MOSCOW, July 2 (RIA Novosti) Moscow expects no sensations at Bush-Putin talks/Societe Generale to buy stake in Rosbank ahead of schedule/Gazprom to make separate company from pipeline subsidiary/"Popular" IPOs shield favorite state-controlled companies/State corporation heads listed among Russian millionaires
Vremya Novostei
Moscow expects no sensations at Bush-Putin talks
The Kremlin and the White House are obviously displeased with each other. The Kremlin might be even more annoyed, as it expected its partner to be more willing to cooperate.
Regardless of how many mutual concessions have been made, Russian authorities still believe the Bush administration could have done much more to form an effective strategic partnership and consolidate trust.
The Americans often "forget" to make small cooperative efforts, but never think twice before planning large and artful schemes.
"George Bush is visiting Eastern Europe. But why on Earth does he choose Georgia and the Baltics of all the East European nations?" a high-ranking Kremlin official wonders. "Isn't it clear that Moscow views it almost as a hostile action?"
The situation with the notorious Jackson-Vanik Amendment is an indication here, too. The Bush administration has apparently had no time over its seven years in office to discuss it with Congress.
The issue will probably be inherited by the next U.S. president, a symbol of continuity in bilateral relations.
Officials in Moscow are puzzled by the way the U.S. bureaucratic machine works: hardly have they agreed on something with the president when the next day Dick Cheney or Condoleezza Rice make statements that do not exactly go against what their boss said, but do not quite reiterate what he said, either.
In that sense, Moscow is behaving more honestly, as it never promised to stop nuclear cooperation with Iran.
The issues to be discussed at the top-level talks are on the surface -- U.S. plans to expand its missile defense system to Europe, Russia's response and proposals, the future of the CFE treaty, the Middle East, Iran, North Korea, and Kosovo.
But Moscow expects a "philosophical" discussion of the vision of future bilateral relations as well.
The talks are unlikely to bring any political sensations. It would be good if the two presidents agreed on the kinds of radars needed to keep track of non-existent Iranian missiles and stopped agitating the international community.
As for the rest, let them have a "philosophical discussion."
Kommersant
Societe Generale to buy stake in Rosbank ahead of schedule
The board of the French bank Societe Generale decided to buy a 30% controlling stake (plus two shares), valued at $2.3 billion, in Rosbank, Russia's second-largest retail bank.
Given previous deals, the 5.9-point capital ratio between the bank's capital and its risk-weighted assets will dwindle to 4.8 points, and will highlight the most expensive purchase on the national banking market to date.
As of April 1, 2007, Rosbank was the 10th-largest national bank in terms of net assets totaling 256.7 billion rubles ($9.9 billion) and ranked 13th in terms of equity capital (24.9 billion rubles, or $964.7 million).
Until now, Interros, a private investment company, was the bank's beneficiary owner with 69.9%, whereas Societe Generale had a 20% stake (minus one share). Top Rosbank executives own all remaining shares.
Rosbank has 600 offices, including 68 affiliates and 58 branches in Moscow, the second largest chain after Sberbank.
Mikhail Matovnikov, general director of the Center for Economic Analysis, said no one has ever paid so much for a Russian bank before, and that Societe Generale primarily wanted to gain access to Rosbank affiliates.
Until now, the purchase of an 85.7% stake in Russia's Orgresbank by Nordea Bank Finland for $313.7 million (capital ratio, 3.8 points) in November 2006 and the purchase of Absolut Bank, a second-tier mortgage bank in Russia, by Belgian KBC Group this April were the most expensive deals involving national banks.
KBC paid $983 million for a 95% stake in Absolut Bank (capital ratio, 3.7 points).
Societe Generale, which could have put off the purchase until late 2008, took note of the developing Russian banking market and Rosbank's performance, and decided to go ahead with the deal.
Yulia Arkhipova, senior analyst with RusRating agency, said Rosbank recently had problems promoting its products on the retail market.
Market players said Interros would be expected to exchange its 40% Rosbank stake for Societe Generale shares.
A source in Interros said the issue would only be discussed after the Societe Generale-Rosbank deal had gone through, which is due to be closed this fall.
Business & Financial Markets
Gazprom to make separate company from pipeline subsidiary
Energy giant Gazprom will consider turning its gas transportation subsidiary into a separate company and then holding a subsequent IPO.
Market players like the idea, saying that it will attract investment and simplify independent gas suppliers' access to the pipeline system.
Alexander Medvedev, deputy CEO of Gazprom and head of its export division, Gazprom Export, said the concern was looking into recommendations from experts to focus on transportation and create the pipeline subsidiary.
Gazprom will take time to carefully consider the idea, according to First Deputy Prime Minister Dmitry Medvedev, who is also board chairman of Gazprom.
