Blacklists for Bankers

A new law will come into effect in January blacklisting management of companies who commit fraud, Kommersant reports.

According the the new law,

“…the ban on holding senior positions will spread not only to bankers, but also to other financial organizations. The law increases the period that financiers remain on the blacklist from five to ten years. Those who are criminally prosecuted for deliberate or fictitious bankruptcy and those who violate the requirements for business reputation face a lifetime ban in their profession.”

Meanwhile, Kommersant says, “more than a hundred high-ranking employees of “Otkritie” bank will be included on the Central Bank’s blacklist. This is the biggest… in the history of bailouts.”

BIN will also have managers blacklisted, but fewer than Otkritie given its comparative size, Kommersant reports.

“The bankers who appear on the Central Bank’s list will not only be able to hold high ranking positions in banks for at least five years…”

In addition, they will also be barred from holding leading positions in other companies in the financial sector.

“It is possible that the list will include other employees whom the interim administration thinks are involved in bringing the bank to a sorry state,” one of Kommersant’s sources said.”

“Another source said… that most executives are unlikely to leave their jobs until the end of the temporary administration.”

15,200 people worked at Otkritie, according the the company’s second quarter report, while 11,200 people worked at BIN.

But, the newspaper continues, according to experts, the only thing a blacklist does is make it more difficult to find qualified people to work in the industry.

 

“In my practice there were cases when candidates did not pass on the qualification requirement,” said the owner of the company Mr Hunt, Aramis Karimov. “For example, one candidate was the deputy chairman of the board of a bank whose license was revoked in 2011. He had to work in a lower position. Five years later he received “a piece of paper” that said he could again occupy leading positions in banks, but he did not want to return to supervising work.”

Given the large-scale bailouts in recent history and the new regulations, a large number of managers will have to forget about [working in] the financial market. And innocent people could suffer, experts warn.

“There will be a large number of highly qualified financiers in the market who are out of work,” complains Mr Karimov. “The biggest problem is how to identify the degree of employee involvement in questionable operations. We need clear criteria [of] who is guilty and who is [held] hostage… There is no such effective mechanism yet.”

Igor Zinevich, an independent lawyer and bankruptcy expert, says that the new law will do “…nothing to improve the banking sector.”

“Those who commit fraud, realize all the risks, they will will not stop,” he believes, “But unfortunately, those who were not directly responsible for the bank’s problems or [who] followed the instruction of the leadership higher up will be placed on the [black]lists…  this can lead to deplorable consequences.”

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Safmar’s Scam

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.

 

Otkritie & Pension Reform

Russia’s Central Bank bailed out the country’s 7th largest bank this past week. According to CNBC:

Otkritie is the country’s largest private lender by assets, according to second-quarter data from Interfax, and some of its shareholders are connected to major state entities, a fact that prompted some analysts to believe it was too big and influential to be allowed to fail.

Given the scope of the bail-out, I am going to spend my next few posts on it.

Sergei Vasiliev writes on Facebook:

Many people call “Otkritie” a bank. But this is not the case. More precisely, the banking business… was only an instrument of development and retention of another business – that of pensions. It [“Otkritie”] is a “pension business” at its core.

This was an outcome of the 2008 global financial crisis, he explains. And it has not been just “Otkritie’s” business strategy, but many chose this business model. However, “Otkritie” has been “the most aggressive in the implementation [of it].”

“After 2008,” Vasiliev continues, “foreign investments disappeared from the market… Since then, our market was fueled by fresh money only due to new income from the pension funds.”

By 2010, these transfers from the FIU had already become significant. This influx of semi-public, semi-private long-term money could already be compared with yesterday’s, pre-crisis, foreign investment in the Russian market. Then the race and competition for “pension” money began.

Starting in 2012, in a short period of time, they [“Otkritie”] bought first one of the largest pension funds “ElectroEnergetikiyi” (which, in turn, by that time had bought three or four other funds), and then the massive “Lukoil Garant”.

