EDITORIAL: Sberbank Vanishes


Sberbank Vanishes

We never cease to be amazed by Russia’s seemingly inexhaustible capacity to surprise us with and ever-expanding univere of horrifying bad news.

Earlier this week, Sberbank released its financial results for the fourth quarter of 2008. Why it took a bank until the second quarter of 2009 to do so is beyond us. Perhaps it is because we lack the requisite level of financial sophistication.

The results the bank revealed — and remember, this institution is owned and operated by the Russian government, it’s the embodiment of the nation’s financial relationship with its citizens — were truly stunning.  Its earnings fell 80% — you read that right, eighty percent — dropping to an utterly puny and pathetic $224 million.  This happened even though revenues were up significantly owing to massive losses in the bank’s investment portfolio.

And, believe it or not, that’s far from from the worst of it.

The Moscow Times reported:

Chief financial officer Anton Karamzin said in a conference call Monday that the bank’s trading losses were “relatively smaller than at other banks with more speculative portfolios.

Yikes. What does that say about Russia’s other banks?

Still not the worst of it, though. The MT continues:

Provisions for nonperforming loans reached 98 billion rubles from 17.6 billion rubles the previous year, with growth in the fourth quarter alone reaching 40.8 percent. Karamzin said the fourth quarter exposed only the tip of the iceberg for growth in delinquent loans at the bank and the country’s banking sector as a whole. “While the nonperforming loan numbers did not show a significant growth trend in 2008 … they have started to pick up in 2009 as the Russian real sector and our borrowers begin to feel the impact of deteriorating economic conditions,” Karamzin said.

In other words, 80% is penny-ante stuff. You ain’t seen nuthin’ yet.  Sberbank hasn’t even begun  to feel the impact of its massive portfolio  of non-performing loans, defaulted because of the total collapse of the commercial eocnomy.  Soon — very soon — Sberbank will begin to experience massive lossses that will force it to dip into the national treasury to cover itself.

But that treasury is already close to empty.  Finance Minister Kudrin, as we’ve previously reported, has warned that the budgetary emergency fund will run dry by the end of next year just based on existing liabilities that have nothing to do with Sberbank.  Massive budget cuts are planned, as well as gigantic new debt burdens. There is no money lying around to cover Sberbank’s default obligations.

Once again, we see Vladimir Putin’s government standing on the edge of an abyss — a result that was entirely predictable from the moment Russians chose to empower a KGB spy.  Putin is hopelessly out of his depth and courting the worst economic disaster Russia has ever experienced — which is really saying something.

8 responses to “EDITORIAL: Sberbank Vanishes

  1. So, what’s a Russian to do. How about invade your neighbors and loot them for everything they’ve got!

  2. What I don’t get is simple thing- Russia is the biggest country in a world with wast resources of almost everything- oil, gas, timber, good soil, you name it, and country suffers compared with some other countries who have nothing but their people’s hands and mind.

    • This is a typical Russian refrain: we are a rich country because of our resources. However, coming from another country that is as rich in resources as Russia, I can attest to the fact that the true wealth of a country is tied to the hard work and minds of its people. Oil? Russia has mismanaged its oil resources and its kleptocracy has preferred to steal money in good times as opposed to investing sufficiently in future production. Timber? Much of Russia’s timber is located in the Far East and lacks the necessary infrastructure to ship it to market. Without roads or rail lines, the only option would be to fly out what was harvested and it is not economic to ship wood by plane. Good soil? Soil without good farmers and infrastructure is of little value to a nation’s economy. Russia must stop lulling itself with the belief that it is “rich” because of its resources and understand that it must invest in people, their “hands” and their minds if it is truly ever going to be a rich country.

  3. Zigfeld is a scary mind twisted person who can not control himself and suffers hard without nu success to keep away from writing and publishing nonsence. Zigfried is Stalin of Mass Media. He is another red scear that cripples your mind with hate towards russians.

    • Actually, achooo, Russia makes itself easy to hate. You don’t need any help on that score.
      Russian crimes Chechnya, Georgia, Ingushetia, Daghestan, not to mention Afghanistan, Poland, Finland, Ukraine, the millions of dead cry out and point the finger at Russia.
      As for writing nonsense. We leave that to the Russians.

  4. Russian looting can be interesting. The story told, during WWII a man hid his watch on his ankle since he was afraid of Moscals demanding watches. So, on a train he lifted his trouser to look at the time. Immediately a Moscal soldier wanted to exchange two regular watches for the “leg watch”.
    Bumkins for sure, are now trying to change the European Energy Security Treaty. Leg watch anyone?

  5. Ukraine, the worst of the 60 biggest stock markets in 2008, led gains this month, soaring 44 percent.

    To all you Moscali with malignant hatred for Ukraine. It is too late for you now. as Rashian steelworkers are back to digging potato. Too bad that you are loosing Siberia as well now. I understand that Siberia is 80% of Rashia and 30% of its wealth. How could Moscow screw itself so hard? Must be the HeadHumping you give yourselves when you go through the Great Power motions before the world.

  6. Gary Marshall

    I keep saying that Putin will be gone this year. The way bad news is stacking up, he may be gone by the end of the summer.

    Gary Marshall

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