Russian oil tycoon offers to buy back state assets for a pittance

Mikhail Gutseriyev offered $2.12bn of $11.7bn the Russian government believes it is owed for rescuing his family banks.

RussNeft chairman Mikhail Gutseriyev has offered Russia's central bank a deal worth more than 136 billion rubles ($2.12bn) to buy back a company and other assets once owned by his family [File: Simon Dawson/Bloomberg]
RussNeft chairman Mikhail Gutseriyev has offered Russia's central bank a deal worth more than 136 billion rubles ($2.12bn) to buy back a company and other assets once owned by his family [File: Simon Dawson/Bloomberg]

Russian oil tycoon Mikhail Gutseriyev has offered to buy back a property company and other assets inherited by the state to partially cover the bailout of banks once owned by his family, a document reviewed by Reuters showed.

The offer – and an assessment by Russian central bank officials showing that this may be the best outcome they can get – are outlined in the 60-page-plus document examined by Reuters.

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The offer, worth 136bn roubles ($2.12 bn), falls far short of the expense of the bailouts. The offer consists of cash and non-cash parts.

The central bank believes it is entitled to claim more than 750bn roubles ($11.7 bn) if it were to pursue the matter in court, according to the assessment of the offer recently prepared by state officials.

Despite the offer’s modest size, officials recommend that it should nonetheless be accepted. The document was prepared by Trust Bank, which was turned by the central bank into a “bad assets” bank to hold toxic assets after 2017 bailouts.

The Gutseriyev family transferred some of its assets – including the ones now planned to be bought back – to the central bank in 2017 when they were first settling bailout costs.

In the document, officials weigh the alternative of taking Gutseriyev to court, concluding that accepting the money was the “recommended strategy” because it would be far faster.

Two people with direct knowledge of the matter confirmed the authenticity of the document, prepared in mid-September.

Clinching such a deal would secure some money for Russian state coffers and allow Gutseriyev and his brother, Sait-Salam, to avoid a lawsuit by the central bank, people familiar with the matter have told Reuters.

But the modest amount of money on offer, and frank assessment by officials that this is the best they can do, underscores the struggle to recover money spent on bailouts, a failure viewed critically by many ordinary Russians.

In the document, officials write that trying to claim roughly 750bn ($11.7bn) roubles from the Gutseriyevs in courts to compensate for the bailout losses could last up to five years.

There is also a risk that, if legal actions are endorsed, other banks who hold certain assets of the family as collateral may call the collateral back, weakening Gutseriyev’s ability to pay the central bank. Such a scenario would risk Trust Bank getting even less than the proposed 136bn roubles ($2.12 bn), the document said.

Under the terms of the offer, the state would get 95bn roubles ($1.5bn) in cash after the Gutseriyev family buys back part of the RussNeft oil firm’s stake that is held by Trust Bank, as well as stakes in the mining company Slavkaliy, a 49 percent stake in the development company A101 and some other assets, the document showed.

Under that plan, Trust Bank should gain another 41bn roubles ($640,000) from the reevaluation of a RussNeft stake that the bank would still retain, the document showed.

Safmar, an umbrella for the Gutseriyev family assets, already holds a 51 percent stake in A101, one of Russia‘s top real estate developers. A deal with the central bank, if agreed upon by all parties, would allow the group to regain full control over A101.

The deal, if signed, allows the Gutseriyev family to pay the central bank back in five years. Then, after September 2024, the central bank would lose a right to claim more from them.

Mikail Shishkhanov, a Gutseriyev nephew, is not taking part in the deal.

Russia’s banking bailouts culminated in the 2017 rescue of three banking groups: Otkritie FC Bank, B&N Bank and Promsvyazbank.

All three banks ran into trouble after years of aggressive expansion were brought to a sudden halt when western sanctions were imposed on Moscow over its role in the Ukraine conflict.

The central bank has taken legal action to recover losses relating to the bailouts of Otkritie and Promsvyazbank after it spent over two trillion roubles ($31bn) on bailouts of the three banking groups.

Trust Bank, which owns the assets Gutseriyev has offered to buy back, declined to comment and Otkritie, which holds “good” assets of the three rescued banking groups, did not reply to a request for comment.

Safmar and RussNeft, where Mikhail Gutseriyev holds senior management roles, declined to comment.

Mikail Shishkhanov did not reply to a voice message left by Reuters on his mobile phone, and Russia’s central bank did not reply to a Reuters request for comment.

Source: Reuters

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