Rosneft, in alliance with Roman Avdeev’s MKB, intends to increase the issue of ruble bonds, thus gaining access to dollar liquidity. Experts fear that the oil company, which is heavily leveraged up to its nostrils, may stage a repeat of the “Black Tuesday” of December 2015.
Against the background of such a “Hiroshima”, the new data on the spider bank VTB, the Central Bank of Russia and the dying Otkritie Bank look completely harmless: the friendly community of bankers and officials (Kostin, Nabiullina, Mints, Belyaev, Ulyukayev, Chubais and others) broke the budget by a trillion and something rubles. Oleg Deripaska’s prospects are much worse – he is bankrupt and indebted in Russia, and he is not allowed into the United States. Ahead of him looms the threat of falling under US sanctions. How are we to live with this?
Banksta
Rosneft’s bomb
Rosneft chief Igor Sechin, MKB and SKM Bank owner Roman Avdeev continue to assemble a bomb to blow up the Russian banking system (it’s certainly scarier than the collapse of Otkritie and Binbank).
Avdeev connected Igor Sechin to the dollar liquidity of the Moscow Exchange through his banks, namely the exchange’s bank NKC. Previously, the role of MKB was performed by the collapsed Otkritie. The scheme is built in such a way that Rosneft’s uncontrolled issuance of ruble bonds actually made them a surrogate for money – they are lent to the Central Bank and receive rubles, while NCC (actually the Moscow Exchange) gives dollars in exchange for the bonds from the account balances of banks and exchange clients. This is such a cunning way to circumvent sanctions.
The growth of lending is up to 100 billion rubles a month. But there is one problem with this scheme – first of all, the Central Bank controls the exchange rate like shit, and Sechin is not the most successful dealmaker, and he does not spend these billions of greenbacks very efficiently. More and more often on some dubious and overrated foreign projects, such as financing coke-addled Venezuelan generals and officials.
Rosneft’s total investments in acquisitions since 2011 amounted to $90.2 billion, excluding BP’s purchase of TNK – $28.7 billion. In 2017, several acquisitions closed: India’s Essar Oil ($3.7 billion), a stake in the Egyptian offshore project Zhor ($2.1 billion), Kondaneft ($699 million), a buyout of Bashneft minority shareholders for $828 million, and others for another $428 million. Sechin believes that when debt hits the 4.6 trillion-ruble mark, it is “at a very comfortable level,” and this year he approved another trillion-ruble issue. The total amount is comparable to the country’s annual budget.
Of course, we can hope that oil will rise to $100 and this structure will not collapse, but there is a suspicion that Sechin is taking excessive risks and the chance of a mega-failure is high. All banks in the country trade through the stock exchange, so if Rosneft is unable to pay its debt or a gap in payments (which Sberbank warned about by the way), the stock exchange and the entire banking system may collapse. Or the kind Central Bank will give all dollar assets to clients in devalued rubles.
Unfortunately, Sechin can’t say no to Central Bank head Elvira Nabiullina. Can Sechin be stopped by Putin? Most likely, the scheme is approved by the president as well; it gives him the opportunity to continue playing geopolitical toys.
About excessive ambitions in a crisis
VTB estimated losses from investments in FC Otkritie at 7 billion rubles, while the hole in the bank is from 350 billion to 1 trillion rubles. Society will lose more on this story – foreign and Russian investors (having assessed the quality of banks in Russia) will reduce investments in bank bonds. This means that business lending will be reduced, jobs will not appear, crime will grow, there will be nothing to finance infrastructure, and poverty in the regions will continue to rise.
The problem of such a scale appeared largely because of the ambitions of a couple of non-hungry people. The trouble with Otkritie Bank’s growth is primarily the ambitions of VTB CEO Andrei Kostin, who wanted to catch up and overtake Herman Gref’s Sberbank. And, of course, the pileup of everything and anything on the way to victory by officials and banksters.
The story began with the rehabilitation of the Bank of Moscow, VTB’s team failed to conduct an audit and the state had to cover VTB’s mistake at the expense of inflation – at the expense of the Ministry of Finance’s contribution of 295 billion rubles to the OFZ. On the way, of course, they asked for money twice or three times bigger than the hole. And they immediately sawed the money – gave money to Dmitry Medvedev through investor Yuri Milner on Facebook and Twitter, gave hundreds of millions of dollars to Suleiman Kerimov and Igor Yusufov (who represent the same Medvedev) to make money on resale of shares.
