Tag Archives: Finance

Russia’s state banks are rotten

Diverse Paper Currency, Coins, Line Graph

(Business New Europe – bne.eu – Ben Aris in Moscow – June 29, 2015) Banks epitomise capitalism, but not in Russia. The financial industrial empires of men like JP Morgan, Rockefeller, Rothschild and Harriman are intimately tied up with creating the vibrant no-holds-barred capitalism in the US. In Russia the top five banks are all state-owned and their power comes […]

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Russia’s Pivot to China Is Real

Map of China and Environs, adapted from archived cia.gov image

(Bloomberg – bloomberg.com – Leonid Bershidsky – June 25, 2015) The search for alternative investors and markets has been a political priority for President Vladimir Putin and his government since Western countries imposed economic sanctions on Russia last year. The resulting pivot to China may seem merely cosmetic, but it is happening. Admittedly, most of the vague and extremely long-term […]

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Interfax: Extension of Russian countersanctions for one year meets interests of national economic development – Peskov

Dmitry Peskov file photo adapted from image at kremlin.ru/wikimedia commons

MOSCOW. June 24 (Interfax) – The extension of Russian countersanctions for a year meets the interests of the country’s economic development, presidential press secretary Dmitry Peskov has said. “Our interests, I mean the interests of the Russian Federation from the viewpoint of the economic development of the country,” he said to journalists answering the question in relation to what Russia […]

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Russia’s recovery faces a reality check

Diverse Paper Currency, Coins, Line Graph

(Business New Europe – bne.eu – Chris Weafer of Macro-Advisory – June 22, 2015) After a relatively positive performance for Russia’s economy in the first quarter, the second quarter has brought more of a reality check, with sharply lower numbers across many categories reported in April and May. The preliminary GDP estimate for April shows a contraction of 4.2% year […]

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Putin Offers Little Change at Russia’s Top Economic Forum

Diverse Paper Currency, Coins, Line Graph

(Moscow Times – themoscowtimes.com – Ivan Nechepurenko and Peter Hobson – ST. PETERSBURG, June 22, 2015) More than a year into an economic firestorm that is pushing Russia into its first recession in six years, Russia’s flagship economic forum in St. Petersburg was titled “Time to Act.” With Western sanctions over Ukraine and fallen oil prices battering the economy, thousands […]

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The long decline in Russia’s international reserves has stopped

Diverse Paper Currency, Coins, Line Graph

(Business New Europe – bne.eu – Heli Simola of Bank of Finland – June 18, 2015) [Charts here bne.eu/content/story/comment-long-decline-russias-international-reserves-has-stopped] Russia’s international reserves have declined substantially, by around $150bn, since the start of 2014. However, during the second quarter of this year the level of reserves has been relatively stable, fluctuating at around $350bn-360bn. The recent stabilization has been supported by […]

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Lack of Action Questions Forum’s Reform Agenda

Diverse Paper Currency, Coins, Line Graph

(Moscow Times – themoscowtimes.com – Ivan Nechepurenko – ST. PETERSBURG – June 19, 2015) Amid the grandiose, ambitious slogans of this year’s International Economic Forum, which opened Thursday featuring topics ranging from building efficiency in essential state-owned enterprises to making Russian jurisdiction “more comfortable for business,” the need to shift from defining problems to acting on them loomed large across […]

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War-Weary Ukraine Shutters Cash-Starved Banks as Trust Falls

Maidan Square in Kiev, Ukraine

(Bloomberg – bloomberg.com – Volodymyr Verbyany, Andras Gergely – June 12, 2015) When Vasyl Klos plunked $9,000 into a bank branch in his hometown of Lviv, Ukraine, in 2013, he assumed it was safe because it was German owned. He was wrong. Bank Forum JSC had already been sold by Commerzbank AG to Ukrainian businessman Vadim Novinsky, a fact Klos […]

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IMF Offers Ukraine a Poisoned Chalice

International Monetary Fund Logo Over Ukraine Flag

(Bloomberg – bloomberg.com – Leonid Bershidsky – June 10, 2015) A top International Monetary Fund official is offering Ukraine a generous gift: continued loans, even if it stops paying private creditors. It is, however, a trap of sorts. Accepting the deal risks undermining Ukraine’s ability to borrow on the open market and strengthening its dependency on the IMF. “If at […]