The strategy was simple – we will buy out anyone who is selling at any price. You bought a bag of money, which grew on its own every year. Each month, the working population transferred 6% each into the pension funds, which in turn transferred them to private pension funds.

The best part of this scheme was that the banks were buying guaranteed money.

However, Vasiliev continues, “this strategy could be justified [only] if the State continued its pension reform, and listed accumulations further, as they had earlier promised. But, the global financial crisis made the state change its strategy. In 2014, the Government first temporarily stopped transferring pension savings to the private pension funds, and then completely froze the program. This was the turning point.”

New money stopped coming to the purchased pension funds, and this violated the business model that was embedded in the purchase. It was necessary to somehow replace the lack of these inflows…

And so “Otkritie” got into the business of “rescuing” troubled banks with the aid of the Central Bank’s money.

But “it was unclear who was “rescuing” whom”, Vasiliev writes. Was “Otkritie” rescuing “Trust” bank, or was the money taken from the Central Bank being used by “Otkritie” to solve its own financial problems?

And [Otkritie’s] purchase of [a 19.8% stake in the insurance company] Rosgosstrakh [in March 2017] was also not for the development of insurance, but for the purchase of their pension fund, which became the leader in attracting new pension savings collected through the agency network of Rosgosstrakh that year.

In general, everything [was done] for the sake of the “pensions”.

But it was only a matter of time until the inflow of money finally stopped. And now that moment has come.

“What does all of this mean for our financial market?” he asks, “In the current situation almost nothing.”

Yes, money was lost in the “Otkritie” pension funds, they were spent on acquisitions of pension funds and banks that did not materialize. But the market will not feel this, because the pensioners of these funds are not lining up to get their money [now]. The first payments will not come anytime soon. Pension savings refer to those who were born after 1967, and they are still far from retirement. The Central Bank today will hardly need additional money and a new money issue will stop this situation. There will not even be an inflationary effect due to the alleged money issue.

The only question that remains is how the Central Bank will resolve the issue with the assets in the pension funds, which largely consist of shares in “Otkritie” and its various own bonds…. thankfully they have a lot of time before the first payments are due.

But, Vasiliev concludes, you “…can be sure that there will no longer be any “pension reforms” in Russia, the Central Bank will not want to step on that rake again any time soon.”

Depleting Russia’s Reserves

The Ministry of Finance posted a long explanation at the beginning of the week on the state of Russia’s two reserve funds. I was planning on breaking it down, but Vladimir Milov has done my work for me. Some key points:

In the Reserve Fund as of 1 January [2017], there were only 0.97 trillion rubles, [that is] more than a trillion rubles were spent [in December alone];

It is unclear, Milov continues, what happened to the money supposedly received from the “privatization” of Rosneft [see my previous blog post on this].

In the SWF [Sovereign Welfare Fund] remains 2.8 trillion rubles that are “liquid” (© Siluanov).

And finally, Milov writes, the budget deficit for 2017 is slated to be 2.75 trillion rubles.

If everything continues in the current trajectory, by the end of this year the two funds will be depleted.

“Anyone who tells you that this supposedly “does not matter because the government is selling the currency to the Central Bank, while maintaining the same volume of gold reserves” is dissembling or does not understand the essence of the matter, because to finance the budget deficit with the gold reserves is useless.”

And once the reserves are empty, then “the fiscal deficit can only be financed by borrowing (and in this respect, the removal of the sanctions acquires a decisive role), or the Central Bank has to loan money to the government…”

Or the third option the government could take is budget cuts.

For reference – even at today’s frozen budget expenditures:

  • real pensions declined by 3.5% for 11 months of 2016;
  • the indexation of wages in education and health care for 11 months in 2016 were 4.2% and 6%, respectively (Rosstat).

By reducing budget spending you can imagine what will happen.

Protracted Crisis

The total amount of loans to Russians, both consumer and mortgage, is 9.23 trillion rubles. The most complicated situation is in mortgages. According to the “United Credit Bureau”, the number of late payments on mortgages in the third quarter of this year increased by 3.7%. The amount of debt of Russian citizens to banks for mortgage loans amounted to 160 billion rubles.

Rosbalt spoke to the director of the Institute of Strategic Analysis, Igor Nikolaev:

How serious is the problem of defaults on loans for our economy?

“The debt is significant,” Nikolaev acknowledges, “the problem is in a frozen state, but it will not go away, it is not resolved, the situation has simply now become a bit better.”

However, he continues, “if the economic situation were to deteriorate again… then, of course, this problem will also manifest itself in a more explicit form.” He mentions another weakening of the rouble, or the rapid decline in real income as factors.

An added problem is that people have begun borrowing again, but this time in “consumer credit”.

“This is celebrated as a positive trend….” but, he says, “I think that the risks are high, because problems remain in the Russian economy.”

Rosbalt calls Nikolaev out on his claim that there has been “some improvement in the situation in the Russian economy.”

“Can you clarify in what area, because apart from the stabilization of the ruble… there is nothing, at least outwardly, that has changed in a positive way.”

Nikolaev replies:

“Well, I already mentioned the growth of consumer credit. This is noted by “Sberbank” and other credit institutions. This is information from August-September. With regard to the whole economy, it is not falling now as it fell in 2015. That is, some stabilization is observed.”

Rosbalt moves on, asking about mortgages. Many Russians, during the good years, took out mortgages in foreign denominations (particularly US dollars).

Nikolaev replies:

“There is also a frozen state, although some intensification of mortgages is taking place. But the situation with the foreign currency mortgage is not exactly resolved.”

It has gotten a bit better because the ruble has gotten slightly stronger, he notes. “But if it gives way again, the problem will arise again with the same sharpness.”

Rosbalt asks about the situation with the ruble:

“It is not clear why the ruble strengthened, given that oil remains at the same level.”

Nikolaev disagrees, saying:

“Well, the price of oil has soared. If you recall that it was $35 a barrel, and now it is more than $50 [note: Brent today is ~$49 a barrel].”

He also notes that the Russians and OPEC are playing the market with their talks of an oil production freeze.

“In addition, the role played by the action of the Central Bank to raise reserve requirements on foreign currency deposits (the so-called devaluation of bank assets). This policy, which has been carried out since the winter of 2016, is not advertised, but it has had a strong influence on the currency, playing a large role in strengthening the ruble, as it becomes less and less profitable for banks to attract foreign currency loans.”

And finally, Nikolaev says, the US Federal Reserve has not increased the refinancing rate.

Meanwhile, current proposals to fix the situation facing foreign currency borrowers are only temporary while “the crisis has taken on a protracted nature.”

Instead, Nikolaev tells Rosbalt, the burden rests with the Central Bank, “because the stability of the national currency was not provided at the time.”

So foreign currency mortgage holders could say that while they took out loans in a foreign currency, “the State did not ensure the stability of the ruble.”

Then, he says, these people could be compensated in some way “for lost revenues by State banks when translating foreign currency mortgages into rubles”.

“Naturally, it would not be a total payment, and a heavy financial burden will remain on the borrowers, but such a move would be important as a precedent. Because when the government says “it’s not my business,” I believe that this is also wrong.

Asset Stripping Fraud

The article is a translation of a blog post by former deputy chairman of Russia’s Central Bank, Sergei Aleksashenko. In the article Aleskashenko details how the Central Bank is committing asset stripping fraud of Russian banks.

“The scheme is ridiculously simple.

  • The Central Bank turns a blind eye to capital and clients’ deposits being siphoned off from a bank;
  • those same Central Bank passive onlookers then decide that the bank has to be saved (although of 30 bail-outs, not one bank has yet managed to return to full operation);
  • the same people choose which bank will save the bankrupt bank and decide how much money has to be allocated for this noble purpose;
  • then those very same people give the DIA [Deposit Insurance Agency; the equivalent of the US FDIC] a loan for 6-8 years at an interest rate of 0.5% (that’s right – half a percentage point);
  • after that the same people [from the Central Bank], or some of them, visit the DIA where, as members of the Board of Directors, they decide to issue a loan of billions of roubles (at an interest rate of 0.51%) to the banks involved in the bail-out.
  • The bank doing the rescuing then uses the funds it has received to buy a federal loan bond at the current rate of return from the Finance Ministry and receives a guaranteed income;
  • the Finance Ministry meanwhile uses funds from the federal budget for the next 6-8 years to pay the interest on the bond sold to the bail-out banks.
  • At maturity, the bond should pay off all the money received as a loan.”

This scheme, Aleksashenko writes:

“…has already cost over one and a half trillion roubles and, taking into account the interest to be paid, the federal budget is going to have to shell out considerably more than two trillion roubles.”

Now, he concedes,

“To be fair, it should be said that the banks have paid back slightly more than 20% of the one and half trillion roubles disbursed. To this end, some assets have been transferred on to the DIA balance sheet. But their real value is unknown as the DIA site carries no information about the nature of these assets, why the DIA needs them, what it has done – or intends to do – with them.”

He continues:

“There have never been, nor are there still, any clear or transparent criteria for deciding which bank should be bailed out – and which should be left to collapse – and it is only the bureaucrats who are allowed to have anything to do with analysing proposals for bail-outs…. Moreover, after some time it emerged that the rescuers were finding the allocated funds insufficient, so multiple hasty appeals for top-ups were launched at the Central Bank because “what you sent last week was gobbled up straight away” (a quote from Korney Chukovsky’s children’s story Telephone).”

Aleksashenko concludes:

“….This way the federal budget is incurring ever more debt, although we know that there is no longer any money left in it, so any extra unplanned kopecks spent throws the Finance Minister, who is also a DIA board member, into a blind spin of rage. It looks to me as though this endless stream of new decisions about money to be allocated was one of the main reasons for the recent purge of the Central Bank’s supervisory committee.

When I decided to look at the final summary of what the sacked “supervisors” had been up to, force of habit led me first to the usual place on the DIA site in the hope of downloading the usual tables, but I didn’t find any. So the bureaucrats’ cat had a very good idea of whose meat she had been eating and decided to sweep all the information about her dinner under the carpet – to avoid any uncomfortable questions for the officials.

We must disabuse the said officials: we will find the information, we shall be asking questions, and we shall name and shame those who are personally responsible.”

Diamonds & Gold

The Finance Ministry is cutting back purchases of precious metals and gems for Gokhran (Russia’s precious metals and gems repository) this year by 2.5 times, from 12 billion rubles to 5 billion rubles, “Izvestia” reported today.

At the same time, large-scale sales of gold and diamonds are planned to replenish the state treasury.

As of 1 October, the paper reports, the Ministry of Finance had only spent 19.9% (or 2.4 billion rubles) of the 12 billion rubles budgeted for purchasing precious metals and stones.

The Ministry’s press service told “Izvestia” that they only planned to spend about 7 billion rubles in total this year.

In conjunction the Finance Ministry intends to increase sales of precious metals and stones in the next three years. The Ministry plans to sell off about 4.522 billion rubles of the commodities this year, 10.411 billion next year, and another 10.5 billion in 2018-2019. These sales will be used to “provide operational funding for the federal budget deficit”, the Ministry claims.

In 2015-2016, purchases of these assets were doubled, analyst Roman Tkachuk told the paper. He stated that the Ministry is now returning to its pre-crisis patterns:

“Between 2012 and 2014 Gokhran bought mainly diamonds, but in the past few years, most of the funds have been invested in precious metals.”

“The relatively high prices prevailing in the market today will allow the Finance Ministry to profitably sell these assets,” the paper claims, “World prices for precious metals and diamonds have been fairly stable this year.”

“The Ministry’s decision will have a moderately negative impact on the diamond market, experts say.”

Gokhran purchases from state diamond company, “Alrosa” are secret, but according to Tkachuk, they range somewhere between “1 and 10 billion rubles a year” (or only 1-5% of the company’s total revenue).

“But the State Fund has traditionally bought… the most expensive stones, the export of which is prohibited abroad. So the news is marginally negative for the diamond company.”

Another analyst told “Izvestia” that the reduction of state purchases from “Alrosa” could make it easier for the company to sell its product abroad. But, he added, “the sale of state reserves will put additional pressure on world prices, which are already reduced in recent years.”

“At the same time, gold producers are not affected: on the one hand, the market is able to support the demand, on the other – procurement plans are stored in the Bank of Russia,” the paper wrote, quoting the head of the Union of Gold Producers:

“So far we have to more substantially cooperate with our other creditors in the market, especially with Russian banks, as well as more and more active fund development in the Far East and the Baikal region. And the high domestic liquidity of gold, as always, is provided to us by the Central Bank.”

Capital Outflow

The Russian Regime appears to be very concerned with the potential impact that a further weakening of the ruble would have and have been warning about it. There have been several articles (some of which I have highlighted here already) mostly pointing to the fact that Rosneft’s lack of ready cash could cause major problems for the Russian currency come December.

According to Russia’s Central Bank Russian companies have $21.6 billion in external debt due by the end of the year, and another $15.2 billion due by the end of the first quarter of 2017. This does not include banks or other financial institutions.

As for the banks, Raiffeisenbank analysts predict a further outflow of capital.

“Since the beginning of the year, foreign currency in corporate accounts decreased by $20.5 billion or 14%.”

That is, every 7th dollar has left.

“Foreign exchange reserves of the banking system, the reserves on the accounts in foreign banks – remained at its lowest level in 5 years and reached $20.4 billion, down by 20% from the beginning of the year.”

The columnist Sergei Shelin wrote earlier this week that a drop in the price of oil could hurt the ruble too. But, he says, the main thing is that people panic. There are three things that could happen with the ruble:

“A more or less marked weakening of the ruble in the coming months is quite possible, although not guaranteed.”

The rising price of oil may prevent this, however. But Shelin writes, “I do not believe this is very likely.”

Second, if the ruble is again weakened, he says, “it is unlikely to be on the same scale as two years ago or even one year ago.”

And third, Shelin does not rule out “a powerful devaluation” but for this to happen, there would have to be external shocks, “such as the collapse of the global energy market, or some major adventures on the domestic and external fronts.”

Rosneft Debt

More bad news about Rosneft.

The Central Bank’s governor, Elvira Naibullina, told reporters this week that “she saw no risk to the ruble from oil firm Rosneft possibly buying its own shares from state holding company Rosneftegaz.”

But Raiffeisenbank is saying that Rosneft’s expansion plans could cause problems for the ruble.

Rosneft could reduce the sale of foreign currency earnings on the Moscow Stock Exchange in 2017 and cause a “double blow” to the ruble.

Why?

Rosneft is the biggest single seller of dollars on the Moscow Stock Exchange. In 2015, the company sold $45.5 billion and in 2014, it sold more than $90 billion.

But due to its rapid expansion and current debt problems (which I discussed here earlier this week), Rosneft may have to cut back on that activity.

Analysts at Raiffeisenbank calculated that at the end of the first half of the year, Rosneft had about $20 billion in foreign currency on their accounts, another approximately $4 billion that the company should obtain from the sale of shares in Vankorneft and Taas-Yuryakh.

That is it should have $24 billion in readily available foreign currency.

Of that [$24 billion], $5 billion [it was actually $5.3 billion – ed.] was spent on the purchase of Bashneft (the transaction was completed on 12 October), $4.7 billion in scheduled loans are due by the end of the year. Another $11 billion will be used to buy back its own shares from the State.

That is, as mentioned above, Rosneft plans to participate in its own privatization by buying the 19.5 percent stake in itself that the State will put up for sale before the end of the year.

If it does so, Raiffeisenbank says that “…at the end of the year Rosneft will have about $5.7 billion (including rubles), which covers only half of the $11.7 billion debt that needs to be paid in 2017…”

“In the next year, Rosneft could reduce the sale of foreign currency earnings to replenish its foreign exchange assets depleted due to the repurchase of shares (in the case of “self-privatization”), at least until the resale of shares to foreign investors,” warned Raiffeisenbank analyst Denis Poryvai.

In his view, the result is a double blow for the ruble: the company will take a substantial amount of currency from accounts in Russian banks, as a result of which the market will run short of dollar liquidity, and later reduce the sale of foreign currency earnings on the stock exchange.

 

Lies & Statistics

Russian economist Sergei Aleksachenko writes on his blog today:

Often, when discussing statistical reports, it is necessary to say that there are lies, great lies, and statistics. Because, for example, connecting in a single line cheese production and cheese products can give the authorities the evidence of the success of [their] import substitution policies. And the fact that this very product does not contain a single drop of animal fat – this is not the statistical part!

But there are also opposite situations where policy makers act in their own interests and deliberately distort the statistical information. For example, the Bank of Russia is doing great and very high-quality work on the balance of payments, the document, which is one of the most important statistical forms for understanding what is happening in the economic relations of the country with the rest of the world, whether or not there is a threat to the stability of the national currency.

Everybody waits impatiently for the publication of this document, he writes, including the Kremlin.

He recounts how President Putin stated at the “Russia Calling” forum in Moscow this week:

“Compared to last year, net capital outflow from Russia for the first three quarters of this year fell, I beg your attention, five times, to 9.6 billion dollars. I remind [you] that in the first three quarters last year, the export of capital amounted to more than $48 billion.”

Who is forcing him to tells these lies, Aleksashenko queries. And at an event where “at least half of the participants” know he is lying, because they’ve read the Central Bank’s report.

What really happened? Between 2015 and 2016, he says, the Central Bank used a variety of different tools to distort the statistics. And more importantly, “…in 2015, the Bank of Russia gave foreign currency loans, but in 2016 they began to demand their repayment.”

To make the math come out right the so-called “experts” at the Central Bank added additional rows to their chart.

The real numbers are actually $37.7 billion capital outflow in the first three quarters of 2015, and $21.4 billion in the same period of 2015. “The difference [between the two] is not five times, but a little less than two.”

And, Aleksashenko continues, “if we compare the performance of capital outflow with the current account balance – this is the result of economic exchange (trade in good, services, wages, interest and dividends, etc.) between Russia and the rest of the world – that is, there is a difference, and this difference is a large [one].”

Traditionally it is believed that the stability of the balance of payments and, consequently, the Russian ruble is based on a stable surplus in the current account balance. This year, that figure began to decline rapidly, from $54.4 billion for the first 9 months of 2015 to $15.6 billion in the same period of 2016.

And if you compare the volume of capital outflows with the current account balance then, in the version of the Russian President, nothing serious is happening: the outflow of capital is less than the surplus of the current account balance. But in the Central Bank’s version, the weakness manifests itself immediately – the outflow of capital is 50% greater than the surplus in the current account balance. This means that the ruble is not in such a comfortable position as it may seem, looking at its dynamics in recent months.

Aleksashenko concludes:

I am far from thinking that the Russian president himself visits the Central Bank’s website and finds the necessary data. Of course, it is done by his assistants. And when they put clearly inadequate information in the text of the president’s speech, I am plagued by two questions: are they doing it deliberately…  or are they [economically] illiterate? And… is the president too illiterate?