John Helmer reports:
In European folklore, will-o’-the-wisps are lambent flames seen flickering over bogs and fens, and known by many different names and stories. Usually explicable as methane igniting, in some Baltic mythologies the will-o’-the-wisp is believed to signal buried treasure. In others, the ignition is believed to be the trick of a mendacious imp intent on leading unwary travellers to misfortune.
In the history of the Russian steel business since 1990, just two men have gone bankrupt while trying to create steelmill empires, and including them, four groups have collapsed. Considering how small their indebtedness was compared to the likes of the steel majors – Evraz, Severstal, Mechel – they might think of themselves as plucky, but unlucky.
Russia to HSBC — Drop Dead!
The poster child we choose for our special issue on corruption this week is the Hong Kong and Shanghai Banking Corporation, better known to the world as HSBC — it bills itself as “the world’s local bank.”
But as of this month, it isn’t Russia’s bank any more.
Stealing from Sberbank
The world learned earlier this week that employees of Russia’s beleaguered state-owned national bank, Sberbank, had plundered their own company (and country) to the tune of nearly 200 million dollars. Strange to say, the most outrageous feature of this story is that we don’t know whether we should believe it.
Russian Banks go the Way of the Dodo
The latest stunningly bad economic news to come out of Vladimir Putin’s Russia that Sberbank’s profits for the first quarter of this year were a puny $18 million, compared with nearly $1 billion rubles in the first quarter of last year. You read that right: Sberbank’s profts are down a whopping 98% compared to the same period last year. The bank’s shares have lost nearly 15% of their value so far this month. Likely, you do not need reminding dear reader that this institution is owned and operated by the Russian government itself, and is by far the largest and most stable bank in the country. If this bank is in this kind of shape, what might be said about the others?
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.