Borodin’s house and land remain under arrest

Business FM

On 31 August the Moscow City Court upheld the decision of Tverskoy City Court for the arrest of property of the former head of Bank of Moscow Andrey Borodin, who is accused of abuse of powers in the issuance of the 12.7-billion loan to “Premier Estate.” The appeal of defense was dismissed.

… Borodin’s lawyer Mikhail Dolomanov insisted that the court decisions be cancelled and that the case be sent to the district court for retrial. In his opinion, the hearings, to which the defense lawyers of the accused were not even invited, were only a matter of formality. Based on the court records, the hearing in both cases took less than five minutes. The lawyer was outraged as he said that even during the times of the Stalin repressions it took longer to make a decision than it took in this case for the Tverskoy Court. …

Experts: Bank of Moscow got caught up in politics

RBC

Experts doubt that Bank of Moscow, a bank with good ratings, could turn into the most problematic credit institution of the country just in one year. This was possible because “there is a lot of politics involved, but it would not be correct to say that Bank of Moscow turned immediately from a very good bank to a bank with problems,” said President of the Association of Russian Banks, Garegin Tusunyan, during the RBC-TV program “Dialogue with Viktor Gerashchenko”.

“If politics forces its way in, it is possible to turn any institution into something doubtful,” stressed Tusunyan.

And this can be done quickly, easily, but it is very difficult to turn a problem bank back in to a good one, according to Tusunyan.

Watch RBC-TV program “Dialogue with Viktor Gerashchenko” here.

Bank of Moscow bailout saved VTB – ex-CEO

By Douglas Busvine, Reuters

* Exiled former CEO defends lending practices

* Says VTB exaggerated bad loans at Bank of Moscow

* Loan that financed stake sale well secured – Borodin

MOSCOW, Aug 30 (Reuters) – The former head of Bank of Moscow MBMM.MM has denied defrauding Russia’s fifth-largest bank, saying the $14 billion bailout it received was in reality intended to save its suitor, state-controlled VTB (VTBR.MM).

Andrey Borodin dismissed allegations by VTB and the Russian authorities that he improperly lent billions of dollars to firms he controlled — loans that went bad after he was ousted, forcing the central bank to launch the record rescue last month.

Borodin, who fled Russia at the end of March and is wanted by a Moscow court on an international warrant, told Reuters that VTB had sought to depict Bank of Moscow’s financial condition in the worst possible light to conceal its own balance-sheet woes.

Read full article here.

Power Play in Russia

Finanz und Wirtschaft

The fate befalling the Bank of Moscow and its CEO Andrei Borodin, author of the adjacent article, is reminiscent of the plot in a bad Hollywood film. The details of what exactly transpired behind the scenes that led the 43-year-old Borodin, sought by the Russian authorities for mismanagement of the Bank of Moscow, to live in exile in London are unclear. “Finanz und Wirtschaft” attempts to trace the course of events. The Bank of Moscow founded in 1995 by the city of Moscow and its mayor Yuri Luzhkov, emerged as one of Russia’s top banks under the leadership of Borodin, a close confidante of Luzhkov. Even as the financial crisis unfolded, the bank maintained buoyant growth and enjoyed the confidence of many western investors. As a result, in July 2010 Goldman Sachs and Credit Suisse jointly acquired a 6.6% holding of the bank’s shares. Everything was going smoothly. Continue reading

Ex-Bank of Moscow Chief Says VTB Bailout Takeover Is ‘Political’

By Maria Levitov and Henry Meyer, Bloomberg

The “political” takeover of Bank of Moscow by Russia’s state-owned VTB Group led to the biggest bank bailout in the country’s history to transfer government money to Bank of Moscow’s new shareholders, former chief executive officer Andrei Borodin and his representatives said.

“The criminal prosecution and takeover of Bank of Moscow are part of the same chain of the political decision to change shareholders at Bank of Moscow and to place it under government control,” Borodin said in an e-mailed statement yesterday. Continue reading

Bank rescue with a question mark; accusations in the Bank of Moscow case

Neue Zürcher Zeitung

The effort to forestall the bankruptcy of the troubled Bank of Moscow became the largest rescue package in the brief history of the Russian banking sector. However, question marks hang over the rescue package launched in July. The state-owned VTB bank claims that the former managers are at fault. The former Bank of Moscow CEO is defending himself against allegations of credit fraud. The conflict lays bare the weakness in the overall Russian banking sector.

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. Continue reading

Russia’s “Greece”

Maksim Blant, economic commentator of NEWSru.com

The country, as it turns out, does not know its heroes well. Russian banking system, it turns out, was hanging on a thread, and only the timely heroic actions of Andrey Kostin, the head of the second-largest Russian state bank VTB, and Aleksandr Turbanov, Director General of the Deposit Insurance Agency, saved Russia from the financial crisis, which could have become as damaging for the domestic financial system as the bankruptcy of Greece would be for the Eurozone.

This is, at least, how the head of VTB Andrey Kostin tried to present the story of purchase of “Bank of Moscow” (BM) and the events that followed in an interview with the Financial Times.

Another direct participant of the events – the former president of Bank of Moscow Andrey Borodin – described in an interview the same actions as an “insane waste of money”, saying that the bank “never needed state help” and that the problems in the bank are “artificial.”

The size of the injections, which were required for the rescue of BM, is indeed “insane”. Only the Deposit Insurance Agency “bestowed” on VTB, as the current owner of BM, 295 billion rubles. What other words can we use to describe a loan for 10 years at 0.51% per annum?

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. Continue reading