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Why Russia Doesn’t Deserve an ‘A’

Published in The Moscow Times
By Andrey Borodin

Around the globe, there is a heated discussion among policymakers, bankers and analysts about the role of the major credit ratings agencies. This discussion was provoked after we witnessed their incompetence in rating collateralized instruments in the early 2000s. According to the U.S. Financial Crisis Inquiry Commission 2011 report, they were “key enablers of the financial meltdown” in 2007 and 2008. The discussion has been reignited recently by Standard & Poor’s decision to downgrade the U.S. credit rating.Автор: Андрей Бородин
Опубликовано в The Moscow Times

Во всем мире среди лиц, формирующих политику, банкиров и аналитиков идет оживленная дискуссия о роли основных кредитных рейтинговых агентств. Дискуссия началась после того, как мы стали свидетелями некомпетентности агентств в процессе присвоения рейтинга обеспеченных залогом финансовых инструментов в начале нулевых. По данным отчета Комиссии США по расследованию финансового кризиса, датируемого 2011 годом, эти агентства сыграли “ключевую роль в создании условий для финансового кризиса” 2007-2008 годов. Недавно дискуссия оживилась – после того, как агентство Standard & Poor’s приняло решение понизить кредитный рейтинг США.Veröffentlicht in The Moscow Times
Von Andrej Borodin

Weltweit diskutieren politische Entscheidungsträger, Banker und Analysten heftig über die Rolle der großen Ratingagenturen. Diese Diskussion entbrannte, nachdem wir Anfang der 2000er Jahre Zeuge ihrer Inkompetenz bei der Bewertung besicherter Finanzinstrumente waren. Laut dem Bericht der Untersuchungskommission zur Finanzkrise der Vereinigten Staaten von Amerika (FCIC) für das Jahr 2011 waren sie die „Hauptauslöser der Finanzkrise“ der Jahre 2007 und 2008. Die Entscheidung von Standard & Poor’s, die Kreditwürdigkeit der USA herabzustufen, hat die Diskussion vor kurzem neu entfacht. (more…)

But the emperor isn’t wearing any clothes!

Blog of Vladimir Krasnov, Andrey Borodin’s Attorney, on the website of “Echo Moskvy” So, today Andrey Borodin made a very important statement (Borodin’s blog 31 August). As the lawyers say,…

Statement by Andrey Borodin

I must go on record in response to recent allegations of ‘criminal acts’ of which I am accused within Russian media. Again citing unnamed sources in the Interior Ministry of Russian Federation the reports purport to suggest that the Investigatory Department, which is apparently leading a preliminary investigation in to my actions while CEO of the Bank of Moscow is supposed to have alleged “virtually all loans were issued to Cyprus offshore companies,” and “instead of $63 million, which were present in the case earlier”, I and my colleagues, “may be (?) charged with the illegal issue of unsecured loans for more than $6 billion” (Kommersant, 29.08.2011).Не могу не ответить на появившиеся в последнее время в СМИ очередные заявления о моих «преступных деяниях». Вновь, ссылаясь на анонимные источники в МВД РФ, осуществляются попытки представить ситуацию так, что Следственный Департамент, который, по всей видимости, ведет предварительное следствие, обвиняет меня в том, что «практически все кредиты выдавались кипрским оффшорным компаниям», а «вместо $63 млн., которые фигурировали в деле ранее», мне и моим коллегам «может быть (?!) инкриминирована неправомерная выдача ничем не обеспеченных кредитов более чем на $6 млрд.» (Коммерсант, 29.08.2011).Ich muss mich zu den jüngsten Behauptungen bezüglich der ‚Straftaten‘ äußern, die mir in den russischen Medien vorgeworfen werden. Wiederholt werden anonyme Quellen im Innenministerium der Russischen Föderation zitiert, die den Anschein erwecken, dass der Untersuchungsausschuss, der derzeit erste Ermittlungen bezüglich meines Verhaltens als Geschäftsführer der Bank of Moscow durchführt, angeblich behauptet hat, dass „nahezu alle Darlehen an Briefkastenfirmen auf Zypern vergeben wurden“, und meine Kollegen und ich „an Stelle der 63 Millionen US-Dollar, von denen bisher die Rede war“, nun „möglicherweise (?) wegen der illegalen Vergabe ungesicherter Darlehen in Höhe von mehr als 6 Milliarden US-Dollar angeklagt werden“ (Kommersant, 29. August 2011). (more…)

Borodin’s house and land remain under arrest

Business FM On 31 August the Moscow City Court upheld the decision of Tverskoy City Court for the arrest of property of the former head of Bank of Moscow Andrey…

Experts: Bank of Moscow got caught up in politics

RBC Experts doubt that Bank of Moscow, a bank with good ratings, could turn into the most problematic credit institution of the country just in one year...РБК Эксперты сомневаются в том, что Банк Москвы с хорошими рейтингами за год мог превратиться в самое проблемное кредитное учреждение страны...

Bank of Moscow bailout saved VTB – ex-CEO

By Douglas Busvine, Reuters * Exiled former CEO defends lending practices * Says VTB exaggerated bad loans at Bank of Moscow * Loan that financed stake sale well secured - Borodin…

Power Play in Russia

Finanz und Wirtschaft

The fate befalling the Bank of Moscow and its CEO Andrei Borodin, author of the adjacent article, is reminiscent of the plot in a bad Hollywood film. The details of what exactly transpired behind the scenes that led the 43-year-old Borodin, sought by the Russian authorities for mismanagement of the Bank of Moscow, to live in exile in London are unclear. “Finanz und Wirtschaft” attempts to trace the course of events. The Bank of Moscow founded in 1995 by the city of Moscow and its mayor Yuri Luzhkov, emerged as one of Russia’s top banks under the leadership of Borodin, a close confidante of Luzhkov. Even as the financial crisis unfolded, the bank maintained buoyant growth and enjoyed the confidence of many western investors. As a result, in July 2010 Goldman Sachs and Credit Suisse jointly acquired a 6.6% holding of the bank’s shares. Everything was going smoothly.

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The Russian intrigue over control of banks; the mode and manner of the Bank of Moscow restructuring raises many questions

by Gerald Hosp, Neue Zürcher Zeitung

Question marks still hang over the massive injection of government funds into the Russian Bank of Moscow. The former CEO is defending himself against allegations of credit fraud. The bailout is dragging down the reputation of the entire Russian banking sector.

In these times of financial and economic crisis, government support for a troubled bank is nothing extraordinary. Even so, the case of the financial injection for Russia’s Bank of Moscow (Bank Moskwy, BoM) is more illustrative of the moral condition of the country’s economic and political elite rather than action to restore a bank’s balance sheet. At the beginning of July, the Russian authorities assembled a 395 billion rouble rescue package to pull back the stricken BoM from the brink of bankruptcy. That marked the largest ever capital injection in the Russian banking industry. “The support package was not necessary. With the bailout, the stockholders of the institution were rescued, not the bank,” says Andrei Borodin, the bank’s former CEO, in an interview with this newspaper in an undisclosed location.

Borodin is defending himself against accusations that credit fraud took place under his watch. Russian officials have said that more than half of the institution’s credit portfolio was “in bad shape.” A large portion of this can be ascribed to companies linked to Borodin and other former BoM managers. Attempts were made to sell off assets pledged as collateral. A warrant was issued for Borodin’s arrest in connection with a loan to property firm. Since the end of March, Borodin has no longer been in Russia, and the banker is thought to be in London.

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