A disembodied hand proudly holding a Sberbank-issued Mir card. Photo courtesy of PressTV
Central Bank Preparing for Cutoff of Some Banks from International Payment Systems Regulator Asks Small Banks to Have Backup Intermediary Able to Service Their Cards
Anna Yeryomina Vedomosti
December 6, 2018
The Russian Central Bank has asked small banks to find a backup partner that would be able to service their bank cards. This would be an asset if their current intermediary banks were cut off from international payment systems.
The Central Bank is concerned with the continuity of card transactions in banks that work with payment systems indirectly, that is, via an intermediary bank. The regulating authority has advised these indirect clients of payment systems to contract with another bank, besides their primary intermediary bank, that could supply them with access to card payment systems. Five bankers confirmed to us they had received the memorandum.
The memorandum also says the contract should provide for a test exchange of information when integrating with the new intermediary banks. It also states payment systems should draft an action plan and recommend it to their participating banks.
A Central Bank spokesperson stressed the memorandum was only advisory, but it was based on international recommendations for risk management in payment systems. The need for banks to contract with backup intermediary banks is not so obvious. According to several of its recipients, in early autumn the Central Bank had sent banks a letter urging them to draft plans to ensure the continuity of payments, but it had not recommended any specific measures.
Switching intermediary banks is a time-consuming, expensive process that takes between three to six months, notes Maya Glotova, director of Kartstandart, a processing center that partners with Payment Center Credit Union. The most high-profile case occurred in 2013 after Master Bank’s license was revoked. As Glotova recalls, Master Bank had functioned as an intermediary bank in payment systems and provided payment processing services. Small banks had to halt their operations for several weeks, and several of them had to leave the payments business. Glotova estimates it would cost a single bank more than $100,000 to switch intermediary banks in the three payment systems.
Intermediary banks had little to say about the memorandum. A spokesperson at Promsvyazbank promised to follow the Central Bank’s recommendations, while a spokesperson at VTB Bank said their own intermediary program had worked well.
Several bankers believe the Central Bank is hedging not only against the collapse of intermediary banks but also potential sanctions, which are fraught with the possibility that intermediary banks would be cut off from Visa and Mastercard, as occurred in 2014 and 2015. The United States has been drafting a new set of sanctions that could affect major banks. Payments within Russia would not be affected: these transactions are processed by the National Payment Card System (NSPK). Russian bank cards, however, would not function abroad. (A spokesperson for NSPK, which operates the Mir payment system, said they had not received the Central Bank’s memorandum.)
VTB Bank had drafted a plan to counter sanctions, its president, Andrei Kostin, told the TV channel Rossiya 24 in October.
“We have been mapping out with both the government and the Central Bank how to avoid the consequences, especially for individuals and companies. I think we can overcome them. I don’t think the sanctions will be wholesale and directed against the entire financial sector,” Kostin said.
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.
The “handy lawyer” at a place calling itself the Civil Legal Defense Center promises to relieve people “of their debts 100% quickly and legally.” Photo taken in central Petersburg on 22 July 2018 by the Russian Reader
Russians’ Bank Debts Grow Twice as Fast as Their Wages Central Bank and Economic Development Ministry Plan to Reduce Banks’ Interest in Loaning to General Public
Tatyana Lomskaya and Emma Terchenko Vedomosti
August 1, 2018
The Economic Development Ministry has reported individual consumer loans have been growing faster than wages and savings. In June, they grew by 15.9% in annual terms after a 15.1% uptick in May. If the season were not taken into account, this would amount to an increase of over 20%. However, real wage growth during the same period slowed to 7.2%, while the growth rate of savings deposits fell 7.1%. (The figures for May were 7.6% and 7.7%, respectively.)
The entire portfolio of loans to the general public increased by ₽1.1 trillion to ₽13.3 trillion [approx. €181 billion] during the first six months of 2018, according to figures from the Central Bank. Sberbank alone lent a record-breaking ₽714 million [approx. €9.7 million] in consumer loans during this period, which was 74% more than a year ago, while VTB Bank supplied the general public with ₽400 million in loans or 32% more than over the same period in 2017.
