strongFinancial News/strongbr /br /Jason Corcoran in Moscow br /08 December 2008 br /br /Increasing competition from new entrants and sharp falls in equity prices are driving down the margins of Russia’s sub-custody banks.br /br /The recent arrivals of Sweden’s SEB and France’s Société Générale, plus the increasing participation of Russian banks such as VTB and Gazprombank, are forcing fees downward but bringing greater segmentation and opportunities for niche providers.br /br /Natalia Sidorova, head of securities services at ING Wholesale Banking in Moscow, said: “Margins are decreasing, which is inevitable in a busy market like Russia driven by competition. Fees used to be about 20 basis points but have come down significantly in recent years.”br /br /Serhiy Berezhny, head of trust and securities services at Deutsche Bank, agreed but said high fees could still be charged depending on the volume of client assets. br /br /He said: “Different clients are ...

Russia's foreign-exchange reserves have been declining rapidly since mid August, and with the money which is flowing out may go almost a decade of economic stability which they brought. Russia's international reserves, which are the third-biggest after China's and Japan's, have now fallen $161 billion, or 27% percent, since 8 August, and decreased by $17.9 billion to $437 billion in the week to 5 December. Investors have pulled $211 billion out of the country since August, according to BNP Paribas.br /br /br /But just how difficult this is proving to be was illustrated only this morning as Russia’s central bank devalued the ruble for the second time in a only a week, and the ruble fell as much as 1.3 percent (to a four-year low of 37.5015 per euro) following the decision by Bank Rossii to widen the trading band against the basket of dollars and euros used by the ...

Finance Minister Alexei Kudrin yesterday slammed the International Monetary Fund as being inadequately equipped to deal with the financial crisis. The crisis is leading to as much press volatility as price volatility, with Russian stocks climbing one day and falling the next, and meanwhile the value of the ruble continues to fall, prompting speculation that the drop in currency value is part of government strategy. Sberbank, Russia’s largest bank, saw withdrawals of around a record $3 billion last month. Overall, the banking sector is seeing huge job losses. ‘The best bonus you can have in Moscow right now is to have a job at all,’ said one manager. The Duma admits that it will be years before the airline sector will see any form of competition, but will Russia’s plan to create a state airline giant in Russian ...

Today the Wall Street Journal is reporting that the British bank Barclays is looking to raise some $10 billion in capital from Kremlin-controlled banks Sberbank and VTB. The bank has studiously avoided any government bailout plan in the UK, which could result in restrictions on dividend payments and state influence over board seats. However it seems unclear how Barclays feels about Russian government influence over their operations. So what has led this fine British financial institution to the doors of the Kremlin? Barclays CEO John Varley has been strenuous about his opposition to state intervention in the banks, commenting that "Those who have government shareholdings will be more constrained in their strategic and operational flexibility than those who are independent. (...) There will be some people in the employment market in the United Kingdom who will make the ...

‘Russia and metal stocks are toxic.’ Will the Russian film industry, amid rising production costs, survive the credit crunch? Major airline Krasnoyarsk Airlines has all but ceased operations due to debt issues. The Kremlin will bail out Russia’s construction companies by buying over $5 billion worth of new apartments, and says it is keeping careful tabs on the ruble, although it has just hit an 18-month low against the dollar, and analysts say that a devaluation is just a matter of time. Several restaurants and some sellers of consumer goods have reportedly stopped accepting credit cards in Moscow. Vladimir Putin has warned against taking ‘aggressive protectionist’ measures to deal with the crisis, and President Dmitry Medvedev signed into law a new set of measures to protect the banking sector last night. Barclays, the UK’s ...

Russia will lend Belarus $2 billion, in a goodwill gesture intended to improve economic and political ties with the country and keep open the option of incorporation into the Federation. "During this time we decided to draft a joint action plan to create a common currency," said Russian Finance Minister Alexei Kudrin. As Russian grocers and food sellers feel the pinch of the economic crisis, an aide to Medvedev announced that Russian banks will loan more money to grocery chains and pharmacies. Texas engineering and construction giant Fluor has secured a contract from Sibur Group, one of Russia's leading petrochemical companies, for a gas processing expansion project in the West Siberian oil fields.The European banking stocks of commodities tycoon Suleyman Kerimov, meanwhile, have taken a pretty big hit. "He sold out of Gazprom and Sberbank in the late spring, which was smart, but invested the ...

Financial NewsJason Corcoran in Moscow 13 October 2008 Many holdings are up for saleOligarchs on opposing sides of the cash crisis are set to trigger a boom in merger and acquisition activity in Russia and the Commonwealth of Independent States.Cash-tight tycoons are being forced to sell holdings to meet pending margin calls while their rouble-wealthy counterparts are sizing up distressed assets affected by the liquidity crunch.Oligarch Oleg Deripaska had to sell a stake in Canadian auto parts maker Magna to meet a $1bn (€734m) margin call while Ukrainian billionaire Kostyantin Zhevago was forced to sell a large stake in Swiss-based ore miner Ferrexpo worth $180 in order to meet a margin call by JP Morgan.Analysts are predicting Deripaska, who has $28bn, may have to divest further holdings in his Basic Element investment vehicle to shore up his finances….

Today the Lex column at the FT points toward the massive redistribution of assets happening in Russia as a result of the global financial crisis, and the routing being experienced by a number of the country's most wealthy oligarchs (Oleg Deripaska had to give up his stake in Hochtief). However, unlike the 1998 Russian financial crisis, the government appears set to dramatically extend its influence over the economy. Even so the Russian rout is triggering a redistribution of assets as some oligarchs are forced to sell assets to repay loans or meet margin calls. This time however – unlike Russia’s infamous 1995 loans-for-shares scheme and 1998 financial crisis – the state is set to increase its influence over the economy, continuing the Putin-era trend. First, the Russian government has channelled extra liquidity through state-owned banks Sberbank and VTB. Some $50bn has been earmarked for Vnesheconombank, a third state ...

by Edward Hugh: BarcelonaWell the action in Russia this week has moved on slightly, and the damage has started to spread from pressure on the domestic stock market (accompanied by capital flight) to the real economy - via a very rapid tightening in credit conditions for Russian domestic users. We are also seeing a rapid slowdown in Russian manufacturing industry as internal demand slows while the inflation-driven decline in cost competitiveness continues to make imported products (where available) an attractive alternative to the home produced variant.Emerging-market bonds have been generally falling this week as the U.S. Senate's approval of a $700 billion bank rescue package did little to revive demand for riskier debt, and Russia has, unsurprisingly, been among the worst affected. The extra yield investors demand to own developing-nation bonds rather than U.S. Treasuries rose 8 basis points yestreday to 4.14 percentage points after widening ...

by Edward Hugh: BarcelonaWell the action in Russia this week has moved on slightly, and the damage has started to spread from pressure on the domestic stock market (accompanied by capital flight) to the real economy - via a very rapid tightening in credit conditions for Russian domestic users. We are also seeing a rapid slowdown in Russian manufacturing industry as internal demand slows while the inflation-driven decline in cost competitiveness continues to make imported products (where available) an attractive alternative to the home produced variant.Emerging-market bonds have been generally falling this week as the U.S. Senate's approval of a $700 billion bank rescue package did little to revive demand for riskier debt, and Russia has, unsurprisingly, been among the worst affected. The extra yield investors demand to own developing-nation bonds rather than U.S. Treasuries rose 8 basis points yestreday to 4.14 percentage points after widening ...