Russia 110308 Basic Political Developments
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- Kernel Eyes Purchase of Russian Oil Producer, Port, Rp.pl Says
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Grain MarketsEventually, Russia will seek to revive its ambition to be a dominant supplier in global grain markets, according to Eurasia Group, which advises companies and government agencies. President Dmitry Medvedev created state trader United Grain Co. in 2009 to boost Russia’s exports to as much as 50 million tons a year by about 2025, from about 20 million tons before the ban. Russia is seeking a 20 percent share of the global grain trade, Agriculture Minister Elena Skrynnik said in June 2009. Russia was the world’s second-largest wheat exporter in 2009-10, the IGC estimates, shipping 18.8 million tons, behind the U.S. which exported 23.9 million tons. “The end of elections next year will mean a shift in focus for the policy makers,” said Eurasia Group’s Ustinova. “The pressure to control inflation and food prices will ease and government will prioritize long-term development. Moscow’s goal of becoming a grain superpower is intact.” To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; To contact the reporters on this story: Marina Sysoyeva in Moscow at msysoyeva@bloomberg.net
Bombardier Transportation Acquires Stake in Russian Railways Subsidiaryhttp://logisticsweek.com/news/2011/03/bombardier-transportation-acquires-stake-in-russian-railways-subsidiary/ By NewsDesk Following the signing of a share purchase agreement in Moscow on December 13, 2010, Bombardier is pleased to confirm today that BT Signaling B.V. purchased a stake in the signalling equipment manufacturer United Electrical Engineering Plants, known as Elteza. BT Signaling B.V. purchased a 25 per cent stake in Elteza, a subsidiary of Russian Railways (RZD). Subject to further approval, BT Signaling B.V. could increase its stake to up to 50 per cent. RZD will remain the majority shareholder. Elteza is Russia’s largest signalling equipment producer with more than 3,000 employees across seven manufacturing sites. The company focuses on the design, development and production of rail signalling equipment and automatic and remote train control systems which have been delivered in Russia, the Commonwealth of Independent States (CIS) and the Baltic states. The new partnership will be one of the first successful examples of the privatisation of a Russian Railways’ subsidiary and part of the modernization strategy of RZD. Already strong partners in the signalling sector, Bombardier and RZD have a well established engineering joint venture, Bombardier Transportation (Signal) Ltd., in operation in Moscow since 1996. This partnership has worked in close cooperation with Elteza to equip over 100 Russian stations with BOMBARDIER EBI Lock 950 computer-based interlocking (CBI) technology. This new agreement leads to the creation of an Elteza department dedicated to new technologies and focusing on the manufacture of products including EBI Lock 950 as well as the latest generation of wayside products. Bombardier Transportation’s Rail Control Solutions portfolio covers the complete range of BOMBARDIER CITYFLO mass transit solutions, from manual to fully automatic systems, as well as communication-based systems. It also provides BOMBARDIER INTERFLO mainline solutions, from conventional systems to ERTMS level 2 systems. Bombardier solutions encompass a broad portfolio of wayside and onboard products. Source: Bombardier
Kernel Holding SA (KER), the Ukrainian exporter of sunflower oil, is close to making a Russian acquisition that should be completed in the first half of this year, Rzeczpospolita reported on its Rp.pl website, quoting Patrick Conrad, Kernel’s director of investor relations. Kernel plans to buy a Russian oilseed processor for less than the 200 million zloty ($70.2 million) it paid for Allseeds Group in 2010, the newspaper reported, without saying where it got the information. The company also wants to buy another port in Ukraine within the next several months to add to its existing terminals in Nikolaev and Ilchevsk, at a cost of about $130 million, Rp.pl cited Conrad as saying. To contact the editor responsible for this story: David McQuaid at dmcquaid1@bloomberg.net
http://www.bne.eu/storyf2554/Russian_in_and_now_rushing_out
