- Former Sberbank Deputy CEO Gorkov Named VEB chairman
- Government estimates of bailout as high as $17 billion
President Vladimir Putin is tapping the head of Russia’s biggest bank to lead the cleanup of Vnesheconombank, the state development lender that needs billions of dollars in bailout funds, according to two government officials.
The Russian president is looking to Herman Gref to repeat his success in modernizing Sberbank PJSC, the successor to the Soviet savings bank, the officials said, asking not to be identified because they aren’t authorized to discuss the matter. While Gref would retain his role at Sberbank and wouldn’t sit on the board of VEB, he will oversee the restructuring, they said. Sberbank spokesman Alexander Baziyan declined to comment on whether Gref would have a role in the revamp.
Gref is discussing VEB’s restructuring with Bank of Russia Governor Elvira Nabiullina, Finance Minister Anton Siluanov and new VEB chairman Sergey Gorkov, one of the officials said. The central bank doesn’t oversee VEB because it’s not a commercial lender.
Gorkov, Gref’s former deputy, was named to the position earlier Friday in a Kremlin statement announcing the dismissal of Vladimir Dmitriev, who had headed VEB since 2004.
Dmitriev leaves a bank crippled by bad debt after being used to pay for projects ranging from the Sochi Olympics to financial assistance for oligarchs. Estimates of a bailout range from 150 billion rubles ($2 billion) to 1.3 trillion rubles, according to government officials.
The management change “could be an indication that the government wants to solve VEB’s solvency and refinancing issues, but there is still no clarity on how it will be done,” Fitch Ratings Ltd. analyst Alexander Danilov said.
VEB was hit with U.S. and European Union sanctions following Russia’s annexation of Crimea from Ukraine in 2014. The Finance Ministry has submitted aid proposals to the government for approval, Svetlana Nikitina, an aide to the finance minister, said in December. The rescue is being discussed while the state considers deep budget cuts as Russia faces a second year of recession and a growing deficit.
Gorkov, 47, is a graduate of Russia’s Federal Security Service Academy. Before joining Sberbank, he worked in human resources at Yukos Oil Co., once Russia’s largest oil producer. The state transferred most of its assets to Rosneft OJSC after what critics called trumped-up charges of tax evasion and embezzlement.
It is too early to discuss Gorkov’s plans for VEB, Putin’s spokesman Dmitry Peskov said Friday on a conference call.