Moscow press review for February 27, 2014
MOSCOW. Feb 27 (Interfax) - The following is a digest of Moscow newspapers published on February 27. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Two senior officers of the Russian Interior Ministry's economic security and anti-corruption division who have overseen many high-profile cases in recent years were arrested Wednesday on charges stemming from an operation involving a Federal Security Service (FSB) agent. The arrested men claim to be victims of an FSB conspiracy. With six senior employees from their division already behind bars and its work essentially paralysed, corrupt officials, they say, can sleep peacefully (Kommersant, p. 1).
The weakening of the ruble and continued high prices for oil will bring Russia's federal budget an extra 760 billion rubles in 2014, the Finance Ministry said. This is double the targeted deficit, but the ministry plans to save the extra revenue in the Reserve Fund. The ministry is also proposing to reduce the minimum balance on the unified Treasury account from 600 billion rubles to 200 billion rubles and channel the difference into the economy (Kommersant, p. 2).
The authorities have decided how to get as many of their representatives into the Moscow City Duma as possible - by sponsoring two candidates in each district: from United Russia and independents who are locally popular. For now, the so-called systemic opposition is not finding a place in the city legislature (Vedomosti, p. 1).
The Investigative Committee is petitioning to put opposition leader Alexei Navalny under house arrest, accusing him of violating the terms of his release on his own recognisance. This could hurt the position of Navalny's supporters in elections to the Moscow City Duma (Vedomosti, p. 2).
Russia's Sports Ministry is asking the government to forego price audits of projects to build stadiums for the 2018 World Cup championships, arguing that this could disrupt construction schedules. The federal budget will have to provide 104.4 billion rubles for stadium projects, according to current estimates, but the costs of the Sochi Olympics quintupled compared to initial projections (Vedomosti, p. 4).
Responding to the pro-Russian sentiment in Crimea, the Russian government has hurriedly revived a list of potential investment projects in the region that was prepared as part of general proposals for Ukraine before the change of power in the country. The Chamber of Commerce has been asked to find investors in Russia prepared to spend over $5 billion in Crimea, but businesses are not prepared to consider such investment until the situation in Ukraine stabilizes (Kommersant, p. 6).
METALS & MINING
Gazprombank, which helped VSMPO-Avisma management gain control of the Russian titanium giant 18 months ago, is divesting its 15% interest in the company. As a result, Mikhail Shelkov and Mikhail Voyevodin are consolidating about 65% of VSMPO-Avisma in a Sberbank-financed deal worth over 14 billion rubles (Kommersant, p. 7).
BANKING, FINANCE & INSURANCE
Russia is moving to strengthen its foothold in Angola. VTB and Rostec are acquiring about 20% of the local Banco Privado Atlantico. For the state bank, which intends to divest its interest in Atlantico in three years, the alliance with Rostec is an opportunity to capitalize its lacklustre project in Angola, VTB Africa. The state corporation's motives are primarily political (Kommersant, p. 1).
The Russian ruble fell to a five-year low against the U.S. dollar Wednesday and a new record low against the euro, as tax payments failed to support the currency amid the growing political and economic instability in neighboring Ukraine. The dollar rose above 36 rubles for the first time since March 2009, while the euro climbed as high as 49.50 rubles (Kommersant, p. 8; Vedomosti, p. 14).
Russian government officials are prepared to approve insurers' proposal to introduce differentiated rates for mandatory vehicle insurance depending on the policy limit. But they have not yet decided whether to raise the base price of policies, as demanded by insurance companies. The Central Bank will assess the rationale for raising them by April (Vedomosti, p. 10).
The Moscow International Commodities and Energy Exchange still hopes to reinstate its license and has again filed the necessary paperwork with the Central Bank. However, in the two months that the exchange has been forced to stand idle, all of its clients have already gone to other trading floors (Kommersant, p. 8).
Declining efficiency is forcing Russian banks to cut spending on staff. The latest bank to cut jobs will be Uralsib, which has decided to reduce its payroll by 15%. The bank hopes to accomplish this with "mild" downsizing and management of staff (Vedomosti, p. 11).
RETAIL & CONSUMER MARKET
Spending on traditional advertising in Russia grew 10% to 327.8 billion rubles in 2013, ACAR reported. This was the slowest growth since crisis-hit 2009. This year the situation could be exacerbated by the ruble's depreciation. Vi, the biggest seller of TV advertising in Russia, forecasts that the country's advertising market will grow by just 3-4% in 2014, which is even less than the official inflation forecast (Kommersant, p. 1; Vedomosti, p. 11).
Russian flag carrier Aeroflot is selling off foreign real estate inherited from its Soviet predecessor, including offices, apartments and hotels. The airline could earn about $40 million just from the sale of a hotel in Japan (Vedomosti, p. 10).
Interview: Willy Bogner, CEO of Willy Bogner GmbH (Vedomosti, p. 8).