Moscow press review for February 11, 2014
MOSCOW. Feb 11 (Interfax) - The following is a digest of Moscow newspapers published on February 11. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The attempt by regions in the North Caucasus Federal District to give a new push to development of business and industry with federal help, made in the fall under the leadership of Deputy Prime Minister Alexander Khloponin, has essentially failed. The Russian government confined itself to formal recommendations and did not even ask investors to expand operations in the troubled region (Kommersant, p. 1).
There are only 79 genuine concessions in all of Russia, in which the participants have invested slightly more than 300 billion rubles, the Center for Development of Public-Private Partnership has found. However, there are far fewer well-structured projects and current concessions often amount to veiled privatization, one critic said. Fewer than 10% of concession projects have been completed (Vedomosti, p. 4).
Big Russian companies unhappy with initiatives to expand minority shareholder rights have won a reprieve. It was decided at a meeting with Prime Minister Dmitry Medvedev on Monday that only "framework provisions" for tougher criteria for affiliation will be stipulated in the Civil Code. This issue will be spelled out later in a separate bill, but there is still no timetable for passing the amendments (Kommersant, p. 7).
OIL & GAS
Gazprom might complete its move to St. Petersburg by the end of 2015. The Russian gas giant is actively looking for office space and employees, as not everyone is willing to leave Moscow. The company's new headquarters, the 86-storey Lakhta Center, is supposed to be completed by the end of 2018 (Vedomosti, p. 1).
Interview: Leonid Lebedev, Senator and Owner of Sintez Group (Vedomosti, p. 8).
METALS & MINING
The owner of Novolipetsk Steel (NLMK), Vladimir Lisin believes the bankruptcy of some Russian metals companies is inevitable. He did not name them, but analysts believe heavily indebted Mechel and UC Rusal are at risk. NLMK itself plans to focus on efficiency and invest only $1.6 billion in new projects over the next four years, 80% of which will go into expanding iron ore production at Stoilensky GOK (Vedomosti, pp. 12, 13; Kommersant, p. 9).
BANKING, FINANCE & INSURANCE
A London court on Monday found a former manager of Otkritie Financial Corporation's international debt trading division and his accomplices guilty of committing fraud with bonuses and securities, marking the first time a Russian company has managed to win such a ruling against a former employee. Otkritie has managed to recover some of the stolen $175 million (Kommersant, p. 8; Vedomosti, p. 10).
The Central Bank's crack down on the banking market has changed Russians' saving habits. They have become less likely to keep all their money in one bank in hopes of a bigger return and more likely to look at a bank's reliability rather than the interest rate it offers, a report from the Deposit Insurance Agency shows. The DIA expects retail deposits to grow 17-19% to 19.8 trillion-20.2 trillion rubles in 2014 (Kommersant, p. 7; Vedomosti, p. 15).
The number of Russian banks with capital of less than 300 million rubles has fallen by half in the past two years, to 179. They account for just 0.4% of the total assets of the Russian banking system. Not all of them will manage to meet the new capital threshold by the deadline of January 1, 2015, Fitch and S&P believe (Vedomosti, p. 14).
RETAIL & CONSUMER MARKET
Russia's regions have gained the right to independently buy drugs for treating HIV (AIDS), and prices for them have begun to differ several-fold, the Community of People Living with HIV has found. Prices in the first purchases of HIV drugs in regional tenders were already 20-30% higher than when the drugs were purchased centrally by the federal Health Ministry (Vedomosti, p. 10).
REAL ESTATE & CONSTRUCTION
Arkady Rotenberg, whose fortune Forbes estimates at $3.3 billion, has formed a new real estate development company, RG-Development, in partnership with Ruslan Goryukhin, who heads Rotenberg's Stroygazmontazh, a contractor for Gazprom. The new company plans to buy up properties at various stages of completion in Moscow and the surrounding region (Kommersant, p. 7).
TRANSPORTATION
Russian Railways is offering to sell a 75% stake in its passenger car repair subsidiary Vagonremmash (VRM), for which it hopes to earn at least 2.5 billion rubles. But there are no bidders yet. Analysts attribute the lack of interest in VRM not only to the high price, but also the gloomy outlook for this business (Kommersant, p. 9).
AUTOMOTIVE & ENGINEERING
The continuing slump on the Russian automobile market has been hardest on Avtovaz, whose sales tumbled 21% in January. Russia's biggest carmaker has seen its market share shrink to 15% from nearly 27% in 2010. Market players attribute this to seasonality, weaker demand for entry models and fairly high prices (Kommersant, p. 1).
Exports of new cars from Russia will soar seven-fold to 1 million annually in the next few years as global automakers expand production capacity in the country and neighboring CIS markets grow, according to a KPMG survey of market players. Analysts and officials believe this projection is quite realistic (Vedomosti, p. 11).