A solution at last, or the last of the solutions?

European leaders finally unveiled a new package of measures to tackle the Eurozone’s debt crisis on 27 October. Support for the European Financial Stability Facility (EFSF) is to be increased from €440 billion to €1 trillion and private holders of Greek sovereign debt are to be offered 50% of their outstanding debt holdings. The markets initially welcomed the deal, with bank stocks rebounding impressively and major stock indices around the world registering 2-5% gains on the day.

While it will take at least a generation to get the Greek economy back on track, pledges to offer insurance on Eurozone members’ debt and attract greater private and public investment into the Eurozone are to be welcomed. Yet French president Nicolas Sarkozy was perhaps more prescient than he knew when he triumphantly described the agreement as “a credible and ambitious and overall response to the Greek crisis”. Continue reading

Andrey Borodin’s defence appealed against charges of fraud. According to the lawyer of the former Bank of Moscow president the investigation committed violations of law

Business FM

Former Bank of Moscow head Andrey Borodin’s defence appealed against the charges of embezzlement of bank funds, lawyer Mikhail Dolomanov told BFM.ru.

Dolomanov noted that the charges contain no other counts besides the issue of loan to “Premier Estate”. According to the lawyer, an extension of a secured  loan cannot be regarded as a reason for criminal prosecution of the banker. The lawyer pointed out that Bank of Moscow received more than 58 hectares of Moscow land as collateral. Mikhail Dolomanov said that “Premier Estate” was paying interests, while part of the loan was repaid in advance. Continue reading

The power of the rising east

The Brazilian central bank’s decision to cut its main interest rate from 12% to 11.5% on 20 October has been cited as further evidence of the slowdown in the global economy. The argument goes that if one of the world’s biggest emerging markets is concerned about slowing growth, then the industrialised world really should sit up and take notice. Indeed, Brazilian GDP is now expected to grow by just 3.5% this year, far less than the 7.5% recorded last year, partly because of difficulties in the country’s key export markets but also because last year’s figure was buoyed by increased oil production.

There is a great deal of truth in this view but many analysts are missing the bigger picture in their relentless dash towards doom and gloom. The interest rate cut came after five successive increases and was prompted by the Banco Central’s desire to rein in the economy to dampen inflationary pressures. It is clear that Brasilia fears an economic slowdown and has now taken its eye off the perceived evil – inflation – to join in the western hemisphere’s battle against the four horsemen of the economic apocalypse: recession, stagflation, unemployment and collapsing confidence. Continue reading

Truth Will Come Out. And It Has

Blog of Vladimir Krasnov, Andrey Borodin’s Attorney, on the website of “Echo Moskvy”

I am positive that those following the Bank of Moscow situation will remember how the tension was being whipped up, how alleged “criminal conduct by the former bank management” was repeatedly “exposed”. The tidal wave of this special operation knocked RUR 295 billion out of the federal budget, brought about the demise of the deputy Chairman of the Central Bank responsible for supervision, deprived the Government of Moscow of its own bank and of the proceeds from its sale. Also, the planned result has been achieved, which doubled as the method of achieving the goal set – criminal prosecution of A. Borodin and his associates is getting into high gear. If anyone still had doubts it has been demonstrated to them yet again that, in modern Russia, business depends, first and foremost, not on the market situation or one’s ability, but on the preferences of the authorities.

However, a bank is an entity that lives by its own, fairly strict and transparent rules. Everything that happens inside a bank eventually ends up in its financials.

This is exactly what has happened to the Bank of Moscow. The perfectly orchestrated hysteria has given way to the time to disclose information about the real state of things. It is not unlike the result of forensic medical examination: someone is either alive or dead. Continue reading

Healthy by International Standards. Bank of Moscow Uses Financial Statements to Patch Hole

Kommersant 

Yesterday, experts were unanimously stunned by the Bank of Moscow H1 international financial statements, which were to have come out poorly – after all the bank’s new owners, VTB Group, had repeatedly referred to the vast scale of problems in the bank. The gaping hole in the Bank of Moscow balance sheet, something that VTB has asked for RUR 295 billion from the Government to fix, did not appear in the IFRS statements. The problem loan portfolio is safely covered by the reserves that more than double it in size. Continue reading

“It is all within the framework of politically motivated cases”. The complaint of Andrey Borodin’s lawyers was dismissed.

Moskovskiye Novosti

On Friday, Tverskoy Court of Moscow dismissed the complaint of the former head of Bank of Moscow Andrey Borodin’s defence. Lawyer Vladimir Krasnov was requesting to eliminate the violations committed in the course of preliminary investigation. A day earlier the same court refused to even take into consideration a slander complaint, filed by the lawyer on behalf of the former president of the bank against the Investigative Department of the Interior Ministry.  Continue reading

Great idea; poor function

As evidenced by the meeting of G20 nations in Paris, global concern over economic instability in the Eurozone is growing. As the international political economy becomes ever more closely integrated, weak or non-existent growth in the European Union has major ramifications from Brazil to Japan, particularly given ongoing problems to kick-start the world’s second biggest economic entity, the United States. Yet as global financial institutions struggle to contain European economic decrepitude, the soft underbelly of the European project continues to creak like a ship in a storm.

Despite relatively modest public debt levels, Standard & Poor’s followed in the footsteps of Fitch by cutting Spain’s credit rating, in this instance from AA to AA-, as a result of high levels of private sector debt and weak growth. Ireland will take a generation to recover from its collapse; Greece remains as far from economic sanity as ever and traders show no let up in dragging Italy into the mix. The credit ratings on a host of major international banks have been cut, most recently on UBS, Lloyds and Royal Bank of Scotland. As long as the EU’s more prosperous states fail to provide the engine for more rapid growth, the European fringe will continue to struggle. Continue reading