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Russian Privatizations: The Line-Up is Announced
Posted on November 24th, 2009 Comments welcome Share/Save PrintIn September First Deputy Prime Minister Igor Shuvalov announced that Russia would resume privatizing assets in order to fill looming gaps in the country’s budget. On Monday November 24 the government released a list of the 14 most attractive assets it hopes to sell off in 2010.
In addition to the 14 named companies, which hail primarily from the infrastructure sector, there are 435 smaller companies that would collectively account for less than a third of the total proceeds the government hopes to raise. According to The Moscow Times, the government’s target figure for next year’s tranche of privatizations is 77 billion rubles ($2.7 billion).
This announcement comes at a time in which state corporations are coming under increasing scrutiny for lack of accountability and corporate responsibility. Earlier in November, Prosecutor General Yury Chaika presented a scathing analysis of Russian state corporations, citing misuse of state funds, wrongful disposal of property, unsanctioned bonuses and absent supervisors. As a result of the prosecutor’s investigation 22 criminal cases have been opened in connection with the activities of state corporations. As Dmitry Medvedev continues to push for economic modernization - a major theme of his State of the Nation address on November 12 - there is hope in the presidential camp that the privatizations will help raise standards at these companies, in addition to helping bridge the fiscal gap.
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[Quote of the Week] “Our American partners have a very original culture when dealing with counterparties.”
Posted on November 6th, 2009 Comments welcome Share/Save Print“The last-minute refusal to complete the Opel deal is not harmful to our interests, but it shows that our American partners have a very original culture when dealing with counterparties,” commented Prime Minister Putin on GM’s decision on Wednesday to back away from selling it stake in Opel and Vauxhall to Sberbank and Canada’s Magna. Read more »
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IMF Releases Third Tranche of Ukrainian Loan
Posted on July 29th, 2009 Comments welcome Share/Save PrintOn July 29 the IMF announced the disbursement of the third tranche - worth $3.3 billion - of its standby loan to Ukraine. This brings the total funds released to $10 billion out of the $16.4 billion promised in November 2008.
The negotiations were more straightforward this time than they were in May, when the second tranche was approved after delays. The IMF seemed generally pleased with the progress Ukraine has made, although concerns remain about falling levels of output and industrial production.
In order to pass muster with the IMF, Ukraine has ostensibly agreed to reform Naftogas, the state gas company, and the gas supply system generally. This includes boosting the transparency of the traditionally opaque company, as well as implementing a schedule of gas price increases to help address Ukraine’s on-going gas payment issues with Russia. Ukrainian gas sector reform has, however, long been a hobbyhorse for international institutions, and it remains to be seen whether these IMF conditions will result in any substantive change.
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[Kazakhstan’s Banking Sector] #4 Kazkommertsbank
Posted on July 1st, 2009 Comments welcome Share/Save PrintThe second largest bank in Kazakhstan, Kazkommertsbank (KKB) has a 26% market share in corporate lending and 14% share in retail lending. It is one of the three London-listed Kazakh banks, having conducted an Initial Public Offering in 2006 that raised $1.7 billion.
At the beginning of 2009, KKB was - together with BTA Bank, Alliance Bank and Halyk Bank - bailed out under the government’s bank rescue program. It was allocated a total of $1 billion as part of the anti-crisis package which gave National Wellbeing Fund Samruk-Kazyna, the country’s sovereign wealth fund, the option to acquire a 25% stake.
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Down But Not Out - Ukraine’s Banking Sector is Putting Up a Fight
Posted on June 24th, 2009 Comments welcome Share/Save Print
By Yulia Sobko, Head of Financial Communications and Investor Relations, The PBN Company, Kyiv
As June comes to close, the Ukrainian banking sector is able to take a bit of comfort from recent events. The government has finally set a bank bailout in motion by allocating 1% of GDP (UAH 9.6 billion) to recapitalize Rodovid Bank, Ukrgazbank and Bank Kyiv in exchange for majority stakes. Nadra and Ukrprombank are also waiting in the wings, pending resolution of issues with creditors.
Prominvestbank, the first victim of the banking crisis that was nationalized in late 2008, recently paid back its loan. Finance&Credit decided it doesn’t need state support as its financial situation has markedly improved. And even though banking sector experts don’t exclude the possibility of insolvencies in other systemically important banks, it is hoped that the bailout, together with the generally more optimistic market sentiment, might mean we are on a path of a gradual strengthening of the system.
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[Kazakhstan’s Banking Sector] #2 BTA Bank
Posted on June 15th, 2009 1 comment Share/Save PrintBTA Bank (formerly Bank TuranAlem), Kazakhstan’s largest bank, did not have a happy new year.
The first Kazakh bank to make international headlines for its precarious financial position, BTA was bailed out in February 2009 by Samruk-Kazyna National Welfare Fund, which took a 75.1% stake.
With the bailout came an overhaul in the bank’s management, as three executives fell under investigation for fraud. Former CEO and probable owner Mukhtar Ablyazov, Deputy CEO Zhaksylyk Zharimbetov and former Chairman Roman Solodchenko all left the country, although all deny the allegations, and face arrest on embezzlement charges if they return.