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World’s economic centre of gravity continues shift east

Mercator Projection Satellite Image of Earth

(Business New Europe – bne.eu – Ben Aris in Moscow – June 9, 2015) [Charts here http://www.bne.eu/content/story/bnechart-worlds-economic-centre-gravity-continues-shift-east] The leaders of the G7 industrialised nations met in Berlin on June 7, but their decisions are becoming less and less relevant to the rest of the world as the centre of global economic gravity moves relentlessly east. In 1990, the centre of […]

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Beleaguered Russian Science Foundation Dynasty Delays Decision on Closure

File Photo of Test Tubes with Algae Displaying Different Colors, Part of U.S. Energy-Related Research; from nrel.gov

(Moscow Times – themoscowtimes.com – Ivan Nechepurenko – June 9, 2015) Beleaguered science organization the Dynasty Foundation, which has been grappling in recent days with whether or not to shut its doors, announced that a decision on the matter will be delayed to provide time to wrap up ongoing projects, the Kommersant newspaper reported on Monday. Following its inclusion on […]

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Interfax: Peak of inflation has passed, but risks remain – Nabiullina

Elvira Nabiullina file photo

MOSCOW. June 8 (Interfax) – The Central Bank of Russia is expecting a reduction of inflation and noted that its peak has already passed, although risks exist for it, Central Bank Governor Elvira Nabiullina said. “Weekly inflation has remained at 0.1% for six weeks already. According to our estimate, we have passed the peak of inflation, we are forecasting its […]

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Russia No Longer a Good Option for Foreign Banks

Diverse Paper Currency, Coins, Line Graph

(Moscow Times – themoscowtimes.com – June 3, 2015) The economic fallout of the Ukraine crisis has transformed perceptions of Russia among foreign banks and will likely see lenders curtail the operations of their Russian subsidiaries, ratings agency Standard & Poor’s said Tuesday. Foreign banks piled into Russia in the early 2000s in the hope that near 10 percent annual economic […]

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Russia is running out of money – revisited

Diverse Paper Currency, Coins, Line Graph

(Business New Europe – bne.eu – MOSCOW BLOG: Ben Aris in Moscow – June 2, 2015) [Charts here http://www.bne.eu/content/story/moscow-blog-russia-running-out-money-revisited] Last December Professor Anders Aslund, then of the Peterson Institute, now of the Atlantic Council, wrote two op-eds entitled: “Russia’s Economic situation is worse than it may appear”, and “The Russian Economy is headed for disaster.” In both pieces he claimed […]

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$110 Billion Expected to Flee Russia This Year as Sanctions Bite

Hand Pulling Cash from Envelope

(Moscow Times – themoscowtimes.com – May 29, 2015) Capital flight from Russia is forecast to hit $110 billion this year, the Economic Development Ministry said Thursday, as Western sanctions limit foreign investment and force Russian companies to pay off billions of dollars in foreign debt. The ministry’s base forecast anticipates that U.S. and EU sanctions over Moscow’s actions in Ukraine […]

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NEWSLINK Brookings Institution: The ruble currency storm is over, but is the Russian economy ready for the next one?

Diverse Paper Currency, Coins, Line Graph

Recent data show the Russian economy contracted 1.9 percent in the first quarter of 2015. In this article, Sergey Aleksashenko delves into the events that led to the downturn, and what we can expect for the rest of 2015.

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NEWSWATCH Wall Street Journal: The Putin Recession; Russia’s economy keeps shrinking, but the West won’t take advantage

Diverse Paper Currency, Coins, Line Graph

The Wall Street Journal editors address Russia’s economic crisis and the West’s apparent unwillingness to step up economic pressure. The Russian recession is expected to continue unfolding. An oddity of recent weeks has been the attempt to argue that Russia’s economy isn’t as awful as it looks. Then along comes Friday’s report that GDP fell 1.9% year-on-year in the first […]

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Russian Foreign Direct Investment Dropped 40% in 2014

File Photo of Outdoor Electronic Sign with Russian Exchange Data

(Moscow Times – themoscowtimes.com – May 19, 2015) Overseas investment by Russian companies fell to $56 billion last year, a 40 percent decline from 2013, even as China led a wider boom in foreign direct investment from emerging economies, according to a report by the United Nations Conference on Trade and Development (UNCTAD) released Monday. The figure means that Russia […]

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Poroshenko loyalists in parliament doubt Ukraine will declare technical default

Rada File Photo

KYIV. May 19 (Interfax) – The Petro Poroshenko faction in the Ukrainian parliament predict that the government will not make use of the right to declare a moratorium on the repayment of the external debt to commercial companies. “The law on the Cabinet’s right to impose a moratorium on the repayment of the external debt is putting additional pressure on […]

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What next for Russia’s economy and the ruble?

