In a Moscow Times op-ed, Kim Iskyan, a Moscow business consultant and former hedge fund manager, says he believes President-elect Vladimir Putin will consolidate the state’s controlling interests in a number of Russian banks – and not divest as current President Dmitry Medvedev has predicted.
Last week Medvedev gave signals that the state would relinquish its controlling stakes in Sberbank and VTB, which would signal a major policy shift. But Iskyan’s not buying it:
[I]t’s not going to happen. Everything that Medvedev says has the half-life – and credibility – of a snowflake in May. More important, President-elect Vladimir Putin is more likely to ride a candy apple-red tricycle in Red Square clad in a pink tutu than he is to allow his government to relinquish control over state banks. […] Since 2001 Sberbank (57.6 percent held by the state) and VTB (75.5 percent state-held) have [been] reaping the benefits of sleeping with the state – including too-big-to-fail status, political favoritism, access to cheap capital and a work-with-us-or-work-with-no-one approach to garnering business.
Iskyan says the state’s large role in banking hurts economic competitiveness and stifles the economy as a whole.
Private capital is driven away, with state banks gaining access capital at much lower interest rates.
Read more of Iskyan’s analysis here.