Things then went from bad to worse. In April BTA defaulted on $550 million in bilateral loans and stopped paying the principal on its wholesale borrowings. Standard and Poor’s downgraded both BTA’s long- and short-term credit ratings from CC/C to D (default) in response. Its current debt totals a whopping $15 billion.
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[Kazakhstan’s Banking Sector] #1 Alliance Bank
Posted on June 10th, 2009 Comments welcome Share/Save PrintFueled by cheap international capital, a consumer boom and surging oil prices, Kazakhstan’s banks had been developing rapidly prior to the onset of the credit crisis. By early 2009, however, the government was forced to bail out a sector saddled with over $50 billion in foreign debt, with President Nursultan Nazarbayev ordering the country’s sovereign wealth fund, Samruk-Kazyna, to step in to prevent a collapse.
In this series we look at how each of the major banks in Kazakhstan has been dealing with the effects of the crisis.
Alliance Bank, among the five top Kazakh banks in terms of both asset and equity size, had focused primarily on retail banking and SME lending. It was one of the first of the country’s banks to be taken over by Samruk-Kazyna earlier this year.
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[Quote of the Week] “As opinions on this document in the ‘Our Ukraine - People’s Self-Defense’ faction differ, as the communists will not vote, and as members of the ‘Party of Regions’ will not vote as a matter of principle, there could be lack of votes.”
Posted on May 29th, 2009 Comments welcome Share/Save PrintUkrainian Parliamentary Speaker Volodymyr Lytvyn speaking about the hurdles facing the government’s anti-crisis plan, which is being considered by the parliament on June 4.
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Putin’s First Annual Address to the State Duma
Posted on April 7th, 2009 1 comment Share/Save PrintYesterday Vladimir Putin delivered his first annual address to the Duma as Prime Minister.
Key Take-Aways
- 3 trillion ruble ($90 billion) aid package to ensure Russia survives a “very difficult 2009.”
- Inflation will soon begin to fall from the current annual rate of 14%.
- Tax burden should be kept low during the crisis.
- Government will reject calls to freeze electricity, gas and rail tariffs.
- Russian companies should take responsibility for reducing their own debt burden rather than relying on the state for bailouts ($174 billion of corporate debt had been repaid or restructured over the past few months).
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[The Third Degree] Sir Andrew Wood on the G20
Posted on April 7th, 2009 Comments welcome Share/Save PrintCrisisCrunch’s series of three question interviews gives expert insight into current issues facing the region.
Sir Andrew Wood was British Ambassador to the Russian Federation from 1995-2000
Russia had some rather eye-catching initiatives in the run-up to the G20, such as plans for a new global reserve currency and a revision to IMF voting rights. In the end, however, Russia took a more hands-off approach. What do you think prompted Russia to be more passive during the summit?
I think it was mostly because Russia wanted to concentrate on immediate gains at the G20, and above all else that would be an attempt to hit the reset button for the US relationship. So in that sense, I think they felt that their ideas on the more strictly economic issues could perhaps wait until opinion in the United States and opinion elsewhere had matured.
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Confidence in Kazakhstan Dented…But Only Cosmetically
Posted on March 30th, 2009 Comments welcome Share/Save PrintBy Yekaterina Syrtsova, Associate Account Manager, The PBN Company
People in Kazakhstan feel surprisingly optimistic about the country’s economic situation, according to a recent poll by the Post-Crisis World Institute and the Public Opinion Foundation. Interfax reports that only 16.6% of people believe that life will get harder before the summer, while 35.4% expect that the situation will improve. The latter figure stands in contrast to Russia and Ukraine, where far fewer people (12.6% in Russia and 6.5% in Ukraine) expect the situation to get better before the summer.
Kazakhs also look favorably on their government’s anti-crisis measures - BusinessNewEurope reports that “66.3% [gave] their government a thumbs up, against 40.7% in Russia and just 13.5% in Ukraine. Of those that criticized the government for its action (or lack of it) the numbers were 9.2% in Kazakhstan, 21.5% in Russia and a whopping 74.3% in Ukraine.”
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A Day of Tokens But Not a Token Appointment
Posted on March 13th, 2009 1 comment Share/Save PrintBy Adrian Erlinger, Account Manager, The PBN Company
On Monday, women were fêted with flowers as Russia celebrated International Women’s Day. On March 12, Yelena Skrynnik became the third female to join President Dmitry Medvedev’s cabinet, filling the post of Minister of Agriculture. With the economic climate negatively impacting Russia’s regions, Medvedev’s has chosen a proven manager to steer the agricultural sector through a difficult financial period.
“I know that today our situation is rendered that much more difficult by the financial crisis. It has exacerbated a number of problems that have been building up for decades in the countryside,” Medvedev said on a video broadcast on the Kremlin website. “These involve issues concerning financing and obtaining affordable loans, the sort of problems that we have in fact been working on lately and with which we have had some success.”
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Ukrainian Consensus in the Offing?
