Andrey Kostin – The Russian Reader

Russians queued up at a popular currency exchange in central Petersburg on September 19, 2018, as the ruble took yet another plunge, fueled by rumors that the regime was planning to “dedollarize” the Russian economy. Photo by the Russian Reader

Foreign Currency Deposits Withdrawn from Sberbank: Depositors Take Out Over $2 Billion in Two Months
Vitaly Soldatskikh
Kommersant
October 6, 2018

In September, Russians continued to aggressively withdraw foreign currency from accounts in Sberbank (Savings Bank). Over the past month, the amount of these deposits decreased by $900,000,000, while the amount has decreased by more than $2 billion dollars since the beginning of August. The outflow of funds from the savings accounts of individual depositors took place as rumors of a possible forced conversion of foreign currency deposits grew. However, after reasurring statements by Elvira Nabiullina, chair of the Russian Central Bank, as well as a rise in rates on foreign currency deposits, the outflows may decrease.

On Friday, Sberbank published its monthly statement before other Russian banks, as usual. According to these figures, as we have analyzed them, the populace’s foreign currency-denominated bank deposits in Sberbank decreased by $901 million or 2.7% in September and now total $32.5 billion. Likely as not, Russians simply withdrew this money from the bank without exchanging it for rubles and redepositing it. According to Sberbank’s statement, the populace’s ruble-denominated sight deposits and term deposits descreased last month by 45.78 billion rubles or half a percent to 9.65 trillion rubles. Overall, the outflow of foreign currecy deposits slowed compared with August, when individual clients withdrew $1.18 billion from the bank.

Sberbank’s press service confirmed the outflow of $900 million in deposits by retail clients in September, but noted the inflow of funds from commercial clients amounted to approximately $1.5 billion. (This calculation was made using the bank’s in-house method.)

Sberbank termed August’s outflow of foreign currency deposits the product of a “managed evolution of the bank’s balance sheets.”

Meanwhile, in late August, Sberbank introduced a new seasonal foreign currency deposit plan, valid until the end of September, with annual interest rates that varied from 1.5% to 3%. (The highest rates was for customers willing to deposit a minimum of $150 million for a period of three years.) Currently, Sberbank’s highest interest rate for dollar-denominated deposits is 2.06%, whereas a number of major banks, including VTB Bank, Russian Agricultural Bank (Rosselkhozbank), Alfa Bank, and Rosbank, offer interest rates on dollar-denominated deposits of 2.5% per annum.

September’s outflow of deposits from Sberbank occurred as VTB Bank chair Andrey Kostin made a series of statements about the possible implementation of harsher sanctions, under which Russia’s state-owned banks could be stripped of the ability to make dollar-denominated transactions. Were this to occur, Kostin said, VTB Bank could not rule out having to disburse funds from dollar-denominated accounts in another currency as a way of upholding the bank’s obligations to its clients. These statements by the head of Russia’s second largest bank did not go unnoticed. Central Bank chair Elvira Naibullina was forced to calm bank customers by denying the possibility of a compulsory conversion of deposits. According to Naibullina, such moves would only undermine confidence in Russia’s banking system.

According to our analysis, foreign currency deposits held by commercial clients at Sberbank increased by $1.43 billion in September. This occurred largely due to the growth of long-term deposits by commercial firms. Deposits made for terms of three years or longer grew by $1.56 billion, while deposits for shorter terms shrunk. Also, the balances on the accounts of foreign companies grew by $902 million. The ruble-denominated balances on Sberbank accounts held by commercial clients grew by more than 222 billion rubles in September. This increase was mainly due to the nearly 151 billion rubles in additional monies raised by the Federal Treasury.

According to Fitch Ratings, the most considerable outflows in corporate funds, adjusted for fluctuations in the foreign currency exchange rate, were observed at Sberbank (117 billion rubles or 1.7%), Gazprombank (87 billion rubles or 2.8%), and Rossiya Bank (58 billion rubles or 9.4%). Retail deposits also declined mainly at Sberbank (107 billion rubles or 0.9%) and banks undergoing reorganization by the Central Bank (35 billion rubles or 3.2%), while other banks enjoyed a fairly uniform increase in retail deposits.

According to Ruslan Korshunov, director for bank ratings at Expert RA, the largest Russian credit rating agency, “Rumors of the Russian economy’s dedollarization and the possible conversion of foreign currency deposits into rubles could have pushed a segment of the populace to withdraw their money from state-owned banks, against which sanctions could be strengthened.”

At the same, Korshunov noted the outflow of retail deposits in September could also have been caused by a seasonal factor: the return of the populace from holiday and, consequently, an increase in consumer activity. However, he believed these factors had a one-off effect and such outflows were highly unlikely in October.

Translated by the Russian Reader

This is a five-storey, eight-alarm nightmare.

It turns out Chris Hedges has a regular program on RT. On his program on the Kremlin’s propaganda channnel, he interviewed Noam Chomsky. The interview was dubbed into Russian and posted on YouTube on August 11.

Nikolai Starikov, “bestselling author,” conspiracy theory freak, and wacko Russian nationalist has highlighted this little act of treachery on his blog under the headline “Conversation with an American Intellectual.”

How dumb do you have to be to work for RT? How dumb do you have to be to let RT interview you at length?

Do either of these formerly respectable people realize they are shilling for the Kremlin and stoking the infernal imagination of an utter creep like Starikov?

What in God’s name is going on in this world?

