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.Джеральд Хосп, Neue Zürcher Zeitung

По-прежнему сохраняются вопросы в отношении мощного вливания государственных средств в российский Банк Москвы. Бывший руководитель банка защищается от обвинений в мошенничестве при выдаче кредитов. Меры спасения отрицательно сказались на репутации всего российского банковского сектора.Gerald Hosp, Moskau Moskauer Betrugsvorwürfe Private Nutzniesser Unklare Rolle Jusufows Staatsbank in Opferrolle Schwächen der Aufsicht
Neue Zürcher Zeitung

Die grosse staatliche Finanzspritze für die russische Bank of Moscow ist weiterhin mit Fragezeichen versehen. Der ehemalige CEO wehrt sich gegen den Vorwurf des Kreditbetrugs. Der Bail-out belastet den Ruf des gesamten russischen Bankensektors.

Staatliche Unterstützung für eine in Not geratene Bank ist im Zuge der Finanz- und Wirtschaftskrise keine Besonderheit. Die Vorfälle um die Finanzspritze für die russische Bank of Moscow (Bank Moskwy, BoM) tragen jedoch mehr die Züge eines Sittenbildes der wirtschaftlichen und politischen Elite Russlands als jene einer Hilfsaktion für eine aus den Fugen geratene Bankbilanz. Die russischen Behörden schnürten Anfang Juli zur Abwendung eines Bankrotts der angeschlagenen BoM ein Rettungspaket in der Höhe von 395 Mrd. Rbl. (11 Mrd. Fr.). Das war die bisher grösste Kapitalspritze in der russischen Bankenbranche. «Das Hilfspaket war nicht notwendig. Mit dem Bail-out wurden die Aktionäre des Instituts und nicht die Bank gerettet», sagt Andrei Borodin, der frühere CEO der Bank, im Gespräch mit dieser Zeitung an einem Ort, der nicht genannt werden soll. (more…)

Russian Banker Hits Back; Former President of Bailed-Out Bank of Moscow Says Lender’s Problems ‘Artificial’

by Guy Chazan and William Maudin, Wall Street Journal

The biggest bank bailout in Russian history was an “insane waste of money,” the bank’s embattled former president said in an interview.

Andrei Borodin, who fled Russia in March and is wanted by authorities there over a loan Bank of Moscow made under his leadership, said the bank “never needed state help.”

“The problems there are of an artificial nature,” he said.Гай Чейзан и Уильям Молдин, The Wall Street Journal

Крупнейшая в российской истории операция по спасению банка-банкрота представляла собой “безумное растранжиривание денег”, заявил в интервью бывший президент этого банка Андрей Бородин.

По словам Бородина, этот банк “никогда не нуждался в помощи государства”. “Проблемы в нем имеют искусственный характер”, – заявил он. (more…)

Bank of Moscow ex-president seeks damages

by Alastair Marsh, FT Tilt Andrei Borodin, the former president of Bank of Moscow, which will be the recipient of the largest bailout in Russian history, is suing his former…

Bank of Moscow bailout tightened VTB grip -FT

Reuters News LONDON, Aug 18 (Reuters) - The $14 billion bailout of Bank of Moscow was a vastly inflated move aimed at tightening the grip of VTB over Moscow assets,…

Questions raised on Bank of Moscow bail-out

Financial Times

The $14bn bail-out of Bank of Moscow was a vastly inflated move aimed at tightening the grip of VTB, the Russian state bank, over Moscow assets, according to people close to Andrei Borodin, former president of the collapsed lender.

They argue that the bail-out was politically motivated and part of a carve-up of Moscow assets following the controversial ousting of Yury Luzhkov as the city’s mayor last year.InoPressa

Финансовая помощь в размере 14 млрд долларов Банку Москвы была чрезмерной, этот шаг был направлен на усиление контроля российского государственного банка ВТБ над московскими активами, утверждают источники, близкие к Андрею Бородину, бывшему президенту потерпевшего крах кредитного учреждения, пишет FinancialTimes.

“Они заявили, что спасение было политически мотивированным и входило в планы по разделу московских активов после противоречивой отставки Юрия Лужкова с поста мэра в прошлом году”, – отмечается в статье. (more…)

VTB puts its protege at Bank of Moscow’s helm

Reuters Bank of Moscow shareholders have elected a former VTB executive as their new CEO, effectively ending Russia's second biggest lender's battle for control of the smaller peer...

Bank of Moscow mounts takeover defence against VTB

Reuters Bank of Moscow, Russia's No.5 bank by assets, mounted a takeover defence against state-controlled VTB on Friday by seeking to reverse a decision to propose a VTB executive as…