Page 28 - bne_Magazine_September_2017

28 I Cover story bne September 2017
big bank territory. It is not clear how big the hole in Otkritie balance sheet it, but according to some experts it could be north of $14bn, which is beyond the CBR’s ability to bail it out.
It is already clear that the sector’s liquidity is very unevenly distributed. Sberbank and most large private and foreign banks have liquidity surpluses, as they have repaid the majority or all
of money the CBR lent them starting in 2008. As of 1 August these big banks kept RUB0.7 trillion on interest- bearing deposits with the CBR, which is considering issuing bonds to absorb excess liquidity from them. However, some state-owned banks, especially VTB, are still reliant on state funding.
Among private banks, few used expensive ruble CBR funding, with
Otkritie being the stand out excep- tion in July (RUB338bn) as well as B&N which borrowed RUB51bn to cover funding outflows in June-July. At 1 August, both banks had liquidity buffers covering about 20% of cus- tomer accounts, which for Otkritie is only moderate, given the magnitude of previous outflows. Promsvyazbank is another name that comes up in connection with Otkritie’s problems.
A “young reformer” and former president Boris Yeltsin’s go-to man with the IMF in the 90s, Chubais was a share- holder, a fact confirmed by a short announcement in 2013 announcing Chubais was selling out (to Belyaev and Agan- begyan it later emerged).
An economics professor by training and later a key figure in Yeltsin’s government, at the time he left Chubais was running the massive Rusnano state-owned corporate designed to promote technological investment in Russia.
Chubais shouldn't have had the money to be a major player in a mid-sized bank’s capital. Generally respected in the west, Chubais oversaw the notorious loans-for-shares pri- vatisation in the mid-1990s and famously balked at allowing oligarch Boris Berezovsky to fix the privatisation of tele- coms giant Svyazinvest. But he was close to the oligarchs and was caught taking a $100,000 “book advance” fee from Potanin in the 1990s. (Chubais eventually did write a book about the 1990s privatisations.)
Boris Mints
Art buff Mints was an early investor in Otkritie. He is the link between Belyaev and Chubais, having worked closely with Chubais in the Yeltsin government as a board member of the Russian State Property Committee in 1994-1996 that oversaw many of the 1990s privatisations.
The State Property Committee was a notorious body that sold off much of Russia’s state property to entrepreneurs making them millionaires overnight, but Mints was sacked from government by Vladimir Putin in 2000 after he became president that year.
In 2004, Mints founded the O1 investment company that specialises in real estate and is now the largest owner of offices in Moscow. (His son Dmitri is also in real estate, running the highly successful O2 high end real estate company.) Close to Chubais, Mints joined the board of
www.bne.eu
engineer, he has been with Otkritie from the very beginning
in 1997 when it was only an insignificant brokerage, before rising to director when it was transformed into a bank in 2001.
Belyaev has several connections to the Yeltsin administra- tion. During the 1990s he met Boris Nemtsov, who was also a close associate of Chubais, playing tennis and they became partners in the real estate business. (Nemtsov was also caught in the book fee scandal.)
Belyaev has kept a low profile for the head of a prominent bank, but after Otkritie’s troubles became public in August he announced that he was returning to take over personally after a two year hiatus in an effort to shore up confidence.
“Recently, we’re seeing a reduction in trust in the banking system,” Belyaev said in a statement. “I believe the best way to increase trust is to lead by personal example.”
..Some commentators have speculated that one of the reasons the Central Bank of Russia (CBR) has been so lax in its regulation of Otkritie is that its current governor Elvira Nabiullina worked as Chubais’ deputy in the Committee
on Economic Reforms in the 1990s and remains loyal to him. Certainly the CBR has been remarkably generous with Otkritie and given it ample funding to bail out other banks. Moreover, the central banks’s first deputy chairman Dmitry Tulin admitted in the last week of August that the CBR
has “been aware of problems with Otkritie” for over a year, but did little to reign in the bank’s voracious appetite for acquisitions.
Vadim Belyaev
Belyaev has been in the spotlight during the CBR’s take over of Otkritie and owns 28.6% of the stock. Trained as a ship