Translated by Ollie Richardson & Angelina Siard
22:59:49
29/03/2017
zavtra.ru
Gesheft – it is said in an ironic sense about a deal made for the sake of profits, speculation of the lowest kind in parallel with deception.
A. N. Chudinov. Dictionary of foreign words, included in the Russian language.
On Monday, March 27th, Sberbank reported that it will sell 100% of shares of its Ukrainian “daughter” to a consortium of investors — Latvian Norvik Banka and a Belarusian private company, the name of which isn’t mentioned. The main shareholder of Norvik Banka is the citizen of Great Britain Grigory Guselnikov.
Later it became known that the majority shareholder of the consortium who will get the Ukrainian “daughter” of Sberbank became the son of the businessman and main owner of the groups “BIN” and “Russneft” Mikhail Gutseriev – Saïd Gutseriev (also a citizen of Great Britain). And it is precisely he who owns the unnamed Belarusian company. Saïd Gutseriev holds the CEO’s post at “ForteInvest” and is a shareholder and final owner of NPF “European pension fund”, JSC NPF “Doveriye”, and NPF “Regionfond” (AO).
Sberbank waits for the closing of the deal in the first half of 2017 after receiving approvals of the deal from financial and antimonopoly regulators of the corresponding jurisdictions, including Latvia and Ukraine.
“Sberbank-Ukraine” today is the sixth largest bank of the country, with assets of about $2.2 billion and a network of more than 150 offices. Nearly 1 million clients uses the services of the bank. Thus, following the results of the first three quarters of 2016, the share of the Ukrainian “daughter” of Sberbank was less than 0.5% of the assets of the group — about 115 billion rubles in the ruble equivalent.
JSC Norvik Banka today is the seventh largest in Latvia in relation to size of assets, and first place in the country by size of its branch network. More than 150,000 clients use the services of the bank.
On March 16th, the President of Ukraine Petro Poroshenko approved sanctions against banks with Russian state capital working on the territory of the country. Restrictions concern five “daughters” of the Russian banks with state participation: 100% “daughter” of Sberbank, Prominvestbank (belongs to VEB), VTB, “BM bank” (“granddaughter” of the Russian VTB) and VS Bank, which belongs to Sberbank through the European “daughter” of Sberbank Europe. They are forbidden to withdraw capitals “in favor of related persons” outside the borders of Ukraine.
Comment of Oleg Tsarev:
It is necessary to pay attention to the fact that before this there was an information leak about an attempt to sell assets of “Sberbank” to a Ukrainian buyer. The sum there as far as I remember was less than one billion dollars. As it appeared, the deal fell apart because Poroshenko, in addition, suggested to buy, at a price overestimated many-fold, his Russian assets – a confectionery in Lipetsk. Therefore the deal wasn’t concluded.
If we listen to Vladimir Putin’s appeal to the Federal Assembly, there a figure of more than $30 billion is given – it is how much the Russian banking system invested inside Ukraine. I.e. Russian “daughters”, the general credits of Russian banks pumped into Ukraine more than 30 billion dollars since the independence of Ukraine. About a half of it are assets of “Sberbank”. The Hryvnia exchange rate went down, there was an huge quantity of non-written off credits, which depreciated, didn’t return, and are toxic assets. Credits were issued, but it’s impossible to receive them back – it was written-off as losses. Now, if we count the bank’s balance, the price of “Sberbank” is about $5-6 billion simply concerning assets, without taking into account business, locality, client base, and so on. It is obvious that the Russian Federation suffered heavy losses. It is possible to assume that if with such a discount the assets of VEB will be sold – Prominvestbank, and also VTB, BM-bank (structure of VTB), VS Bank (“daughter” of Sberbank), and other “daughters” in Ukraine, so this loss is a magnitude of an order of 2. The returning of $1.5 billion from $30 billion is a twenty-fold loss. Of course, it is heavy losses for the Russian Federation.
I want to pay attention to the fact that for two years I said that such a situation will happen, and it is necessary to do something urgently. Just for the last year $1.5 billion was injected by the Russian banking system into Ukraine. And actually it is for the same money that these banks will now be sold. By the way, because of these transfers for recapitalization, which was done by the Russian banks in Ukraine, Russia is now investor No. 1 in Ukraine. It is necessary to understand that this money transferred during the time of the standoff is support for the Kiev power. I.e. under this money the hryvnia was propped up, under this money the salaries of fighters of the anti-terrorist operation was paid, arms were bought, war was paid. Now it is not so important to who the assets will be sold: inside of Ukraine, to Belarusians, Lithuanians, British, or to somebody else. The most important thing is that the support of the Kiev regime will stop. It is a plus. But it is necessary to understand that Russia paid a very high price for this
There isn’t any business here. Just the depriving of money took place, and it is clear that it’s not from the pockets of Gref, Gorkov or Kostin, but from the pockets of Russian citizens. Why? Because it is very easy to observe where the money was coming from for accounts of Ukrainian “Sberbank” and in the daughter of Vnesheconombank and VTB – it is refinancing received from the Central Bank of the Russian Federation. Eventually, it is the Russian taxpayers who paid for everything. And it is very regrettable. When two years ago I wrote that it is necessary to urgently make a decision on this issue, so if a decision was made at the time, it was possible to simply gift the assets to Ukraine, because during these two years there was more money transferred to Ukraine than the sum that now these banks are being sold for. And it is clear that during these two years it was possible to sell these banks for absolutely other money – not for what is proposed today for this. Here a decision is difficult: it is correct in a political sense, but very expensive for the Russian taxpayer and the Russian budget.