He said the idea could be implemented in the future, provided "the focus is on infrastructure."
According to the Russian Audit Chamber, the depreciation of Gazprom's gas transportation system reached 57.7% at the start of 2000. Spending on pipelines maintenance has always been Gazprom's main argument for limiting pipeline access given to independent producers.
Gazprom recently promised to increase access in return for investment in pipeline modernization.
By 2010, the annual output of independent gas producers could reach 100-150 billion cubic meters, further complicating access to the pipeline system.
Artyom Konchin, an analyst with the Aton brokerage, said: "The market would be happy if the pipeline subsidiary is created." According to him, this would increase Gazprom's transparency to 100%.
"The government could use the scheme of [oil pipeline monopoly] Transneft to float the shares of Gazprom's transportation subsidiary: float preference shares and keep the voting stock," Konchin said.
Timur Khairullin, an analyst with the Antanta Capital investment company, said the gas pipeline company could cost tens of billions of dollars.
"An IPO would allow Gazprom to raise a substantial sum, whereas linking the [growing] output of independent producers to their investment in the pipeline system would guarantee a stable income," he said.
In his words, Gazprom's monopoly over the gas transportation system provides the gas concern with powers it might not want to give up now.
Vedomosti
"Popular" IPOs shield favorite state-controlled companies
Some shareholders of state-owned oil company Rosneft, the first to hold a "popular" IPO, said they were unhappy with the size of dividends at a recent meeting.
However, Rosneft should not be blamed, as its management promised to spend over 10% of net profits on dividends, and the company spent 13.3% late last year instead.
The desire of the state and local companies to sell shares to ordinary Russians, rather than corporate dividend policies, is the most unusual aspect.
The price of Rosneft shares traded on the Moscow Inter-Bank Currency Exchange (MICEX) increased by just 0.4%; and the company offers low dividends.
Rosneft president Sergei Bogdanchikov said the corporate dividend policy would not change until 2010-2011; consequently, dividends are not expected to increase.
Today, there are over 150,000 private individuals among Rosneft shareholders. A poll of investors, conducted by the Public Opinion Foundation and creative communications agency Salvador D. immediately after holding IPO in 2006, showed most shareholders were quite old and did not have sufficient knowledge of stock market operations.
The so-called business group totals only 27% (financiers, 11% and businessmen, 9%, respectively).
Companies like pensioners as shareholders, who account for 28% of the total, because they just make noise at meetings. However, "popular" IPOs may create problems for the state, which attracts ordinary people to buy shares.
Although Rosneft shares do not seem to be an attractive financial instrument, due to inflation, they are not being sold en masse because investors are counting on the state for support.
In all, 59% of the respondents said they viewed Rosneft's status as a state-owned company as the most important aspect.
However, 33% of private shareholders said nobody would protect their interests, and another 20% said they hoped Russian President Vladimir Putin would protect them.
Many analysts said budgetary allocations could be spent to support Rosneft, Sberbank, the commercial savings bank, Vneshtorgbank, and energy giant Gazprom.
That factor probably induced President Putin to propose to invest state assets into the stock market.
And it appears that the strategy of "popular" IPOs is aimed at shielding privileged companies, rather than involving the people in economic activities.
Novye Izvestia
State corporation heads listed among Russian millionaires
Russia ranks fourth in terms of the growth of U.S.-dollar millionaires. According to World Wealth Report 2007, there are 119,000 such millionaires in Russia today, 15,000 more than last year.
Experts have said the rich community is coming mainly from government officials, which is expanding the already enormous gap between the rich and the poor.
"Few new people appear among the wealthiest businessmen these days. Moreover, hundreds of large entrepreneurs have left Russia in the past few years," said Olga Kryshtanovskaya, head of the Elite Studies Center at the Sociology Institute, Russian Academy of Sciences.
"The new Russian millionaires are not business people, they are state officials who today control huge capital. All 70 companies in the sphere of oil and gas production, defense industry, nuclear power generation, and transport, which have strategic priority, are state run. No self-made men like Bill Gates have emerged in Russia lately," she said.
Businessmen agree with this assessment. "New millionaires come from state corporations, not from booming businesses, small or medium-sized," said Vladislav Korochkin, vice president of the Opora Rossii association of small and medium-sized businesses.
"True, oil revenues grow in the more developed regions, and demand for various services is on the rise there. But the flow of oil dollars has a dark side, too. When businessmen begin making easy money, they decide it is easier to bribe a state official than to optimize their own business. What we are witnessing is growth without development," he said.
Last year, Russia's Economic Development and Trade Ministry forecasted a growth in the middle class in Russia to 50%-55% of the population.
That forecast has been recently adjusted. Government representatives said at the recent economic forum in St. Petersburg that the middle class would only account for 50% of Russia's population in 2020.
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