The sanctions have since been tightened in response to Russian meddling in the U.S. presidential election and the alleged poisoning of a former spy in England.
In recent weeks, however, the Kremlin and White House have begun preparations for a potential summit between President Donald Trump and Mr. Putin, which Russian officials and business leaders hope would lead to the loosening of sanctions.
White House National Security adviser John Bolton and several U.S.congressmen and senators are coming to Moscow this week to discuss the presidential summit.
The stakes are high for Mr. Zadornov, who hopes a thaw in relations could bring in new foreign investors to deliver Otkritie back into private hands. His plan is to sell 15% to 20% of the bank by 2021.
Amid Western sanctions, weak growth and tightening regulation, bankers and analysts say the government will struggle to find a buyer for Otkritie.
“It’s a tough market that’s not interesting for investors,” said Kirill Lukashuk, chief banking analyst at Russia’s ratings agency AKRA. “Not one financial institution has been properly privatized. There’s no precedent.”
Russia’s bank bailout last year calmed markets but also reinforced the state’s dominance of the financial sector. Russian state banks now account for about 70% of lending in the country. Private bankers fear Otkritie’s state backing, which could give it easier access to cheap funding, will crowd out the remaining competition.
“We wanted to get a more effective banking system but we’re getting a state banking system,” said Mikhail Alekseev, chairman of the Russian subsidiary of Italy’s UniCredit , at a recent event in St. Petersburg.
Mr. Zadornov says his first task is to measure the size of the hole in Otkritie’s balance sheet by next month and then begin transferring troubled assets into a separate central bank-sponsored bad bank.
Mr. Zadornov says the bank has already recovered its private banking portfolio to pre-meltdown levels, sometimes by personally calling clients to plead with them to stay.
He also plans to triple the size of its corporate loan book by 2020.
He then plans to improve the bank’s performing parts by focusing on small businesses and wealthy individuals.