The public’s demand for consumer loans has grown. Inflation is relatively low in the wake of 2014, the Central Bank’s key rate has stabilized at a low level, and wage growth has picked up, explains Sergei Shirokov, managing director of Sberbank’s Borrow and Save Division. Since the start of the year, VTB has twice improved the terms of its loan programs and increased the issuance of loans by 17%, notes Dmitry Polyakov, a vice-president at the bank.
Companies, on the contrary, have increasingly gone on a savings binge, writes the Economic Development Ministry. In June, they increased their bank deposits by 8.3% in annual terms. (The increase in May was 6.5%.) Their outstanding loans have also grown, but only by 2.8%, compared to the same period in 2017, or by 3.3% when corporate bonds are taken into account. (In May, the same figures grew by 2.6% and 3.1%, respectively.)
Banks have focused on lending to the public. Under current regulations, they find this more profitable than lending to businesses, complained Economic Development Minister Maxim Oreshkin. This circumstance worried his ministry, he said. He suggested the Central Bank should make it more profitable for banks to loan to companies as opposed to making consumer loans. The ministry did not respond when we asked whether Minister Oreshkin, as a member of Sberbank’s advisory board, had voiced his concern about the high rate of consumer loans issued by Sberbank.
Retail lending has actually been recovering faster than corporate lending, partly because the public vigorously decreased their debts to banks in 2015–2016, whereas now, as wages have increased and rates have hit bottom, they have again accumulated debts, says Natalya Orlova, chief economist at Alfa Bank. Banks are also more interested in lending to individual due to western sanctions against Russian companies, she continues. If a company is at risk of western sanctions, it might also have trouble paying back its loans. Unlike mortgages, however, the growth of consumer loans has almost been exhausted. Outstanding loans have nearly reached 10% of GDP, the maximum for Eastern Europe, warns Orlova.
Consumer lending started to recover last year amid falling personal incomes. People were able to increase consumption only by taking out retail loans, analysts at RANEPA noted. In early 2018, on the eve of the presidential election, the salaries of state-sector employees increased dramatically. The government had to make good on President Putin’s May 2012 decrees and bring the salaries of teachers, doctors, and researchers to 100–200% of average regional wages. On the heels of the wage increases, personal incomes rose by 4,2–5,6% in annual terms from February to April. In May and June, however, real personal incomes of Russians returned to a near-zero growth rate. This sparked an increase—from 12% in May to 22% in June—in the percentage of Russians who anticipated that their family’s financial circumstances would worsen over the next year. The percentage of people who excepted their fortunes to change for the better shrunk from 24% to 19%, according to a poll conducted by inFOM.
The Central Bank has already been reducing the profitability of consumer loans for banks. The risk ratio for unsecured consumer loans was increased on May 1, and the regulator plans to raise it again on September 1 for loans whose total cost exceeds 10% per annum. The Central Bank has been also been reviewing other proposals for stabilizing the growth of consumer loans, said Vasily Pozdyshev, the Central Bank’s deputy chair, as quoted by RIA Novosti. For example, increased oversight requirements could be applied to banks whose consumer loan portfolios increased much more quickly than the market average, or the growth of such loans could be restricted, said Pozdyshev. According to him, the banks had made an interesting propose to introduce differentiated risk ratios for consumer loans depending on their amount: large loans in amounts greater than ₽300,000 [approx. €4,000] would bear the greatest risk ratio. In addition, as of 2019, banks should start regularly calculating the PTI (payment to income) ratio as a means of determining a customer’s credit worthiness, although the Central Bank would not use it as a regulatory instrument befored 2020, added Pozdyshev.
High-risk borrowers are more likely to seek loans from microfinance institutions (MFIs). According to the National Credit History Bureau, MFIs issued ₽26.3 billion [approx. €358 million] in so-called payday loans from April to June, which was 23.8% more than last year. Vulnerable segments of the populace are already seriously indebted, says Georgy Okromchedlishvili, principal analyst at ITS Wealth Management, and significant growth in these loans is not anticipated in the future, but nor is a noticeable decline expected. Stable economic growth has to be in place for that to happen, he argues.
Under legislation currently tabled in the Russian parliament, these up-and-coming Russian businesswomen could do hard time in a penal colony for the wholly fanciful crime of “complying” with western sanctions against target businesses and individuals. Image courtesy of Credit Bank of Moscow
Sanctions Victims Refuse the Russian State’s Protection Big Business Categorically Rejects Adopting Law on Anti-Sanctions
Yelizaveta Bazanova, Anna Kholyavko and Yekaterina Burlakova Vedomosti
May 16, 2018
“An absolute nightmare”: that was the phrase used by the majority of lawyers and executives of Russian and foreign companies whom we asked to comment on plans to imprison people who “implemented” foreign sanctions. On Monday, a law bill to this effect, tabled by State Duma Speaker Vyacheslav Volodin, Federation Council Speaker Valentina Matviyenko, and leaders of all four parliamentary factions was passed in its first reading. The second reading has been scheduled for Thursday.
Under the law bill, if a company refuses to sign a public contract with an entity on the sanctions list, the company and its executives would be threatened with a maximum fine of ₽600,000 [approx. €8,200] and a maximum prison term of four years.
The board of the Russian Union of Industrialists and Entrepreneurs (RSPP) has decided passage of the law would be completely unacceptable. Companies would find themselves between the frying pan and the fire: violations of sanctions would threaten them with secondary sanctions, while complying with sanctions would make them criminally prosecutable in Russia.
The RSPP’s resolution was supported even by board members who had themselves been sanctioned.
“We believe it would cause further damage to the Russian economy, including business with foreign and Russian companies, and both Comrade Vekselberg [Renova Group Chair Viktor Vekselberg] and I voted for the resolution,” Interfax has quoted VTB Bank president Andrei Kostin as saying.
A spokesperson for Vekselberg did not respond to our questions. We were also unable to contact a spokesperson for Oleg Deripaska, another target of western sanctions, yesterday evening.
If passed, the law would be unlikely to have a considerable impact on how businesses operate, but it could be a means of threatening and pressuring them, the entrepreneurs we surveyed said unanimously. The wording of the law bill is harsh. Nearly anyone could be prosecuted on the flimsiest of pretexts, complained an executive at a transnational food producer.
The key risk is the absence of clear criteria for defining what would constitute a violation of the proposed law, our sources all agreed. Even the Russian Finance Ministry could be prosecuted. In its Eurobonds prospectus, it pledged not to use the funds raised to support entities targeted by western sanctions. In January, Alfa Bank warned Russian defense companies it would not handle their accounts due to sanctions. Spokespeople for the Finance Ministry and Alfa Bank did not respond to our inquiries.
The Kremlin has also been unhappy with the law bill, said a federal official close to the presidential administration.
The law bill, if passed, would also generate risks for those companies who refuse to do business in Crimea due to sanctions, said Alexei Panich, a partner at Herbert Smith Freehills. These include the state banks Sberbank and VTB, as well as mobile telecom operators. Andrei Isayev, deputy head of the State Duma’s United Russia faction, claimed companies who do not open branches in Crimea would not be affected by the law. What was at stake, he said, were the ordinary deals and transactions companies perform almost automatically. However, refusal to do business with counterparts in Crimea could be considered a criminal offense under the terms of the law, said an attorney at a major international law firm. The law could complicate public offerings, the issuing of loans, and contracts and transactions, he specified.
An employee at a major international firm explained it would be hard to determine whether a company refused a deal with a counterpart due to their bad reputation or the threat of sanctions. An auto dealer agreed the threat of criminal prosecution would be powerful leverage. To encourage its partners to agree to a deal, a business could threaten to report them to law enforcement agencies, argued Panich.
The proposed measures were excessive, agreed a spokesperson for an agricultural commodities trader. Some companies have in-house rules restricting such deals. Our source said the law bill appeared to be means of coercing such companies. Theoretically, it could be used as leverage. A company or person on the Specially Designated Nationals And Blocked Persons List (SDN) could show up and demand another company do business with them, agreed the head of major private bank. It was difficult to imagine how banks would solve such dilemmas, he said.
“There are many ambiguities in how the law would be interpreted, and what specific actions or inactions would be punishable,” he concluded.
Foreign businesses could interpret the law bill as a signal it was time to wrap up their operations in Russia, said the vice-president of a major foreign company that produces popular consumer products. No one has any intention of sacrificing their top executives to the Russian law enforcement and judicial system.
All issuers of bonds include in their covenants the refusal to do business with entities targeted by sanctions. Perhaps expatriates who do not want to take risks would leave the country, argued an employee at a large foreign company.
Passing the bill into law would be a mistake, said political scientist Yevgeny Minchenko. The law would have to be seriously amended over time.
“Knowing how this could affect both Russian companies and foreign business operating in Russia, this is very risky decision in my opinion,” Minchenko told us.
Spokespeople for Sberbank and Credit Bank of Moscow declined to comment.
With additional reporting by Vladimir Shtanov, Darya Borisyak, Alexandra Astapenko, and Svetlana Bocharova
Reliable Future Consumer Credit Cooperative is one of many retail lenders ready to help ordinary Russians “boost their standard of living.” Photo by the Russian Reader
Household Debt of Russians Exceeds Twelve Trillion Rubles Half of This Amount Was Borrowed Over the Last Year
Emma Terchenko Vedomosti
January 31, 2018
This emerges from statistics gathered by the United Credit Bureau (OKB), based on information about the outstanding loans of 82 million Russians.
According to the Russian Central Bank, the Russian populace’s bank debt grew by 13.2% in 2017 to 12.2 trillion rubles [approx. 170.75 billion euros].
The OKB’s calculations show the number of new loans grew more slowly than their total amount. Over the past year, loans increased by 37% compared to 2016 (by 4.14 trillion rubles), whereas their quantity increased only by 12% to 34.8 million individual outstanding loans.
Moreover, an increase was observed in all segments of the loan market—mortgages, cash loans, auto loans, and credit cards—according to the OKB’s statistics.
Banks mostly disbursed money to Russians in the form of cash loans: nearly 3 trillion rubles or 33% more than in 2016. The number of such loans reached 24.7 million units, an increase of 14%.
The total amount of mortgages issued for the year increased by 42% to 1.8 trillion rubles, while the total number rose by nearly a third to 959,237 individual mortgages. According to Rusipoteka, a financial analytics company, 53% of the housing mortages issued last year were supplied by Sberbank.
In November, the mortgage portfolios of Russian banks exceeded a record five trillion rubles, the Central Bank reported previously.
“Afer the crisis, banks tried to build up their mortgage portfolios. Many of them reduced their down payments to accomplish this. Therefore, amongst the loans issued last year, around a third had down payments of less than 20%,” says Rusipoteka director Sergei Gordeiko.
According to the OKB, auto loans for all of 2017 increased by 36% to 333.3 billion rubles or by 25% to 436,539 individual loans. The National Credit History Bureau (NBKI) estimated the annual growth of auto loans at 29%.
“Auto loans have returned to pre-crisis levels, and the share of cars bought on loan has been growing,” notes NBKI’s director general Alexander Vikulin. “In 2017, every other automobile in Russia was purchased with a loan.”
The OKB claims credit cards are the fastest growing segment. Although the number of new credit cards issued last year grew only by 8% to 8.65 million cards (this figure excludes replacement cards), their total limit increased by less than half: by 48% to 544.5 billion rubles.
According to the NBKI, the number of newly issued credit cards grew by 52.6% to 6.87 million units in 2017. Equifax reported an 52% increase to six million new cards issued on the year.
The reason for the discrepancy is the databases of creditors monitored by the various credit bureaus differ. Unlike other credit bureaus, the OKB receives all information about loans made by Sberbank, which, according to different estimates, accounts for 42% to 46% of the loan market. The NBKI, for example, does not monitor figures from Home Credit Bank. None of the three bureaus—OKB, NBKI, and Equifax—take Russian Standard Bank’s statistics into account.
With its share of the credit card market, Sberbank has an impact on discrepancies in the calculations of the OKB and the other bureaus, argues Frank RG director general Yuri Gribanov. According to Frank RG’s data, based on the management statements of banks and taking into account the utilization of credit limits and overdue debts, Sberbank’s portfolio of credit cards and overdrafts constituted 42.5% of the overall portfolio of all Russian banks as of December 1, 2017. During the year, it grew by 16.4% to 559.6 billion rubles.
A Sberbank spokesperson did not provide exact figures for the issuing of new credit cards last year, but confirmed they had not grown, remaining at a “consistently high level.”
Tinkoff Bank issued 2.41 million new credit cards in 2017, 43% more than the previous year, while Sovkombank issued more than a million credit cards. Vostochny Bank increased its issuing of credit cards by 140%, OTP Bank, by 135%, and VTB Bank by 13% (440,000 cards).
“The main reason for the growth is that banks have returned to sales channels that were frozen after 2015, for example, lending to walk-in customers,” says Alexei Shchavelev, director of the cross-selling department at OTP Bank.
“In addition, many banks now have built up a broad base of quality customers: payroll customers, debit card holders, borrowers. It is now much easier for them to sell credit cards, because this customer base has been clarified,” Pavel Samiyev, managing director of the National Rating Agency, explains.
The demand for credit cards from borrowers themselves has been caused by the growth of consumer activity in general and improved customer solvency, argues Rostislav Yanykin, director of Russian Standard’s credit card sales. In the fight for customers, banks have been offering increasingly advantageous terms for using credit cards, he admits.
People who take out loans to boost their standard of living have mainly fueled the growth in lending to the populace, argues Nataliya Orlova, chief economist at Alfa Bank.
“In the past two years, they suffered more than others from the crisis in terms of reduced purchasing power.”
According to NBKI’s Vikulin, retail lending has been growing due to the economy’s stabilization.
Translated by the Russian Reader
NB. According to a May 17, 2017, article in the New York Times, household debt in the US had risen to $12.73 trillion in the first quarter of 2017, a new peak. Converted into rubles, this would amount to approx. 742 trillion rubles at current exchange rates. Based on the latest UN estimates, the current population of the US is nearly 327 million people, while the population of the Russian Federation is nearly 144 million people, based on the same estimates. In 2016, GDP (PPP) per capita in the US was over $57,000, while it was just over $23,000 in Russia, according to figures published by the World Bank. TRR
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.
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.
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 believable that a little over three years have passed since Russia downed Flight MH17 and what, all is forgiven and forgotten? Now the exemplary Dutch taxpapers 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:
The copy reads:
Win a trip to the Rolling Stones concert in Paris! https://goo.gl/JBP379 Pay for purchases with the World Mastercard Black Edition card from VTB24 before September 15 and, perhaps, it will be you who makes it to the concert by the legendary rock musicians. The winner of the promotion will receive two tickets for special places in the group’s own box and the right to skip the queue, a meeting with members of The Rolling Stones, a keepsake photo, and a gift from the group.
The link leads to a page on VTB24’s own website, promoting its World Mastercard Black Edition Privilege Card and providing a few more details about the promotion, including the fact that you are eligible to win only if you spend 50,000 rubles [approx. 725 euros according to exchange rates on September 9, 2017] or more in purchases using the card between August 1 and September 15.
According to the Rambler news website, the average monthly salary in Moscow during the second quarter of 2017 was 49,900 rubles.
On April 21, 2017, popular Petersburg news website Fontanka.ru, citing Rosstat as its source, published a brief item stating the average monthly salary in Petersburg in February 2017 was 51,024 rubles [sic].
I won’t bother citing average monthly salaries in Russia’s eighty-one other regions. They would be higher only in the handful of regions where oil and gas is produced, and much lower in most regions that do not produce oil and gas. Most people in those regions live in what would be regarded as abject poverty in the west.
So, even in the so-called two capitals of Moscow and Petersburg, the actually nonexistent average inhabitant would have to blow an entire month’s wages buying things with a card she probably cannot afford to have in the first place in order to have a slim chance to win the promotion and see The Rolling Stones in Paris.
This still begs the question of whether The Rolling Stones, a highly profitable company that, at least until 2007 (see above), paid its bare minimum of taxes in the Netherlands, can do business with a Russian bank on the US-EU sanctions list.
How the Western High-Speed Diameter Has Changed Petersburg’s Look Kanoner
August 15, 2016
The central section of the ZSD (Western High-Speed Diameter) has almost been completed and looks as it will for years to come. Petersburgers are getting used to how the tollway’s tall bridges have altered familiar cityscapes.
Construction of the ZSD’s central portion was launched in 2013. By that time, the entire southern segment from the Ring Road to the Yekaterinagofka River had been opened to traffic, and a little while later, the ribbon was cut on the northern segment, which runs from Primorsky Prospect to the Scandinavian Highway. While the city built the southern and northern segments in the guise of Western High-Speed Diameter JSC, the most complicated section has been entrusted to Northern Capital Thoroughfare, Ltd., which is linked to VTB Bank and Gazprombank.
The length of the central portion is around 12 kilometers. It runs from the Yekateringofka River to Primorsky Prospect. The segment mostly consists of a series of bridges crossing the Neva Bay on high piers. It was designed by Stroyproyekt Institute JSC. The crossings over Petersburg’s two main fairways—the Petrine Fairway (in the mouth of the Malaya Neva River), and the Ship Fairway (in the mouth of the Neva River)—were built higher. The ZSD reaches its highest point when it passes over Kanonersky Island and the Sea Channel.
The height of the cable bridge across the Ship Fairway is 35 meters. The crossing is noteworthy for its inclined pylons. According to designers, they are supposed to resemble the drawbridges in Petersburg’s historic center.
The cable bridge over the Petrine Fairway reaches a height of 25 meters. However, two of its pylons have risen to a height of 125 meters, which is slightly higher than the spire of the Peter and Paul Cathedral. In recent years, the cathedral has rapidly been losing its status as the city’s visual centerpiece. The tall pencil-like pylons can now be easily seen from the Islands.
The bridge crosses the Elagin Fairway at the mouth of the Bolshaya Nevka River. The bridge is situated at a height of sixteen meters, but that has sufficed to wipe out one of the oldest views of the Gulf of Finland, the view that once opened from the spit of Elagin Island. Whereas previously you could catch a glimpse of Kronstadt from the Central Park of Culture and Rest (TsPKiO) on a sunny day, you now must admire the highway.
This video provides a bird’s-eye view of construction of the ZSD over the Bolshaya Nevka River and the nearby Zenit Arena football stadium, on the spit of Krestovsky Island. Posted on YouTube by Alexander Parkhomenko on April 11, 2016, it was, apparently, filmed by a drone on October 18, 2015.
But as it crosses the Sea Channel, the bridge has come to tower over an entire island, Kanonersky. Its metal girders hang right over the island’s late-Soviet residential high-rises. Some of the buildings will have to be resettled, but no buildings have been demolished yet and, most likely, none will be.
This stretch of the ZSD is the highest, because the main water route to the Neva (i.e., the one with the deepest fairway) runs through this part of town. The height of the span is 52 meters. Initially, it was planned to be slightly higher, 55 meters. It was lowered “to mitigate the highway’s longitudinal profile in order to ensure traffic safety on the approaches to the highest portion of the ZSD.”
In addition to the bridge, the face of the city has been impacted by another engineering decision made by the ZSD’s designers. As it passes the western edges of Vasilyevsky Island and the Island of the Decembrists, the road has been laid along the bottom of a ditch dug into the ground. Moreover, the road bed is essentially situated where ten years ago the waves of the Gulf of Finland washed the shoreline.
A tunnel was built under the mouth of the Smolenka River to construct this segment of the highway. It was built using the cut-and-cover method. Due to this fact, the Smolenka flowed into the gulf via two channels. While the tunnel was under construction, they were closed in turn to drain the water away. During the first phase, the tunnel was dug under the southern channel; during the second phase, under the northern channel.
The reclaimed lands to the west of the ZSD have been undergoing vigorous housing development, but they are cut off from main part of Vasilyevsky Island by the ZSD itself. The only link is Michmanskaya Street, which runs over the highway via an overpass, which was built before construction on the ZSD had begun. To improve transportation accessibility over the highway, two more bridges have been erected in the vicinity of Europe Square. For the time being, however, like the entire ZSD, they are fenced off and closed not only to traffic but also to pedestrians.
Under the investment agreement, the central section of the ZSD must be delivered this year. In the wee hours of August 9, a demonstration took place that involved securing the locking section of the road bed for the cable bridge over the Ship Fairway. Next, the final guy lines have to be adjusted and tightened, and the road bed must be asphalted.
According to the most recent statements by Petersburg city hall officials, the entire highway is scheduled to be open to traffic in November.
Translated by the Russian Reader. Photos by Dmitry Ratnikov, except where noted.
“Clouds Rose over the City,” from the film The Man with the Gun (1938), as sung by Mark Bernes:
Clouds rose over the city,
The smell of storm was in the air.
In faraway Narvskaya Zastava
Walked a young lad.
Ahead of me is a long, long road. Come out, my dear, and say goodbye. We’ll say our farewells in the door. And you wish me luck on my way.