But it is possible to congratulate, of course, Gref, Kostin, and Gorkov on an “excellently” executed operation. However, let’s not hurry to label neither the sellers, nor the buyers. The buyers eventually can be the most unexpected. Today there is already such statements that Ukraine will block the deal with Gutseriyev and Guselnikov, and will then compel to return “Sberbank” to Ukrainian buyers for an absolutely symbolical payment. I.e. with even heavier losses. Because as I understand Petro Poroshenko will try to make a deal with his confectionery business. By one, another, or a third method. Do you understand, the Kiev power wants to “earn” for the third time. The first time is when, using the Ukrainian courts, assets are seized from under the credits. When someone starts a business, they obtained credits, the Ukrainian courts in large quantities terminated contracts, recognized them as invalid, seized assets, and actually made it impossible for Russian banks to obtain their credit back. This money was stolen also for the second time. Declaring the credits as substandard, the National Bank of Ukraine demanded from Russian banks to additionally capitalize their Ukrainian “daughters”. And Russian banks, parent structures were compelled to transfer money to Ukraine. And Kolomoisky, on the contrary, was squeezing out money from the Ukrainian budget and transferred it abroad, twisting the arms of Ukrainian National Bank with the fact that he has a large number of deposits, and he threatened to bring down the banking system. And the Russian banks, under the threat of introducing a temporary administration, will take away all assets, demand to transfer from inside Ukraine to Russia billions of dollars, under which then the hryvnia was issued, which the Ukrainian budget used. Thus, in such a way they received money from Russia for a second time. And now Petro Poroshenko tries to receive money for the third time from the repeatedly-robbed Russian banks, compelling them to sell already the remaining assets.
There is such an opinion that all this story of “daughters” of Russian banks in Ukraine, with their blockade and so on, is a spontaneous grassroots movement of Ukrainian nazis, which was supported, because of the hopelessness of the situation, by the highest Ukrainian authority. Or, on the contrary, everything was enacted by the authorities, having used nazis as a pretext? What came first here: chicken or egg?
Studying examples of other countries, the conflicts (including such as between Northern and Southern Cyprus, between Great Britain and Argentina for the Falkland Islands, and there are many other cases), I understood already a long time ago that the relationship between Ukraine and Russia will worsen to complete severance. And it is precisely for this reason, understanding what money stands on, I said all the time that it is necessary to resolve the issues of Russian banks urgently. And here it isn’t so important what is first and what is second. There is a common tendency: in what direction and in what key will the relationship develop. And believe me: the next step will be the attempt to nationalize the assets of Russian business in Ukraine – and it is quite possible that it will be successful. And this, once again, according to data that exists in many sources, is more than $30 billion. These are the factories and plants belonging to Russian businessmen in Ukraine. And they will most likely follow suit. And that’s why, until trouble catches somebody unprepared, it is necessary to count these things and to make decisions in advance. It would be silly to count on the fact that, after external management was introduced in Donetsk and Lugansk in some Ukrainian companies, Ukraine won’t sooner or later go down this road. We already overslept on the banks. But there is still business. And, eventually, this is anyway the money of Russian taxpayers, this is the Russian money. Maybe not to such a degree as it is money of Russian banks, but all of this is the profit earned on Russian enterprises, invested abroad, which then should’ve brought money to Russia. And it won’t bring anything, and money can be lost. Such companies are numerous – both metallurgical and ship-repair, and in the chemical industry, and in mechanical engineering. Maybe they won’t reach each kiosk, but the companies of large oligarchs can receive another blow. Moreover, I think that the risks are rather high.
Many predict a crash in the banking system of Ukraine. Please believe the Deputy of four convocations who was involved in the Ukrainian economy (I was also in the Committee of economic policy, and in the tax committee): the State has very serious resilience. If the balance of a firm didn’t converge, and liabilities became more than assets, creditors started demanding a return of funds – then that’s all, the firm becomes bankrupt. And the businessman can’t lower the salary of employees because they will leave, they will go to work for other enterprises. And the State has a very large supply of resilience because people can’t leave the State. The average salary of $300-400, for example, can go down to $200, then to $100 dollars, to $7 or $6, as it was in some Latin American comprador regime that the US was establishing. So, the standard of living was falling, industry was falling, salaries were falling. But nevertheless, dictatorships have existed for dozens of years. The most important thing in this case is that the fall in the standard of living is not sharp so that people manage to get used to the fact that tomorrow will be slightly worse than today. It mustn’t become instantly worse, not a landslide, so that people don’t come out onto the streets, so that it doesn’t look like a catastrophe. Therefore not everything is so simple in Ukraine. And the expectations of my many colleague-politicians that the Kiev regime will die and there will be a revolution … So to say, it is possible to argue with this point of view.
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