One of Russia's largest non-state pension funds (NPFs) Budushee posted negative return of 12.6%, meaning it lost every eight ruble of the savings of its 4.5mn clients in 2018, Vedomosti daily reported on April 4. 

Budushee was one of the pension funds used by the so-called Garden Ring leading commercial banks to fund their expansion. The Garden Ring banks went bust in the autumn of 2017 and had to be rescued by the CBR, nearly sparking the systematic meltdown on of the Russian financial system.

The total loss in 2018 stood at RUB38bn ($58.3mn), while the liabilities exceeded the assets by RUB30.6bn. In 2017 the NPF also had a negative return of 3.98%.

Budushee was controlled by O1 Group of billionaire Boris Mints, but was recently bought out, together with other assets of Mints, by Cyprus-based Riverstretch Trading & Investments (RT&I) that reportedly is affiliated with state-controlled Rosneft oil giant.

Mints was a shareholder in Promsvyazbank (PSB), one of largest private banks bailed out by the Central Bank of Russia (CBR) in 2017, and has his businesses suffering from banking assets contagion, risking losing over RUB20bn in assets after the CBR takeover of PSB and Financial Corporation Otkritie last autumn.

"The bank scam was based on getting pension funds and using their money to pump loan books and manipulate the market," unnamed industry sources told bne IntelliNews commenting on the reports of losses made by Budushee.

As reported by bne IntelliNews, while previously NPFs were clustering around private financial groups, the banking sector clean-up shook the market and shifted the bulk of pension savings to state and quasi-state groups, under the watchful eye of the Central Bank of Russia.

After buying Budushee from Mints, RT&I then sold 49% in the NPF to Leningradskoye Adazhio, controlled by Sergei Sudarikov of the Region investment company. After that Budushee issues RUB15mn worth of additional shares. 

Region is also one of the largest players in the ongoing pension market consolidation. The company affiliated with Rosneft oil major has been buying stakes in such NPF assets as Traditsia fund, Soglasiye, and Neftegarant, in addition to Budushee and RT&I.

Region's fragmented pension assets are estimated at RUB520bn and are reportedly managed by the ex-top manager of Sberbank Galina Morozova. 

About RUB1.4 trillion ($21bn) of pension assets are concentrated around Gazprombank and its parent, the state-owned natural gas giant Gazprom, with the latest acquisition being the NPF Blagosostoyaniye, with 50% minus one share acquired from Russian Railways. Other Gazprom-affiliated pension assets include Gazfond, SOGAS, and Lider.

Sberbank, Russia's largest state-controlled bank, is de-facto the market leader, managing RUB618bn of pension assets through its NPF structure that expands organically and made only one acquisition recently of VNIIEF Garant. The fourth major player with RUB570bn of assets is being formed on the basis of NPF assets of bailed Financial Corporation Otkritie.