For BP and its Soviet-born billionaire partners in TNK-BP, Rosneft’s mega deal to buy 100 per cent of the Russian oil venture is an enormous $55bn payday on an investment that has already paid out $38bn in dividends.
But minority investors in the main holding of TNK-BP risk being caught stranded – and indeed squashed – in the biggest deal in Russian corporate history, a state of affairs that investors say speaks volumes about the sorry state of Russia’s investment climate. Read more
Even as Sweden’s Handelsbanken this week became the latest foreign bank to join the herd leaving Russia due to tough market conditions and the predominance of state banks, another foreign bank looked to have found a way of staying in the market.
France’s BNP Paribas is putting Cetelem, its point-of-sale bank in Russia, into a joint venture with Sberbank, the country’s number one bank. The French bank is giving up control in return for riding on Sberbank’s broad coattails. Read more
More bad news for foreign investors in Russian banking. And for those Russians concerned about declining competition in the sector.
On Monday, Sweden’s Handelsbanken said it was the latest foreign bank to be leaving the country, joining HSBC, Barclays, Santander, Swedbank and Rabobank, which have all departed in the last few years.
Its move follows last week’s announcement of a controversial takeover of Nomos bank, which is removing from the Russian market one of the few independent privately-held lenders, with a significant foreign shareholding. Read more
Deep divisions have emerged once again this week over Igor Sechin’s bid to remain front and centre of the Russian energy industry. They offer more public evidence – as if any were needed – of the growing conflicts between the camps of president Vladimir Putin and prime minister Dmitry Medvedev. Read more
There was a big drop in capital flight from Russia during the second quarter of this year, according to the latest central bank figures. At first glance, that could be read as a sign that confidence in the investment climate is returning after huge capital flight over the last year.
But economists say the drop may have more to do with seasonal factors and the falling price of oil – leaving exporters with less cash to stash abroad – than with any belief that Russia is on track for institutional reforms that would combat corruption and better protect property rights. Read more
When Vladimir Putin returned to speak at the St Petersburg international investment forum on Thursday, he faced a tough task convincing investors the government will make progress on pledges to improve the investment climate. The problem was many of those gathered there had heard similar promises before. Read more
One of the biggest developers of Russian internet companies, Fast Lane Ventures, has formed a strategic partnership with VTB, the Russian state-controlled bank, as investor interest rises in Russia’s rapidly-growing internet sector.
Tuesday’s deal in which VTB Capital, VTB’s investment banking arm, becomes the lead investor in an $18m fundraising will give Fast Lane access to VTB Capital’s wide network of corporate clients, and its hefty financial resources. The partnership will also, presumably, help Fast Lane Ventures (FLV) fend off possible aggressive approaches from predatory oligarchs, wanting to snap up the business just as it becomes interesting. Read more
On the face of it, it looks like investors believe the risks associated with Russia’s wave of protests have already had their day.
Russia’s stock indexes have surged this year with the dollar-denominated RTS up 20 per cent and the rouble-based Micex up 11 per cent year to date. Both have recovered the steep 11 per cent losses they saw in December when unprecedented demonstrations spooked investors. Of course, the general recovery in global sentiment has helped – but it does seem that investors have stopped worrying so much about Russian political risk. Read more
Does Anatoly Chubais, the architect of Russia’s privatization programme in the early 1990s, have the answer to the dilemma facing Russia now: how best to diversify its raw materials economy into one driven by innovations?
As head of Rusnano, the state corporation attempting to spearhead that leap, Chubais, perhaps not surprisingly, seems to have undergone an evolution of his own. He now sounds much more positive about the role of the state than he would have done nearly 20 years ago when as a free marketeer he helped dismantle the command economy. Today he defends the state capitalist theses of Vladimir Putin who wrote this week that only the state corporations can lead Russia into an innovative future. Read more
There was a whiff of revolution and money in the air on Thursday as foreign investors flocked to the fifth annual Troika Dialog investment forum in Moscow, filling the city’s international house of music to the rafters to hear Vladimir Putin speak.
Just two days before opposition forces plan to take to the streets for a new protest against alleged vote rigging and Putin’s planned return to the presidency, Putin attempted to give his usual command performance, touting the economy’s 4.3 per cent growth and promising an improved legal and regulatory environment for investors. Read more
BP has been putting a brave face on the mounting legal problems surrounding its failed bid for a strategic alliance with Rosneft, the Russian state oil champion. At its third quarter results presentation on Tuesday, the UK oil group touted a 57 per cent year-on-year jump in net income at TNK-BP, its lucrative Russian oil venture, to $2.27bn.