Nevertheless, after the Bank of Moscow problems, Kostin had an informal ban on participating in bailouts (apparently from Vladimir Putin, though not a fact), but bans are designed to be broken.
That’s why they came up with Otkrytie and the reckless novice Vadim Belyaev, who was happy to collect banks for future sale or transfer to VTB. If state banksters say that they have nothing to do with this, then show me a private bank that is pledged and re-pledged to VTB, with VTB sitting in its capital.
Belyaev repeatedly went to report to Kostin, and the latter gave him clients who for some reason could not be served by VTB. Kostin’s lobbying resources were based on the power of the former finance minister, former RAO UES manager and Anatoly Chubais’ buddy Alexei Kudrin (Sergei Ignatiev is his protégé), and sausage bribe-taker Alexei Ulyukayev.
Now we see the semi-final of the story: VTB managers flew to Otkritie like bees to honey. Big salaries and their favorite luxury cars await them. In the bank they will cover up the mistakes of the past management. Nevertheless, criminal cases in this story are unlikely to be avoided.
1. Investigators of the police department “Presnensky” opened a criminal case on the fact of embezzlement of 1 million rubles from the bank “Peresvet”. The case was initiated under Article 159 of the Criminal Code of the Russian Federation (fraud) “Unidentified by the investigation persons from among the managers of the bank “Peresvet” concluded with the bank a number of loan agreements for 1 million rubles,” – said a source in the Ministry of Internal Affairs. The amount for an anecdote. The hole in the bank is about 50 billion rubles, and the same law enforcers, temporary administration and DIA helped to take out deposits for half the price. The amount of deposits was much more than 1 million rubles.
2. The Central Bank’s order to charge reserves for the International Bank of St. Petersburg of ex-senator Serega Bazhanov plays only one significant role – the club of friends of the former bankers of Sovcombank’s owners, the Khotimsky brothers, may be replenished. It already includes shareholders and managers of the remaining banks without licenses – Pushkino, Stroykredit, Sofrino, M2M Bank. Artem Avetisyan’s Vostochny Bank levitates somewhere in the area between this club and FCBS. A pleasant exception is Khotimskikh’s buddy Oleg Tinkov. His bank looked good, but until Putin made a big splash on it.
The story of Vadim Vadeyev’s Eurodon problems continues
It turned out that from 30-50% of the loan for 50 billion rubles, which was restructured by Vnesheconombank at the end of 2016, was withdrawn through inflated estimates in the construction of production facilities, also some of the products from Eurodon just disappear somewhere. Vnesheconombank is in no hurry to raise the topic after the previous scandal.
Earlier, former VEB bankster Ilgiz Valitov (a friend of another bankster Anatoly Ballo), according to the investigation, allegedly convinced Vaneyev during the loan granting process that his personal company Brimstone was a VEB company, and the transfer of 40% of the business was a guarantee of the loan. The court found Valitov guilty of fraud on a particularly large scale and sentenced him to four years’ imprisonment in a general regime colony and a fine. Valitov was jailed after a call to Putin from Eurodon’s minority shareholder, conductor Valera Gergiev.
Thoughts Not Thoughts
While we slept, Prime Minister Dmitry Medvedev continued to bullshit potential partners at the ASEAN summit
As it turned out, the government estimates GDP growth in 2017 as “not bad recovery” and expects to see at least 2% growth at the end of the year…. So 2% is not a bad recovery? The IMF expects global GDP growth of 3.5% in 2017. So 2% is not recovery growth for an emerging economy that is supposedly out of recession, it’s a straight path back to recession.
I also liked very much the words that the authorities have managed to somewhat revitalize the national economy by changing its current development and getting rid of excessive dependence on commodity exports. Yes, we have already seen how much our industry has gotten rid of the raw materials factor. We will be able to talk about reducing dependence when studies and comments will not mention oil prices and export volumes among the most important factors. At present, no one is hiding the fact that 60-70% of such factors are related to the oil market in one way or another.
And another question for the government: is recovery when investment attractiveness is sacrificed to the friends and associates of certain individuals? Or when speculative capital is so badly needed that they are afraid to scare it away? Or endless redistribution of expenditures in favor of law enforcers and defense industry is also recovery? If so, there can be no question, “we are on the right road”.