Posted on March 12th, 2009 Comments welcome Share/Save PrintNegotiations continue over IMF conditions for releasing the second tranche of the country’s $16.4bn loan. Yesterday afternoon the IMF appeared to concede on its controversial demand that Kyiv have a balanced budget, allowing for a deficit of 1%+ provided it could be financed without substantially increasing inflation. Ukrainian News quoted First Deputy Finance Minister Ihor Umanskyi as saying that additional issues yet to be resolved involve legislation on excise duties and pensions, both of which have been sources of contention among Ukraine’s leadership. Prime Minister Yulia Timoshenko said that this progress paves the way for the IMF mission to return to Ukraine as early as next week. Read more »
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Kazakhstan to Shut Private Exchange Bureaus
Posted on March 11th, 2009 Comments welcome Share/Save PrintThe National Bank of Kazakhstan is planning to amend existing legislation in order to cancel the licenses of private, non-bank currency exchange bureaus trading in foreign currencies. National Bank head Grigoriy Marchenko believes that the bureaus have been exploiting the February tenge devaluation in order to extract excess profits, and that the changes are necessary in order to stabilize the retail currency markets. Read more »
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Ukraine’s IMF Bailout
Posted on March 9th, 2009 1 comment Share/Save PrintToward the end of 2008 Ukraine secured a $16.4 billion bailout from the IMF to shore up its economy, and in November received the first tranche, amounting to $4.5bn. Under the terms of the loan agreement, Ukraine agreed to rein in spending and approve a balanced budget. However, shortly after the first tranche was received, Ukraine approved a budget with a deficit of 5% of GDP. The IMF cautioned the Ukrainian government that this violation jeopardized the second tranche of $1.9bn. Read more »
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Kazakhstan’s Reserves - February Figures
Posted on March 9th, 2009 Comments welcome Share/Save PrintThe National Bank of Kazakhstan released the February figures for its international reserves and National Oil Fund.
International reserves rose 7.6% from January 2009 to $19.6bn. The National Oil Fund fell 20.2% from January to $22.3bn.
On Friday Nursultan Nazarbayev, Kazakhstan’s president, announced that $4bn from the National Oil Fund would be used toward the country’s larger $21bn economic stimulus plan.
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Tenge Devaluation: One Month On
Posted on March 5th, 2009 Comments welcome Share/Save PrintOn February 4, Kazakhstan’s National Bank dramatically devalued the tenge from a corridor of 117-123 tenge/US dollar to 145-155 tenge/US dollar, citing the decline in oil price (oil comprises 60% of Kazakh exports); currency devaluations in Kazakhstan’s neighbors, particularly Russia; and the fledgling state of the domestic banking sector. The sudden devaluation was unexpected - the general sense in the financial community was that it wouldn’t happen until March or April, and even then it would be an incremental devaluation throughout 2009. Read more »
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Policy Matters: Russian Government Alters Anti-Crisis Plan
Posted on March 2nd, 2009 Comments welcome Share/Save PrintBy Blake Marshall, Senior Vice President & Managing Director - Government Relations, The PBN Company
Russians returned from the long holiday season in January with a new comprehension of the depth and breadth of the Russian economic crisis. A crisis that started in the Russian financial markets and corporate world is being felt in early 2009 in the “real world,” with mounting unemployment, declining rubles and rising prices.
Russians also returned to a more candid and forthright government, which laid out a sober assessment of the economic crisis and provided details about the government’s plans for addressing it. President Dmitry Medvedev’s recent television address to the nation, for some reminiscent of Roosevelt’s fireside chats in the U.S., was an important first step in reassuring the Russian public about the government’s handling of the crisis. Read more »
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Fighting the Crisis by Rebuilding Confidence
Posted on February 27th, 2009 Comments welcome Share/Save Printby Peter B. Necarsulmer, Chairman & CEO, The PBN Company
The key to emerging from a recession this deep and this broad is the restoration of confidence. Building confidence is ultimately about building trust. Trust in our government, in our business leaders and in the fundamentals of our economy and economic future.
Right now that trust has been shaken badly. Perhaps in Russia even more so than in other countries.
That’s because it came so suddenly and at the very moment when the public’s confidence in Russia was sky high. Among rich and poor alike, there was widespread belief that the type of economic displacement experienced in 1998 could never happen again, and certainly not under Prime Minister Putin’s watch.
What started out as a financial crisis and turned into an all-out economic crisis has now becoming a massive crisis of confidence. Read more »
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From $95 Oil to $41 Oil - Russia’s Revised Budget
Posted on February 26th, 2009 Comments welcome Share/Save PrintFinance Minister Alexei Kudrin previewed Russia’s revised 2009 budget yesterday. The original 2009 budget was based on an oil price of $95 per barrel and projects a surplus of 1.9 trillion rubles ($54 billion). The new budget is based on $41 oil and projects a deficit of 8% of GDP. Kudrin said that Russia’s Reserve Fund and National Welfare Fund will provide up to 2.7 trillion and 255 billion rubles, respectively, to help make up the deficit. Read more »
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