The war between the Central Bank and the banker Vadim Belyaev has acquired a positional character. And this strategy, apparently, suits both the former and current owners of the Otkritie banking group. After all, the state still pays the bills.
Write off debts
The financial results of 2021 revealed that the Otkritie group, which is owned by the Central Bank, started to cancel debts that it considered impossible to repay. This is even evident from a quick look at Otkritie's balance sheet, which showed a decrease in bad debts on loans given to non-government financial organizations. The amount of overdue debt cancelled by the Central Bank was 45 billion rubles, and the balances in this account dropped by 77.7% in December 2021.
A very interesting trend emerged. The decision to cancel debts was made by the bankers currently managing Otkritie, while the political decision was in the hands of the Central Bank leadership. All the expenses fell on the Russian population as a result of a federal law enacted in 2017, which allowed the Bank of Russia to restructure credit institutions by providing direct loans to an investor through the Banking Sector Consolidation Fund (FCBS), managed by the Central Bank. Although the law was of a general nature, it was specifically adopted for the reorganization of Otkritie.
From a macroeconomic perspective, this method of direct lending by the Central Bank implies money issuance, as the Central Bank does not have any other money sources. However, in this case, the actual decision-making and the right to use the benefits remained with the FCBS, covered by the Central Bank – an organization known for its independence from state power. The bankers managed to carry out the well-known joke: "Give me a meter of the state border, and I will become a billionaire", effectively gaining the right to issue money.
Real investor
It was expected that the restructuring of FC Otkritie would take 6 to 8 months, and then the revamped bank would be sold to a genuine investor, whose money would be written off by the Central Bank. By 2021, 20% of the bank was being prepared for sale. However, complications arose. In June 2020, the Central Bank postponed the sale of Otkritie to spring 2022, picking the most opportune moment for such a sale. It is currently difficult to even imagine a lineup of investors willing to purchase a large Russian bank closely linked with the state. Therefore, the money spent on the rescue will likely remain a gift to Mikhail Zadornov, who leads Otkritie, and Elvira Nabiullina, who supervises the entire operation. Therefore, the "real investor" of Otkritie became the Russian population, which bore the inflationary consequences of the money issuance.
At the place of residence
The former owner of Otkritie, Vadim Belyaev, also placed his bet on the long-term plan. And, as it turns out, he was not mistaken. It all began in August 2020, when Otkritie and the troubled bank Trust filed a lawsuit against Belyaev for billions of dollars. However, they filed the lawsuit in the Supreme Court of the State of New York – Belyaev's current place of residence. After a year, instead of reviewing the old lawsuit, a new one was filed against Belyaev. This time, it was filed in Moscow by the Moscow Arbitration Court on behalf of the bank Trust, which had accumulated all the significant (and bad) debts of Russian banks on its balance sheet.
“Trust” explained the filing of a lawsuit in a new place by the desire of Vadim Belyaev himself. Belyaev’s desire is quite understandable and understandable – the ex-banker is trying by all means to gain time. And the Moscow jurisdiction made it possible not to recognize the court decision later, explaining it as bias and pressure. In the current conditions, the temporary loss turned out to be a complete capitulation of the Central Bank. Now Vadim Belyaev, even with all his will, will not be able to participate in court proceedings without the risk of being sanctioned.
Vadim Belyaev, of course, took a big risk. As early as February 21, he could not remove the arrest from his assets in the amount of 156.6 billion rubles. But the situation has changed. Now it will not be difficult to take these assets if they are located in the West. But even if they are in Russia, the Central Bank, Otkritie and Trust, which are under sanctions, are clearly not in the mood for litigation now. Which significantly improves the position of Vadim Belyaev in this game.
