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…

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.

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.

Neue Zürcher Zeitung The effort to forestall the bankruptcy of the troubled Bank of Moscow became the largest rescue package in the brief history of the Russian banking sector. However,…

Frankfurter Allgemeine Zeitung

The rescue of Bank Moskvy puts Russia’s entire banking sector in a bad light. The state has bailed out to the tune of billions – but for whose benefit remains in dispute. Criticism is levelled at supervision, politics and management.

By Maria Levitov and Henry Meyer, Bloomberg

The “political” takeover of Bank of Moscow by Russia’s state-owned VTB Group led to the biggest bank bailout in the country’s history to transfer government money to Bank of Moscow’s new shareholders, former chief executive officer Andrei Borodin and his representatives said.

“The criminal prosecution and takeover of Bank of Moscow are part of the same chain of the political decision to change shareholders at Bank of Moscow and to place it under government control,” Borodin said in an e-mailed statement yesterday.