But the legal net is tightening around BP after TNK-BP’s management recommended its main board discuss filing suits claiming billions of dollars in damages over the failed Rosneft bid. Read more
News that Russia’s central bank has been forced to extend $14bn in funds to shore up a gaping hole in Bank of Moscow’s balance sheet, in the country’s biggest ever bailout, is sending shivers down investors’ spines.
If the fifth largest bank can deliver such a nasty surprise, what does it say about the quality of management, regulation and supervision in Russian banking? And what of decision-making at VTB, the bank that earlier this year won a hard-fought fight to win control of the Bank of Moscow? Read more
Alexei Kudrin, Russia’s finance minister (pictured), has the nation’s oil barons in his sights once again. First, the finance ministry targeted Rosneft, saying it was scrapping tax holidays on export duties for the state oil champion’s vast east Siberian Vankor field from May 1.
Then, this week, the ministry said it was axing the tax breaks for TNK-BP’s east Siberian Verknechonskoye field and for Surgutneftegaz’s Talakan field, also in east Siberia, too. Read more
When is a raunchy disco party, complete with half-naked women, strippers and exotic dancers, more than just a party?
When it is given in honour of Russian prime minister Vladimir Putin. That’s when.
Officially, the prime minister’s office frowned on the “Putin party” staged on Sunday night at Rai, one of Moscow’s most decadent clubs. Unofficially, the party will have done no harm to the prime minister’s macho image – and may even assist in launching a possible presidential election campaign later this year. Read more
The food ran out at lunchtime and there was standing room only in the
vast conference hall at Moscow’s International Trade Centre. Global emerging markets may be wobbling right now, but this year’s Russia Forum investment conference this week drew a record 1,700 delegates.
While the speakers tried to draw attention to Russia’s many attributes, from low debt to high-spending consumers, one fact alone accounts for a lot of the country’s new-found popularity – oil at $100 a barrel. Read more
Two foreign oil consortia operating in Kazakhstan are facing renewed pressure from the Kazakh government, which said on Tuesday it was extending export duties to projects that had been protected from tax changes under long-standing production sharing agreements.
The government’s decision to impose export duties of $20 per tonne on crude exports and extend the levy to the Chevron-led Tengiz project and the Eni and BG-led Karachaganak consortium is the latest example of resource nationalism in Kazakhstan, analysts said. Read more
With temperatures soaring above 30 degrees in Moscow, streetside vats selling kvas, the traditional Russian drink made out of rye, yeast, beet sugar and stale bread, are sprouting as fast as mushrooms after the rain.
Despite ubiquitous sales of western soft drinks like Coca Cola and Pepsi, nothing, it seems, can reduce Russians’ taste for the fermented soft drink with the peculiar malt taste during the summer. As Russian newspaper Moskovsky Komsomolets writes this month, like “marinated watermelons” pickled in the heat, Muscovites have only one joy: “a cool and bracing keg of kvas”. Read more
Now that Norilsk Nickel’s coffers are fast filling after the crisis, it hasn’t taken long for the uneasy truce between Vladimir Potanin and Oleg Deripaska to fall apart. The last time the two oligarchs fought for control of the world’s biggest nickel miner it was flush with cash as commodity prices soared. When they made peace in late 2008, prices had plummeted and both men’s 25 per cent stakes in the company were threatened by margin calls. As one investor puts it, “the world was about to end”.
This week’s shareholder vote for board seats at the annual general meeting revealed battle has resumed as the two main shareholders – and possibly some managers – fight for a bigger piece of Norilsk’s recovering readies ($2.65bn in net profit last year and counting).
In all this time, none of the big players seem to have paid much attention to the hapless minority shareholders even though they hold a chunky 38 per cent. The shares trade 51 per cent below their all-time high in 2008, a bone-crunching loss that might have driven even the most patient investor to protest. But, in fact, the oligarchs could legitimately argue their antics have done less damage to Norilsk’s market value than might have been expected. The RTS index has dropped 45 per cent over the same time. So the performance gap is only 6 percentage points. Not huge in comparison with the egos involved. Read more
Inside a crowded and stuffy Moscow courtroom, a quiet shift is underway. For the first time, senior members of Vladimir Putin’s government have given testimony as witnesses for the defence in the trial of Mikhail Khodorkovsky, the jailed former owner of Yukos oil company. Read more
When TNK-BP, the Russian-British oil venture, pushed the unit that owns its vast Kovykta gas field into bankruptcy last week, it was the latest twist in a long-running saga that highlights how difficult it is to business in Russia.
The move is either an act of desperation or a clever trick designed to trigger a sale of the field and win back the $600m investment TNK-BP has put into Kovykta. Either way, it is most unlikely to mark the end of the story. Read more