Diverse Paper Currency, Coins, Line Graph

(Business New Europe – bne.eu – Chris Weafer in Moscow, Senior Partner at Macro Advisory, which offers bespoke Russia-CIS consulting – May 19, 2015) If you left Russia for the last New Year holiday and did not return until the recent May holidays, and did not follow the news from or about Russia in the meantime, you would certainly be […]

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Russia’s Richest Billionaire: Impact of Sanctions Is Waning

Cash, Calculator, Pen

(Bloomberg – bloomberg.com – Ryan Chilcote, Yuliya Fedorinova – May 18, 2015) Russia’s richest man said international investors are coming back to the country and the impact of sanctions has peaked. “Now it’s getting clear that the situation is more politically stable or predictable,” Vladimir Potanin, who heads Russia’s biggest miner, OAO GMK Norilsk Nickel, said in an interview with […]

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Currency Crisis Leaves Russian Scientists With No Funds for Foreign Journal Subscriptions

Artist's Conception of Nanotechnology Components

(Moscow Times – themoscowtimes.com – Gabrielle Tétrault-Farber – May 13, 2015) After scientists across Russia lost access to thousands of academic journals on Tuesday due to the ruble’s sharp devaluation, Education Minister Dmitry Livanov vowed to restore access to academic publishing giant Springer, Russian media reported. Universities and research institutions across the country lost access to Springer due to a […]

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Russia’s road to deoffshorisation and capital amnesty still ‘under construction’

Hand Pulling Cash from Envelope

(Business New Europe – bne.eu – Artem Toropov, senior associate in the tax practice at law firm Goltsblat BLP – May 7, 2015) More than a year has passed since the Russian “deoffshorisation” reform was switched into “active” mode by the Russian president. 2014 was dominated with work on the new legislation – but the result, to many, was quite […]

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Dividend season opens and Russian companies are paying

Diverse Paper Currency, Coins, Line Graph

(Business New Europe – bne.eu – bne IntelliNews – May 6, 2015) It’s reporting season and some Russian companies are paying handsome dividends to their shareholders. Almost twice as much as emerging-market peers, in fact, relative to their stock prices, after the sudden ruble rout of last year bolstered exporters’ cash piles. Russian stocks have been performing well off the […]

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Russian Bank Lending Drops 60 Percent as Crisis Paralyses System

Diverse Paper Currency, Coins, Line Graph

(Moscow Times – themoscowtimes.com – May 6, 2015) The number of loans issued in Russia in the first quarter of this year fell by 58 percent compared to the same period in 2014, as the devaluation of the ruble, Western sanctions and sky-high interest rates hit the banking system, a report showed Tuesday. The tide is now slowly beginning to turn […]

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Foreign currency protests in Russia – a chance for the opposition?

Map of Russia and Russian Flag adapted from images at state.gov

While political demonstrations are on the slide, economic protests are on the rise in Russia. Can the two be united? (opendemocracy.net – Dmitry Florin – April 30, 2015) Dmitry Florin is an independent journalist based in Moscow, Russia. The Russian opposition is a broad church. Just as radical leftists hold their own marches, so do the liberals and the nationalists. […]

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Russian Economy May Be Stumbling Back To Its Feet

Diverse Paper Currency, Coins, Line Graph

(Oilprice.com – Andy Tully – May 3, 2015) The Bank of Russia has cut interest rates for the third time so far this year, reinforcing forecasts by some government ministers that the country’s economic woes are beginning to stabilize. The central bank cut its key rate on April 30 to 12.5 percent, a reduction of 1.5 points, and said it would […]

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NEWSLINK Reuters: Russia cuts key interest rate, hopes worst of crisis over