Ben Aris in Moscow March 8, 2011 The gold rush into Russia's retail banking market has come to an end after Barclays Bank announced it plans to sell its high street bank, while reports say that HSBC is also looking to exit the country. HSBC and Barclays Bank would be just two of the most high profile foreign banks that have given up on Russia. With a population of more than 142m people, but a very low banking penetration – only one in four Russians have any sort of bank account at all, according to some surveys – the retail banking business was doubling in size every two years prior to the global economic crisis, leading to a stampede by international banks into the market from about 2004, which sent prices for banking acquisitions through the roof. Barclays paid top dollar for Expobank, based in Russia's Far East, in March 2008 for $745m (€531m) at the very top of the banking boom, valuing the bank at a whopping 3x book value. Over the next few years, Barclays rapidly rolled out a retail offering across the country. But in the middle of February, the bank announced it was seeking a buyer for its retail business and would focus solely on investment banking. "The people in London realize that they paid stupid money for these banks. There was a rush into Eastern Europe, but now they are willing to write off a big loss. It seems to me to be a very emotional decision," says Sergei Nazarov, head of Renaissance Asset Managers financial institutions fund. A week later, HSBC was also reportedly pulling the plug on its retail operations just two years after announcing ambitious growth plans, although the bank is insisting it "remains committed" to its business in Russia. "No decision has been made to exit one of our businesses in Russia," the bank said in an e-mailed statement on February 21. HSBC doubled its Russian unit's capitalization in the midst of the crisis and former CEO Stuart Lawson said the bank was, "targeting high net worth individuals as the cornerstone of its growth strategy." The bank launched what it called a "world-class retail offering" in June 2009, opening four branches in Moscow and one in St Petersburg as the starting point in an ambitious $200m expansion plan. However, a year later, Lawson left the company in what one banking source at HSBC described as an "acrimonious disagreement over strategy." The possible exit of the two British banks comes after a string of smaller banks have given up on the Russian market. Holland's Rabobank surrendered its Russian retail license last year. Spain's Santander sold its Russian business to local player Orient Express in December. And both Belgium's KBC Group and Swedbank, the biggest Baltic lender, have also cut back their Russian operations in the last year, citing stiff competition as the cause.
The reasons for the whittling down of the number of foreign players are multiple. The crisis has obviously depressed earnings and saw the number of non-performing loans soar. At the same time, almost all of Russia's banks slashed interest rates as the crisis receded in an effort to rebuild their deposit bases, reducing the profit margins for everyone in the sector. Finally, the relentless expansion of the two state-owned giants of the sector – Sberbank and VTB Bank – means competition has become increasingly tough. Founded in the Soviet era, Sberbank is a monster with about 20,000 branches nationwide and accounts for 27% of Russian banking assets and 26% of banking capital. VTB's retail business, VTB-24, has more than 530 offices. Most of the bigger private retail banks have at best a few hundred branches, mostly concentrated in Russia's biggest cities. "Shrinking margins and growing competition means the days of easy money are over," says Roland Nash, chief investment officer of Verno Capital. "Those banks that have not built up sufficient bulk in the last few years are going to be pushed of the Russian market or bought up by the stronger players." However, a few foreign banks have succeed in gaining a toehold in Russia; foreign banks cumulatively account for just over a quarter of the sector's total assets as of January this year. France's Societe Generale has probably been the most successful after it bought a string of banks as well as launching a greenfield retail operation of its own over the last decade. The bank has almost 3m clients and its consumer unit posted a €13m profit in the fourth quarter of 2010, following a loss of €58m a year earlier, according to the bank's website. The bank predicts Russia will be the biggest contributor to it international retail earnings by 2015.
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OAO Lukoil and OAO Gazprom have signed a gas supply agreement in Moscow, under which gas will be supplied from Lukoil's fields in the Bolshekhetskaya Depression, the Yamalo-Nenets Autonomous District and from the north of the Caspian Sea.