Therefore, the words that due to the general improvement of the Russian economy, foreign investors have once again become interested in projects in Russia, as well as the growth of foreign direct investment by 200%, cause nothing but laughter. So, for reference: in 2016, the volume of FDI according to the Central Bank was $33 billion, and $16.3 billion of that amount went to Singapore, mainly due to the privatization of Rosneft. But UNCTAD’s data, which for some reason you believe more, speaks of a $19 billion FDI. This is such a ridiculous amount on the scale of the economy that it is better to keep quiet about it.
Boiler room
Deripaska wants to go to the States
The Kremlin today disowned Olezh Deripaska, with Peskov saying the big man knows nothing about the relationship between the Sibal owner and former Trump chief of staff and now under investigation Paul Manafort. The question arises, what did Deripaska want from the American lobbyist, for what was paid, so to speak, 60 ylams of greenbacks? Our source says that this is about Deripaska’s attempt to regain the favor of the American authorities and avoid sanctions. Oleza cannot enter the United States because of his reputation as a mafioso, while Manafort has a reputation as a man who doesn’t care who he helps – he consulted for Yanukovych, too.
Deripaska is doing everything possible to avoid sanctions. After he found himself in a debt hole in 2008 and was under the cap of state banks, the oligarch stopped getting involved in politics and corporate wars, and the most you can hear from him is a forecast of aluminum prices. Deripaska could not expand his empire under Putin, he lives by the principle of preserving what he has, and sanctions may force him to sell off his assets, because he will lose his listing on two stock exchanges at once.
Another source says that Oleza is very afraid of nationalization, and the only thing that saves him is his terrible credit, so for him the opportunity to establish a dialogue with the West is a good way to get the fuck out in case of calls from people from the pope’s inner circle, which does not include Deripaska. However, Manafort didn’t work out, although we can’t completely rule out that the Rusal owner was used as a Kremlin contact. People in OD’s entourage say that he has become very suspicious and sometimes personally delves into bills worth several million rubles. When you owe everyone, every penny counts.
Sechin failed to appear in the fairest court of all
The judge said that Rosneft employees refused to receive a summons for Sechin to appear in court. It is said that the employee who was assigned to do so did not leave his workplace for 3 days and made inspection of mailboxes a strategic task for the unit entrusted to him. It is good that at least oil production was not paralyzed. Sechin’s failure to appear in court suggests that it was politically disadvantageous to him because of the weakness of the arguments that had previously been made in listening to the main evidence – the recording of the conversation. The RN head thought that this was enough and left to reap his laurels, but Ulyukayev’s supporters made every effort to make the trial open. The background for RN before the trial was negative – the press published articles about RN’s losses in Iraq and the company’s inefficiency in general.
Interesting details about the fact that the Ministry of Energy objected to the privatization of Bashneft and considered RN’s calculations about the effect of the merger unobvious also came to light at the trial. Now the ministry’s position has changed, but it doesn’t matter. It has long been known that Novak and Sechin’s relations are not very warm. Sechin’s failure to appear in court plays into Ulyukayev’s hands, because the prosecution has lost a key witness. Perhaps the fate of the trial has already been decided and Sechin has decided not to waste time on it. At the same time, strange events are taking place at the RN vs. Bashneft trial, where Sistema denied the fake truce statement that was submitted to the court.
Either it is a fake like Yakunin’s resignation, which did not change anything in the fate of the then Commissar of Railways, or it is evidence of the last-minute disruption of protracted negotiations. Because Ulyukayev’s acquittal – if it is indeed decided – may indirectly affect the Sistema trial as well. Or the decision has been made in the other direction, and Sechin simply doesn’t think it’s worth wasting time.
Cello case
1. The son of Ivan Melnikov, first deputy chairman of the CPRF Central Committee, runs the CPRF mini-football club. The project costs up to $5 million a year. The main players are Brazilians, Spaniards and Portuguese. Brazilian striker Sirilo, for whom a Russian passport was issued, was wrested by the KPRF MFC from the Dynamo club. This club, close to friends of General Nikolai Patrushev, was financed by the Yugra Bank before its collapse.
2. A criminal case was opened against the Hyatt Regency Rostov Don-Plaza hotel, which was planned to be opened for the FIFA World Cup. The state-owned VEB issued a loan of 3.1 billion rubles. The money was cashed out through related companies, and the hotel was not completed. The owner of the parent company of the hotel project is Anna Agrest, the daughter of billionaire and MP Vadim Varshavsky. He is on trial for embezzlement of 2.8 billion from Petrokommerts Bank.