File Photo of Elvira Nabiullina at OECD Event, at Podium and On Large Video Screen

Russia’s central bank cut its main lending rate by 1-1/2 percentage points on Thursday, its third rate cut this year, a sign that it believes the worst of an economic crisis is over. The cut to 12.5 percent follows the rouble’s recovery in recent weeks after a dramatic decline last year as global oil prices fell and Western economic sanctions […]

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NEWSLINK Wall Street Journal: Russian Assets Regain Appeal for Investors. The country’s ruble, sovereign bonds, and stocks attract those seeking higher yields

St. Basil's Domes

Investors have taken Russia out of the penalty box. The ruble has gained 17.5% in 2015 against the U.S. dollar, after losing nearly half of its value in 2014, according to financial-data provider CQG. It has soared 46% from an intraday record low set in December. Russia’s stock index denominated in the ruble has soared 20% this year through Monday, […]

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Open economy should be created in Russia – Putin

File Photo of Outdoor Electronic Sign with Russian Exchange Data

ST. PETERSBURG. April 28 (Interfax) – Raising private investment for different economic sectors, including the defense industry, is one of the key paths for the development of the Russian economy in general, President Vladimir Putin has said. “Raising private investment is one of the general paths of economic development as a whole. It is one of the main points that […]

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NEWSLINK Forbes: Here’s How Much Russian Stock Values Have Eroded Since Sanctions

File Photo of Outdoor Electronic Sign with Russian Exchange Data

For Russia investors, timing was everything.  Those who bought on the bad news of last summer were hit with more bad news come the end of summer when the U.S. sanctioned Gazprom, Rosneft and Lukoil. Then the Russian Central Bank went into panic mode and raised interest rates to save the ruble. The market sensed that the bank was getting […]

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Strengthening of ruble due to growth of oil prices over – Yudayeva

Oil Wells File Photo

MOSCOW. April 22 (Interfax) – The strengthening of the ruble due to growth in prices for oil has ended, First Deputy Central Bank Governor Ksenia Yudayeva told journalists at the Forum for Financial Stability on Wednesday. “The strengthening of the ruble has ended, it has partially ended, what we saw was connected with the sharp movement upwards in prices for […]

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Russian Global Trade Plummets as Economic Crisis Deepens

Mercator Projection Satellite Image of Earth

(Moscow Times – themoscowtimes.com – Peter Hobson – April 21, 2015) Russia’s trade turnover with the outside world plunged 30.1 percent year-on-year in the first two months of 2015 as oil price falls, currency devaluation and tit-for-tat sanctions shook the Russian economy. The value of Russia’s international trade fell to $83.3 billion over January and February, according to data published […]

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Ruble Rebound Slows Russia’s Rampant Food Price Inflation

Diverse Paper Currency, Coins, Line Graph

(Moscow Times – themoscowtimes.com – Delphine d’Amora – April 21, 2015) The ruble’s rapid recovery in recent weeks has seen prices on some foods fall, easing months of spiraling inflation and softening one of the most widely felt blows of Russia’s economic crisis. All major retailers contacted by The Moscow Times last week said that the ruble’s rebound of some […]

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NEWSLINK CNBC: Why Russia is more confident: Finance Minister

Anton Siluanov file photo

Russia’s economy has been through a series of seismic shocks in the past year – but there are increasing reasons to be optimistic as the amount of money being pulled out of the country slows, according to the country’s Finance Minister, Anton Siluanov.

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Ukraine plays hard ball with private creditors

International Monetary Fund Logo Over Ukraine Flag

(Business New Europe – bne.eu – bne IntelliNews – April 20, 2015) Ukraine is ready to play hard ball in its bid to restructure $15.3bn in foreign debt, was the signal sent by Finance Minister Natalie Jaresko to corporate bondholders in Washington on April 17. The government wants to secure a $40bn bailout package assembled with the International Monetary Fund […]

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Russia Economy Recovering as Oil Reliance Eases, Dvorkovich Says

Arkady Dvorkovich file photo

(Bloomberg – bloomberg.com – David Tweed, Haslinda Amin – April 20, 2015) Russia’s economy showed signs of recovery in the first and second quarters amid a declining dependence on oil, Russian Deputy Prime Minister Arkady Dvorkovich said. “Oil prices are not as important to the Russian economy as before,” Dvorkovich told Bloomberg TV Monday at the World Economic Forum on […]

