Sergei Vasilev writes on Facebook:
If you look at the list of assets of Safmar (the owner of B&N Bank), it is impressive and surprising at the same time.
The list of [its] industrial assets is not so large, there are the relatively small oil companies Russneft and Neftis, as well as Russian Coal and Slavkali. Gutseriev and [his nephew] Shishkhanov have been in this business for a long time and this is not surprising.
But then there is a long list of assets from development, commercial real estate and retail, which they bought relatively recently and this list is impressive. Only 5-star hotels – 9 properties: the Intercontinental on Tverskaya, the Marriott Grand Hotel, the Marriott Royal Aurora, the Marriott Tverskaya, the Hilton on Leninsky, hotels in Minsk and Astana, etc.
“But,” he continues, “that is not all.”
In the past few years, Safmar has bought the leading retailers of home appliances and electronics: Technosila, ElDorado, and also this last year M. Video. In addition, Gutseriev and Shishkhanov absorbed a lot of developers with land, becoming one of the leading developers in the Moscow region, buying Mospromstroi and Inteko [Elena Baturina’s development company], etc.
“Where did the money for all these acquisitions come from?” Vasilev asks.
Gutseriev and Shishkhanov themselves did not build these hotels, they bought them already ready, just as they did not create the retail chains ElDorado et al… Safmar attracted money for these purchases from some other source, and not at the expense of the purchased businesses.
It soon becomes clear, he writes, that: “the main source of capital investment for these aggressive purchases was the pension savings of citizens.”
Gutseriev and Shishkhanov did not have foreign investors in the shareholders, there were no other rich partners. The only source of their “long” money is the pension accumulation of citizens.
Just as we saw with Otkritie, Safmar played the same “cat and mouse” game.
For about 5-7 years through the agency networks, the “Safmar” pension fund raised about 300 billion rubles of pension savings from 4 million citizens on the market. This money was used by the group for its aggressive acquisitions, buying up hotels, developers, and retailers.
“The scheme was simple,” Vasiliev explains.
The group issued bonds that received ratings from various Russian ratings agencies. It was not so difficult, indeed, behind “Safmar” there are serious steep shareholders, so they can place the highest rating! Further, based on this rating, the Moscow stock exchange included these bonds in the highest quotation list, which allowed pension funds to buy securities from this list…
You issue bonds, you rank them, you include them in the first list of the stock exchange and then you buy them yourself with money from your own pension funds.
This happened with the Central Bank’s knowledge and tacit approval, he alleges.
The authorities finally decided to put a stop to the practice only this past year after they established their own ratings agency [ACRA], and the “hard purge started in January 2017.”
“The Moscow Stock Exchange announced that it was excluding from its higher quotation list of bonds, almost a quarter of a trillion rubles, if they don’t receive a rating from ACRA. On the list of those securities were bonds from Otkritie and Safmar.
Now the banks needed to find “new money”, Vasilev concludes, “But from where? After all, the pension money was the only “long” money on the market.”
It seems likely that the Central Bank will take the assets from Safmar, nationalize them, and then re-privatize them at some point, starting the same cycle all over again.