New business year starts with surprises.
January 1st, 2010
Gazprombank gets a license on branch creation in Cyprus.
Gazprombank that in Cyprus is considered to be the largest gas monopolist of Russia, has obtained a license to open an investment branch in Cyprus. Cyprian Ministry of Finance Officials consider that it can strengthen the hope that the island is gradually converting in a regional financial and business centre. Meanwhile Cypriotes do not bother with such subtleties as the fact that "Gazprombank" belongs not to the gas monopolist, but to Kovalchuk brothers. They believe, the investment branch, under the name of «GPB Financial Services Cyprus Ltd» will be used basically for business dealing with European Union member countries. The Cyprian officials consider that licensing it and other Russian banks based in Cyprus, gives them good possibility of development financial and entrepreneurial business in EU markets. Gazprombank, through its Cyprian structure, will deal, most likely, with large capital investment projects, and also will grant financing facilities to the companies or private persons, offer professional consulting to interested investors, or companies, wishing to access the European exchange platforms. According to the Cyprian minister of trade, the industry and tourism of Antonis Paskhalidis, «the fact that the Russian bank-giant has chosen Cyprus for creation here its investment branch shows a good level of safety which Cyprus grants today. Our island becomes that bridge that will connect Russia and Europe by financial and investment bonds», the minister told.
Kudrin: Crisis proceeds and will show new surprises
World financial and economic crisis proceeds and will show new surprises, declared the vice-premier, Minister of Finance Alexey Kudrin at the international conference "Russia and the world: challenges of new decade" which has taken place in January." I do not frighten. They are now arising locally - whether it is Dubai, or Greece, or a situation in particular major banks ", - the head of the Ministry of Finance of the Russian Federation added. According to Kudrin, the exit of Russia from crisis will be tough. He underlined that despite banking system preservation many problems in financial sector remained. The situation development will depend on that, how much the real sector which took credits, can rise in the nearest year or two and return these credits, the minister noted. Under his forecasts, Russia will reach the pre-crisis GDP level in 2012. The economic crisis aggravation in Greece where deficiency of state budget has reached 12,7 percent, has caused a record falling of Euro exchange rate to US dollar in the world currency markets. Euro cost has constituted 1,4090 dollars - the lowest indicator since July, 2009. The situation in Dubai has toughened in the end of autumn of 2009: there was a danger of emirate’s default. In the end of the past year Dubai World has asked creditors for a deferment on debt retirement - the foundation has suggested to pay credits in May, 2010, instead of this December. Fears of investors about a possible default of the emirate led to a panic on world fund, raw materials and currency markets, and also to oil prices falling.
Deposit Market forecast for 2010.
Throughout 2009 bank deposits remained in Russia the most popular derivative instrument. II quarter became the most successful period of 2009 for banks. The volume of bank investments of the Russian citizens in a second quarter of 2009 grew five times faster, than in the first one. Aspiring to involve the maximum volumes of funds, market participants indefatigably focused attention of clients on the fact that deposits up to 700 thousand rubles are insured, and in case of a banking failure absolute compensation is provided for such deposits. Thus the idea of increasing maximum amount of the insurance of deposits - to 1 million rubles, or even to 2,5 million rubles began circulating. The reasons are obvious: insisting on acceptance of such legislative norm, banks aspire to create optimum conditions for attraction of large investments from wealthy clients.
Summing up the past year, we can see that during last 12 months «the market of investors» was formed in Russia. Now banks are ready to make concessions for the sake of population’s demand for funds. The first reason: the situation with funding developed after Lehman Brothers collapse. It became impossible to involve means (especially long-term) in foreign capital markets even for the largest (and, hence, the most known in foreign markets) participants of the Russian bank sector. In 2010 as analysts predict, the situation with external funding will slowly improve. The money, which banks can involve in this process, will become cheaper for them than the investor’s sums.
The second reason: as the economic growth will start the buying power of the population and its economic activity will increase. It means that the certain share of incomes will go to the deposit accounts, and on acquisition of goods and services. Taking it into account, the Agency of Deposit Insurance predicts continuous tendency to gain bigger volumes of investments, but relative rates decrease of this growth. In 2010-2013, according to the Agency experts, the rates of physical persons deposit increase will be in a range from 16 % to 22 %, in 2014 they can already constitute 14-16 %. That is quite reasonable if considering that by 2014, under the forecast of many economists, the Russian economy should definitively recover from the crisis consequences.
Latvia: undercapitalization rules are equally unpleasant both to residents, and non-residents.
Since January, 1st, 2010, undercapitalization rules (thin capitalization rules) will be equally applied in relation to the interest paid under the loans granted both to non-residents, and residents of Latvia. These changes will affect those Latvian companies which finance their activity by means of loans (without considering bank credits). Revision of investment approaches and re-structuring of financial models will be required.