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Weak Russian Economic Data Blunt Putin’s Optimism

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(Moscow Times – themoscowtimes.com – Peter Hobson – April 20, 2015) The ruble slumped 4 percent and Moscow-listed stocks fell on Friday after official data showed that Russia’s economy contracted sharply in the first quarter of this year. The data, which showed a deep decline in real wages and consumer spending, came a day after President Vladimir Putin told Russians […]

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Moody’s: Russian inflation to peak at 17%-18% in Q2 2015, drop below 10% by mid-2016

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MOSCOW. April 15 (Interfax) – Moody’s Investors Service expects Russian inflation to peak at 17%-18% in the second quarter of 2015 and to drop below 10% by mid-2016 as the impact of the ruble’s depreciation fades, Moody’s said in a report on Russia’s banking sector in 2015. “Therefore Central Bank of Russia (CBR) is likely to loosen monetary policy on […]

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Eastern Ukraine returns to the ruble

Map of Ukraine, Including Crimea, and Neighbors, Including Russia

(Business New Europe – bne.eu – Graham Stack in Kyiv, Mari Bastashevski in Donetsk – April 15, 2015) The Russian ruble is gaining ground against the hryvnia across rebel-held parts of East Ukraine’s Donbas region, 19 years after Kyiv introduced the national currency to end the country’s membership of the ruble zone. As Eastern Ukraine heads towards becoming a frozen […]

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NEWSLINK Reuters: Russia must review participation in international funds – finance minister

Anton Siluanov file photo

Russia must review its participation in international financial organisations because the country is paying too much in fees, Finance Minister Anton Siluanov said on Wednesday. http://www.reuters.com/article/2015/04/15/russia-crisis-internationalfunds-idUSR4N0X602D20150415

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Putin’s Mideast Gains Trump $27 Billion Loss From Iran Agreement

Middle East Map

(Bloomberg – bloomberg.com – Henry Meyer, Stephen Bierman – April 14, 2015) As Russian President Vladimir Putin has shown in Crimea and eastern Ukraine, he’s willing to take an economic hit to expand his political influence. He’s taking the same approach with Iran. Lifting sanctions and allowing Iranian oil onto global markets would threaten to deepen the plunge in crude […]

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Russia Sees Further Drop in Capital Outflows as Economy Adjusts

Diverse Paper Currency, Coins, Line Graph

(Bloomberg – bloomberg.com – Olga Tanas, Anna Andrianova – April 14, 2015) Russian capital outflows will slow further as bonds and the ruble stage a comeback following a sell-off last year, Finance Minister Anton Siluanov said. Net outflows will slow to $15 billion in the second quarter after a “sharp decline” in the previous three months, bringing the total for […]

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Russian Capital Flight Slows to $32.6 Billion in First Quarter

Cash, Calculator, Pen

(Moscow Times – themoscowtimes.com – April 10, 2015) Net capital outflow from Russia was $32.6 billion in the first quarter of the year, down from $72.9 billion in the previous three months, suggesting that panic over Russia’s economic crisis has receded, data published this week by the Central Bank showed. Capital flight from Russia nearly tripled in 2014 from the […]

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Almost all net capital outflow from Russia in Q1 due to debt payments – CBR

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MOSCOW. April 13 (Interfax) – The private sector net capital outflow from Russia of $32.6 billion in the first quarter of 2015 was almost completely due to payments on the foreign debt of the private sector, which amounted to $29.8 billion, the Central Bank of Russia (CBR) said in comments released by its press service. Another $2.9 billion of the […]

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NEWSLINK Forbes: Ukraine Debt Rating Now Super-Duper Junk

Map of Ukraine, Including Crimea, and Neighbors, Including Russia

On Friday, Standard & Poor’s cut Ukraine’s long term foreign debt rating to CC from CCC-.  The rating of CC is one notch above C, which is used when a debtor is in the process of filing for bankruptcy protection. Standard & Poor’s kept Ukraine’s short-term foreign credit rating at C with a negative outlook. http://www.forbes.com/sites/kenrapoza/2015/04/10/ukraine-debt-rating-now-super-duper-junk/

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