Bank linked to Russian Railways axed as former boss Yakunin loses ground

 Bank linked to Russian Railways axed as former boss Yakunin loses ground
Former railways chief Vladimir Yakunin with President Vladimir Putin at the Kremlin.
By Jason Corcoran in Moscow February 5, 2016

The Central Bank of Russia (CBR) has revoked the license of a Moscow-based lender affiliated to Russian Railways in a move seen as directed at the monopoly's influential former chief executive Vladimir Yakunin.

The regulator, which has closed over 200 suspect or substandard lenders in the past two years, identified "poor quality assets" and liquidity problems after assessing Millenium Bank's credit risk, according to a statement on its website.

Millenium Bank, which was ranked 282nd largest in Russia in terms of assets, was set up in 2002 and within a year had started helping Russian Railways to finance the construction of bridges, embankments and tunnels. Its client base included major contractors working with Russian Railways.

In 2012, Russian Railways acquired 35% of Millennium Bank through its affiliated entities, according to the company's earnings statement published in mid-2013.  However, Kommersant newspaper reports that the figure is now 48%. Vedomosti newspaper also reported last October that 11.7% of the bank's assets were owned by Russian Prosecutor General Yuri Chaika's son Igor through Russia's largest producer of railway sleepers Beteltrans.

The bank dealt extensively with Russian Railways' entities for many years, and provided the rail monopoly with services to place available funds on deposit accounts up to RUB50bn. In 2011, the lender entered into an agreement with Russian Railways to place ATMs and payment terminals at around 330 railway stations around the country.

Yakunin was sensationally ousted in August as head of Russian Railways, which is the country's biggest employer. Commentators said his departure may have been due to mismanagement or his flagrant liking for the good life, or it could be a signal that the statists are on the way out. His son Andrei's application to Britain for a passport was also cited as a catalyst for his exit.

Former employees of Russian Railways told Vedomosti newspaper on February 5 that the bank may be associated with the personal projects of Yakunin. His wife Natalia was a member of the bank's board of directors and the paper linked Yakunin's activities at his St Andrew Foundation to the bank and Russian Railways.

Yakunin, who is thought to have worked for Soviet intelligence while posted as a diplomat to the United Nations in New York during the Cold War, met with President Vladimir Putin last month supposedly to discuss an international think-tank that he is setting up to reduce global tensions. 

In an interview with Bloomberg News on January 13, Yakunin warned other members of Putin's inner-circle to know their place. 

"This circle will continue to rotate," he said, adding that Putin has yet to form a stable "ruling class like Russia had during tsarist times".