Moscow press review for November 27, 2014
MOSCOW. Nov 27 (Interfax) - The following is a digest of Moscow newspapers published on November 27. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Oil prices will probably remain at $80-$90 per barrel for some time and the Russian government needs to revise its budget for coming years based on a price of $80, Finance Minister Anton Siluanov said on Wednesday. The budget for 2015 assumes an oil price of $96. The budget will lose 1 trillion rubles in 2015 due to the deterioration of the external situation, slowdown of economic growth and decline of imports, the Finance Ministry estimates (Vedomosti, p. 4).
Russia's Central Bank, finance and economy ministries have brought their near-term inflation forecasts closer together. The Central Bank chief said inflation will slow in the second quarter of 2015. The Finance Ministry agrees, projecting inflation of up to 9.2% at the end of 2014, a peak in January and slowdown in the second quarter, and the economy ministry's projections are similar. All three essentially expect the carry-over effect of the exchange rate to run its course in coming weeks, and differ only on how producers will meet the New Year (Kommersant, p. 8).
OIL & GAS
Russian state oil major Rosneft is proposing to restrict the presence of dealers on the oil products exchange while increasing the number of major end consumers, arguing that this would reduce speculation and ensure the availability of fuel on the market. Exchange prices for fuel in Russia have been growing despite the drop in oil prices. An official at the competition regulator criticized the idea, arguing that dealers account for less than 3% of transactions and that consumers have a right to buy through brokers (Vedomosti, p. 12).
BANKING, FINANCE & INSURANCE
Russian private banks are now asking for money from the National Welfare Fund, government officials said. They might be allowed to convert subordinated loans they received from state lender VEB during the 2008-2009 crisis into subordinated loans directly from the NWF in order to boost their capital adequacy. In 2008-2009, VEB lent 404 billion rubles to 17 banks (Vedomosti, p. 1).
Interpol has issued a Red Notice alert to arrest Sergei Pugachev, the former Russian senator and owner of bankrupt Mezhprombank who is wanted in Russia for theft. Pugachev's fate will now in large part depend on what country he is found in, as different nations respond differently to Russian requests for arrest and extradition (Kommersant, p. 1).
Russia's parliament has approved amendments that will allow individuals to take an income tax deduction of up to 15,600 rubles per year for life insurance policies with terms upwards of five years as of January 2015. Industry strategists are betting on life insurance in the period to 2020, and life insurance companies are expected to become a powerful institutional investor (Kommersant, p. 8).
New Zealand has tacitly joined the financial sanctions against Russia. Local banks, like Australian ones, have closed the correspondent accounts of a number of Russian state banks hit by sanctions, including Gazprombank and VEB, forcing them to conduct client settlements in Australian and New Zealand dollars through intermediaries. Analysts attribute this to the concerns of bankers rather than the political will of New Zealand, as most local lenders are subsidiaries of Australian banks (Kommersant, p. 9).
Sberbank, Russia's largest lender saw its net profit tumble 27% to 71 billion rubles in the third quarter, the lowest figure since 2011, as provisions increased dramatically. The bank's return on capital dropped to 14.4%, the lowest level since the second quarter of 2010 and far below expectations. Sberbank does not expect the situation to improve before the end of this year (Vedomosti, p. 14; Kommersant, p. 10).
RETAIL & CONSUMER MARKET
Major discount food store chains in Russia are preparing additional bonuses and discounts for consumers in an effort to get them to shop more often and spend more. Pyaterochka, the country's second largest discount chain, is testing two bonus card pilot programs, while Dixy is testing a loyalty program it intends to roll out in 2015 (Vedomosti, p. 10).
REAL ESTATE & CONSTRUCTION
The Moscow Region government has made an unprecedented claim against SU-155, one of Russia's largest construction companies, alleging it owes over 1 billion rubles for fines and land lease payments. Officials are threatening to bring a bankruptcy lawsuit against the developer if the dispute is not settled by December 10. Developers say the situation in the sector is difficult, but not like the 2008 crisis that wiped out many in the industry. Residential real estate sales are still growing and builders' loans are mostly in rubles (Kommersant, p. 1).
VTB Capital, the investment banking division of Russian state lender VTB, has had to reconsider participation in a toll road construction project in which its partner is France's Vinci due to European Union sanctions. It has reduced its stake in Two Capitals Highway, which signed the concession agreement for the 76.8-billion-ruble project last week, to 49.5% from 60%. Vinci's stake remains 40%, and 10.5% has been acquired by a firm controlled by Ic Ictas, as Turkish contractor (Vedomosti, p. 11).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Gazprom Media might join the joint venture that Russia's national telecom operator Rostelecom and state TV and radio company VGTRK plan to form to develop their niche TV channels. It is prepared to contribute the Red Media group of 13 channels, acquired in June, to the joint business. Alternatively, Red Media could be sold to the new company rather than swapped for a stake (Kommersant, p. 9).
None of Russia's top five Internet service providers provide actual wired Internet speeds that live up to the data speeds claimed in their price plans, Comnews Research has found. Transtelecom had the highest ratio of actual to average claimed speed at 88% and national operator Rostelecom was second with 77%. Providers say the firm's conclusions are incorrect (Vedomosti, p. 11).
TRANSPORTATION & LOGISTICS
Russia's Federal Anti-Monopoly Service suspects that the Unified Transport Directorate, which provides ferry services across the Kerch Strait to Crimea, of inflating prices. Crimea's transport ministry believes an audit of UTD is long overdue and local retailers attribute high food prices in the region in part to the high cost of ferry services. But experts fear lowering prices could lead to technical problems, while sources attribute the situation to the local authorities' desire to independently run the operator, which now answers to the federal Transport Ministry (Kommersant, p. 1).
The Economic Development Ministry and freight shippers are recommending that Russian Railways (RZD) cut costs. The state might not have the money to finance the company's investment program in 2016-2017. The government is supposed to approve RZD's investment program of 414.1 billion rubles for 2015 on Thursday. The company plans to invest about another 1 trillion rubles in 2016-2017 (Vedomosti, p. 10).