BUSINESS

Alfa Bank Seeking $400M Loan From VEB

By Courtney Weaver

Staff Writer

MOSCOW — Alfa Bank will apply to Vneshekonombank, the state development bank, for a long-term loan of $400 million, Alfa Bank president Peter Aven said at a crisis-related summit Friday.

With help from the Central Bank, Alfa Bank could be in a position to bail out Russian banks in danger of bankruptcy, he added.

Speaking on a panel that included Arkady Dvorkovich, an economic adviser to President Dmitry Medvedev, and Pavel Medvedev, a member of the Duma’s budget committee, Aven and his fellow participants remained relatively optimistic about Russia’s ability to survive the financial crisis.

Both Aven and Dvorkovich highlighted Russia’s preparedness for the challenge, especially compared to countries such as the United States.

Aven said the crisis would not be catastrophic for Russia, especially since mortgages are only 3 percent of the country’s gross domestic product. Still, Aven said, the Russian real estate sector would experience a significant downturn following three years of ballooning property prices.

Russia’s deep reserves will play a critical role in the country’s ability to handle the crisis, Dvorkovich said, adding that the banking sector could expect substantial reforms by the end of the year, specifically in terms of the laws governing the sector.

Both Dvorkovich and Aven spoke favorably about a potential consolidation of the Russian banking sector, but speaking after Aven, Dvorkovich said the government would still do everything to ensure each bank got a chance to survive.

“We want every financial institution to have a chance. We want everyone to have a security cushion. It doesn’t matter if it’s a big bank or a small bank,” he said.

“The most important asset a bank has is its reputation,” Dvorkovich continued. “If the bank [is in trouble and] already has a good reputation, we will work quickly so that over the course of a few days everything normalizes.”

Other speakers, such as MDM Bank chairman Oleg Vyugin, who spoke on a subsequent panel, drew comparisons with the United States to put Russia’s current economic woes in perspective and highlight its ability to take on a bigger global role.

“[Compared to the United States,] our situation is a lot easier,” Vyugin said. “Thank goodness credit doesn’t play the same role in Russia that it does in other countries.”

Dvorkovich and Alexei Timofeyev, chairman of the board of the National Association of Stock Exchange Participants, brought up the goal of Moscow becoming what Dvorkovich called a “strong financial center.”

While Timofeyev admitted that it would not be easy for Moscow to step into this role at present, he insisted that the goal had been in place long before the current financial crisis and that Moscow should continue to strive toward it.

“We have these global financial centers that have gained prominence because of various political and economic factors,” Timofeyev said, citing London and New York as examples.

“They have not demonstrated the best decision-making.”

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