Red-brown alliance indeed.

Meanwhile, the geriatric perennial musical rebels known as The Rolling Stones have done an advertisment for VTB24, a wholly owned subsidiary of VTB Bank, whose main shareholder is the Russian Government.

The ad’s copy reads, “Mastercard. Priceless cities. Win a trip to a concert by the legendary Rolling Stones. VTB24.”

The list of VTB Bank’s other shareholders makes for fun reading:

The main shareholder of VTB is the Russian Government, which owns 60.9% of the lender through its Federal Agency for State Property Management. The remaining shares are split between holders of its Global Depository Receipts and minority shareholders, both individuals and companies.

In February 2011, the Government floated an additional 10% minus two shares of VTB Bank. The private investors, who paid a total of 95.7 billion rubles ($3.1 billion) for the assets, included the investment funds Generali, TPG Capital, China Investment Corp, a sovereign wealth fund responsible for managing China’s foreign exchange reserves, and companies affiliated with businessman Suleiman Kerimov.

In May 2013 VTB completed a secondary public offering (SPO), issuing 2.5 trillion new additional shares by public subscription. All the shares have been placed on Moscow’s primary stock exchange. The government has not participated in the SPO so its stake in the bank decreased to 60.9% after the subscription has been closed. The bank has raised 102.5 billion rubles worth of additional capital. Three sovereign wealth funds Norway’s Norges Bank Investment Management, Qatar Holding LLC and the State Oil Fund of the Republic of Azerbaijan (SOFAZ) and commercial bank China Construction Bank became the largest investors during the SPO after purchasing more than half of the additional share issue.

Source: Wikipedia

In October 2015, VTB chair and president Andrey Kostin went on CNBC to talk Syria, geopolitics, and the need to lift sanctions against Russia as quickly as possible.

It’s no wonder that Kostin was concerned about these issues, because VTB have been accused of acting as banker for the Assad regime. Curiously, WikiLeaks is alleged to have removed evidence of the relationship between VTB and the Assad regime from a 2012 trove of hacked emails.

Even worse, VTB have been on the US and EU sanctions list, imposed over Russia’s invasion of Ukraine, since September 2014. As a wholly owned subsidary of VTB, VTB24 should be subject to the same sanctions, as explained in a press release issued by the US Department of the Treasury on December 22, 2015, namely,

“Today, OFAC also identified a number of subsidiaries of VTB Bank, Sberbank, and Rostec as being owned 50 percent or more by their respective parent entities. The two banks and one defense company were previously sanctioned pursuant to E.O. 13662 in September 2014. The subsidiaries identified today were already subject to the same financing restrictions as their respective parent entities per OFAC’s Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked (“50 percent rule guidance”), which can be found here. These identifications will help the public more effectively comply with the sanctions on VTB Bank, Sberbank, and Rostec.”

According to a May 22, 2014, article in the Guardian, The Rolling Stones are music’s “biggest business.” Where is this business registered?* Is it exempt from the sanctions imposed by the US and the EU on VTB Bank and its wholly owned subsidiary, VTB24?

I ask these questions to the wind, the Holy Spirit, and the inhabitants of other, distant galaxies, because I very much doubt that any of these niceties would bother the morally unimpeachable preacher Chris Hedges, the world’s greatest anti-imperialist Noam Chomsky, and those fun-loving seventy-year-old lads from London, just as long as they get paid on time and paid a lot.

Frankly, I doubt that this bothers you very much, dear readers, although in a nutshell it says a lot about how our fallen world actually works. || TRR

*UPDATE. The Rolling Stones apparently pay their taxes in the Netherlands, which is not only an EU country in good standing, but a country that lost many of its nationals when the Russian army decided to blow Flight MH17 out of the sky over Donbass on July 17, 2014, one of the actions that triggered western sanctions against Russian companies and individuals connected to the regime in the first place.

But The Rolling Stones have bigger fish to fry.

What two of the other three Rolling Stones apparently learned, including Mick Jagger and Charlie Watts, was that Mr. Richards’s near-death experience meant that it was time to think about their heirs. For that, the aging rockers turned to a reclusive Dutch accountant, Johannes Favie, whose company, Promogroup, has helped them minimize their tax bills for more than 30 years. (The fourth Rolling Stone, Ron Wood, handles his finances apart from Promogroup.)

And so, last August, according to details disclosed in documents maintained by the Handelsregister, the trade registry of the Netherlands, Promogroup helped the three performers set up a pair of private Dutch foundations that will allow them to transfer assets tax-free to heirs when they die. Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely; over the last 20 years, according to Dutch documents, the three musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam — a tax rate of about 1.5 percent, well below the British rate of 40 percent. (Lynnley Browning, “The Netherlands, the New Tax Shelter Hot Spot,” New York Times, February 4, 2007)

It’s hard to believe that a little over three years have passed since Russia downed Flight MH17 and what, all is forgiven and forgotten? Now the exemplary Dutch taxpayers Keith, Mick, and Charlie can promote a Russian bank that, I repeat, is still on the US-EU sanctions list, put in place after Russia’s violent actions against a neighboring sovereign country that threatened it in no way whatsoever? And how did the passengers on Flight MH17, over half of them Dutch nationals, threaten Russia?

P.S. In case you thought I was dreaming or had somehow photoshopped the Stones/VTB24 advert, it popped up again on my Facebook news feed this morning (September 9) as a “suggested post,” albeit with more details, namely: