The Oligarch Rescue Plan
The Financial Times is running a story tonight about an $87 billion bailout plan by the Russian government to ease the fall of some of the country’s most wealthy and overleveraged men – allowing the government enormous power to determine the winners and losers of the financial crisis. It occurs to me that there is only one (former) oligarch who needs rescuing – and he is the only one whose rescue is proven to boost the stock markets. Liquidity may be short in Russia this month, but irony is not. More details from the report after the cut.
“How the government and the state-controlled banks allocate liquidity could create winners and losers on a scale not seen in Russia perhaps since the 1998 crisis,” said David Aserkoff, chief strategist at Renaissance Capital, a Moscow investment bank.Some of the country’s biggest names are lining up for $50bn in refinancing of foreign loans that VEB, the state development bank, will disburse. The rescue package includes a further $36.5bn in five-year loans to the biggest state-controlled banks.Gazprom, the world’s biggest gas producer, is seeking $1bn in loans from VEB, according to a company official. Lukoil, Russia’s second biggest oil producer, said it was seeking between $2bn and $5bn for investment projects.UC Rusal, the aluminium giant owned by Oleg Deripaska, who has been forced to divest stakes in foreign holdings, said it too was seeking VEB financing but declined to disclose details. VTB, Moscow’s second biggest bank, said it had applied for VEB financing to help pay off $2.3bn in foreign loans due this year.Not everyone will get funding; Vladimir Dmitriev, chairman of VEB, said the bank had already received applications for more than the $50bn.Vladimir Putin, the prime minister, said this week VEB would disburse refinancing for foreign loans only to companies that worked in the real economy, had strategic importance and used the funds to finance acquisitions or investments in Russia.Analysts and businessmen said only the most well- connected tycoons were likely to win access to funding in a process that would not be transparent.They also warned that retailers, construction companies and some telecoms companies could be left out.“People who were on the Forbes list are really hard up,” said Alexander Lebedev, the Russian banking and airlines billionaire. He said the market collapse had wiped more than 50 per cent from the value of his paper holdings. “But there should be a transparent procedure and not just lending out funds to whoever is close,” he said.