Fight against corruption in Ukraine failed: in February, 2010 FATF can repeatedly include it in "blacklist"
The State committee of the financial monitoring published this message on the site of the Ukraine government. Despite 7 years of active work of the Ukrainian government and long-awaited acceptance of the new base law in past November, Ukraine is among 25 countries which have a big chance to appear outside civilized financial world & foot the bill of all the sanctions which will be applied by the world countries on fulfillment of FATF requirements », - the message tells. It is specified that in the end of January, 2010 a controlling group on the international cooperation from FATF will estimate the final statements of certain countries and will defy the list of highly-risk jurisdictions that will be filed for the approbation of the FATF plenary meeting to be held on February, 15-19th, 2010.
Hong Kong updates the companies act.
The government has presented the first part of the administration bill regulating the rules of incorporation and activity of the companies for public consultations. Consultations will proceed till March, 16th 2010. The administration bill provides a number of significant changes which should make management and possession of the company more transparent. It is planned to achieve by toughening requirements to directors and possibilities on disclosing of the information on holders and operation of the company. Also the new administration bill supposes to simplify procedures of registration and the reporting on the basis of use of electronic technologies. Besides, simplification of accounts for the small and middle enterprises is provided. It is planned that the whole work should be finished till the end of next year.
Russia going to debts again.
Russia is going to incur abroad about $17 billions for maintenance of level of the State expenditure in 2010, - vice-premier, the Minister of Finance of Russia Alexey Kudrin declared.
As he said, it is necessary to do so even in such a case, "when we plan to spend all our reserves ". Let us notice that approximately one year ago Kudrin claimed that Russia does not plan to incur debts in international markets. The minister said that the fiscal deficit will be covered from a surplus fund, and money for fulfillment of social obligations should suffice for 2-3 years.
Let's remind that in 2000 the external state debt of Russia exceeded $158 billion. In this situation the task was to reduce external debt scales as much as possible. By the end of August 2006 Russia carried out prescheduled payments of 22,5 billion dollars under credits of the Parisian club.
On October, 1st, 2009 the external debt of Russia constituted $38,7 billion.
Let's remind that Russia plans to increase the annual volume of a grant-in-aid to the poorest countries of the world up to $400-500 million from present 220 million dollars by 2011. In 2003-2005 Russia annually budgeted $50-60 million on rendering assistance to the poorest countries.
Russia paid out the obligations on these debts inherited from Soviet Union. In January the Ministry of Finance of the Russian Federation declared the end of exchange with creditors of the commercial indebtedness of the USSR on bond which will be reset subsequently. This message was published on a ministry site. These debts were accumulated in 1989-1991. They had arisen because of imported goods deliveries to the country which had not been paid by the enterprises. As a result these obligations under contracts were taken by the government of the USSR, and then in 1994 "passed" to Russia.
In order to settle up the situation with creditors, they issued bonds that lately were acquired in secondary market. "The cumulative sum of the active debts accepted to an exchange constituted 405,8 million dollars. Total number of these requirements exceeded 1900, their holders were residents of 24 countries of the world», - the ministry message tells. Eurobonds will be extinguished in 2010 and 2030. Earlier Russia already changed the commercial Soviet indebtedness for bonds twice: in 2002 - on 1,37 billion dollars and in 2006 - on 1,14 billion dollars. In general for 15 12,7 thousand active debts of foreign commercial creditors for the sum, equivalent 2,8 billion dollars were settled.. Now Russia has no debt before foreign commercial creditors. But is going to incur debts again
Latvia is to start pensions payments in full on February, 1st.
The government has reached the preliminary agreement with the international creditors of Latvia which allows it to execute the sentence of the Constitutional court (CC) on the case of reduction of pensions at the expense of a fiscal deficit of this year, the prime minister of the country Valdis Dombrovskis has declared in January to journalists. As the former arrangement with international creditors provided the maximum fiscal deficit for 2010 at a rate of 8,5 % from gross national product, and the budget is approved at a deficit 7,4 % necessary for payments of pensions of means will be in full taken from this difference, the prime minister has explained. If everything goes smoothly these payments begin on February, 1st, Dombrovskis has noted. By the estimates of the Welfare Ministry, serving of a sentence of the CC will require this year additional 110,9 million lats (over 156 million euro) if they start payments on February, 1st. In its turn to compensate reduced pensions received from July 2009 till January 2010 (10% reduction for al pensioners & 70% for working ones) 73,7 million lats (about 104 million euro) will be required.
Natsbank of Ukraine increases the tax to the Pension fund at currency purchase.
The Natsbank of Ukraine in the end of the past year has informed that the tax to the Pension fund at currency purchase for accounts with non-residents on all kinds of payments, including interest & capital payment, will constitute in 2010 0,5 % instead of 0,2 %. Therefore it is necessary to consider that, since January, 2010, at currency purchase banks of commerce will levy 0,5 % in favor of the Pension fund.
MIDLAND CONSULT
