Whither the euro?

German Chancellor Angela Merkel has finally secured a new rescue package for the Eurozone’s struggling economies, propping up her own domestic position in the process. In the event, the Bundestag vote was more convincing than expected, with 523 votes in favour of increased German support for the European Financial Stability Facility (EFSF), with only 85 against. The ruling Christian Democratic Union and is partners did not even need the support of opposition parties, so the message was clear: Germany still fully supports the European project and will not allow the euro to fail.

Yet increasing the size of the EFSF from €440 billion to €780 billion appears to be too little too late. Greece’s economic woes show no sign of fading, while Italy moves ever closer to the precipice of economic disaster. Perhaps most importantly, the markets took little heart from Merkel’s victory and it is worth noting that stock markets within the Eurozone, including Germany’s Dax and France’s Cac 40 suffered greater losses following the German vote, than those, such as London, on the outside. Continue reading

Borodin’s lawyer sees no reasons for new charges


MOSCOW. Sept 29 (Interfax) – The lawyer of Bank of Moscow’s ex-president Andrei Borodin has protested new fraud charges against client, describing them as illegal.

Earlier, Borodin was charged with fraud worth more than 12.5 billion rubles.

“There are no reasons whatsoever for these charges against Borodin,” lawyer Mikhail Dolomanov has told Interfax.

Borodin’s lawyers were not informed about the indictment, he said.

“Since the defense was not notified about the letter of indictment, the charges cannot be regarded as valid and are in fact doubtful”, Dolomanov said.

Statement by Andrey Borodin’s Defence

30 September 2011

The circumstances and the timing of the new charges being made against Andrey Borodin demonstrate politically motivated persecution.

Today, the media circulated the announcement made by The Investigative Department of The Ministry of Internal Affairs concerning new charges against the former head of the Bank of Moscow. However, neither Andrey Borodin, nor his defence team have been notified of the new charges. This is a grave violation of legal protocol. It should also be noted that the “new charges” appeared at exactly the same moment as that when the earlier charges, relating to abuse of power, fell apart under the weight of many contradictions.

The new charges are also unlawful and groundless. A situation such as this where legal cases are built, not in relation to crimes, but as a direct attack on specific individuals, is a firm indication of political rather than legal motivation. While the attempts of the law enforcement authorities to inform the public about fictitious investigative actions is nothing else than a disinformation campaign.

Save Euro and Democracy

Published in The Moscow Times
By Andrey Borodin

The issue that has loomed large over the past months has been the extent to which the European Union’s institutions are willing and allowed to intervene to support individual countries and their banks.

Although Britain is outside the euro zone, an interim report from the country’s Independent Commission on Banking described the problem of bank guarantees well. “Large banking systems can threaten the perceived creditworthiness of governments, through the presence of an implicit guarantee. The social costs of sovereign default, or even the risk of it, are very large indeed,” according to the report. “So bank guarantees, by placing the creditworthiness of the government in question, can risk costs for society that would dwarf the direct cost or value of the subsidy to the banks.”

The main problem facing the euro zone is that there are a variety of governments pursuing their own policies, but there is only one monetary authority and guarantor of the whole banking system that is trying to act in the best interests of the single currency area as a whole. Continue reading

Independent evaluators confirmed the price of 58 hectares of land sold by Baturina to Premier Estate was fair


Leading independent appraiser – Finance-Appraisal-Consulting – has completed the valuation of 58 hectares of land in the west of Moscow, which “Ramenskaya” (the owner – Yelena Baturina) in May 2009, sold to Premier Estate for 12.6 billion rubles.

According to the report of Finance-Appraisal-Consulting, the value of this land at the time of the transaction in 2009, following evaluation, was set at 14.323 billion rubles. “The price of the transaction concluded in 2009 is fully consistent with the market realities of that time,” said Yuri Petrenko, General Director of Finance-Appraisal-Consulting. Continue reading

Collateral damage; Russia’s banks; Fallout from the rescue of one of the country’s biggest lenders highlights concerns about links between politics and state-controlled businesses – and about the vigour of financial oversight

By Catherine Belton and Neil Buckley, Financial Times

On a snowy Friday evening in late March, Andrei Borodin received a call as he flew out of Moscow on a private jet. Then president of Bank of Moscow, Russia’s fifth-biggest, he found himself under mounting pressure as VTB, the state-controlled lender that is Russia’s second biggest, tried to take over his bank. Just hours earlier, the government’s budget watchdog had called for his suspension while it audited what it be-lieved were “dubious” loans to entities re-lated to Bank of Moscow. Police were also investigating him separately over a property loan the bank had made.

“Someone called me and said that on Monday the Russian police will officially accuse me of abusing my authority,” says Mr Borodin. He never flew back; today he is in exile in an undisclosed location. Within months, Bank of Moscow – a quasi-sovereign lender with shareholders including Goldman Sachs and Credit Suisse – was at the centre of one of the nation’s largest corporate scandals of recent years. To fill an alleged hole in its accounts far bigger than previously suspected, the government agreed in July to extend its largest-ever bank bail-out. At Rbs395bn, then worth $14bn, it was equivalent to 1 per cent of economic output. Continue reading

Statement by Andrey Borodin

Bank of Moscow Case Sees New Development: Hostage-Taking.

Yesterday the Investigative Committee moved the court to arrest a number of individuals (details needed as media differ on who has been arrested) who have cooperated with Bank of Moscow. While the Tverskoi court has not caved in to the investigators and has set bail, the situation has taken a very sinister turn.

The investigators have sought the arrest of – and until bail is posted they will remain behind bars – completely innocent people. It was done despite numerous statements by the government leaders about the need to avoid applying such restraint measure to suspects in economic crimes. Continue reading

The return of stagflation?

Stagflation isn’t a word that has been used much in recent years, but, in a number of countries, there are hints that we may need to dust off the term.

One of the most explicit comments came last week from India’s Finance Secretary, Mr Gujral, who told Reuters, ‘The Indian government is concerned about high inflation and slowing growth.’ That followed a 25 basis point rise in the repo rate, to 8.25%, the 12th increase in 18 months. However, with inflation at a 13 month high of 9.78%, that still leaves the official rate in negative real territory, so analysts are expecting further rate increases over the next few months.

Growth is expected to reach 8.5% for the fiscal year to March 2012 – a rate that Western nations can only dream of – but with real wages now falling, consumers are feeling the pain of higher prices, and fuel price increases in particular are helping to make the Indian government hugely unpopular.

Amongst the other BRICS, consumer price inflation is at 7.2% in Brazil, 8.2% in Russia, 6.2% in China and 5.3% in South Africa. Continue reading

Andrey Borodin: Victim or perpetrator? The former top banker is at the centre of one of Russia’s biggest financial scandals.

Florian Willershausen, Handelsblatt

London and Moscow

He is standing before the ruins of his life – and yet Andrey Borodin seems anything but resigned or downcast. … Borodin is fighting for his reputation as a successful top banker. Let’s not forget, he built up the Bank of Moscow to be the fifth largest bank in Russia within 15 years. Continue reading