Business in Brief

Central Bank Wants to Tap Investors' Phones

The Central Bank has drafted amendments to the law on insider trading that would give the regulator access to police transcripts of phone taps and mail intercepts.

If adopted, the amendments would allow the Central Bank to request police to tap the phones and read the mail of those whom the bank suspects of "illegal activities," and then would give it access to those materials, Kommersant reported Monday, citing a bank spokesman.

Russia adopted its insider trading law three years ago, but not a single case has been successfully prosecuted. The Central Bank argues that the new amendments would help overcome the difficulties of proving insider trading cases in court.

Interior Ministry officials appeared skeptical about the proposal. Current regulations already allow the Central Bank to request wiretapping, but any monitoring would still need to be sanctioned by court, police officials said.

(MT)

Interest Rate Limits Proposed on Loans to Small Businesses

The A Just Russia political party has submitted a bill to the State Duma that proposes to cap interest rates for small- and medium-sized businesses which borrow funds under government programs to modernize production facilities.

The bill envisages that the credit rate for such loans would equal the Central Bank's refinancing rate plus three percent, Itar-Tass reported Monday.

The refinancing rate now is 8.25 percent, which would mean the rate offered to small and medium businesses would be set at 11.25 percent.

The proposal concerns loans provided by banks under government programs aimed to promote growth of small and medium businesses. Entrepreneurs have so far been reluctant to participate in these programs because of both high interest rates and the large amount of paperwork involved in applying and subsequently reporting ongoing business activity.

The loan program also obliges businessmen to set market-level salaries for their employees, though many prefer to minimize official salaries and pay partially in cash, in order to avoid payroll taxes.

Entrepreneurs have complained that the loans on offer are not big enough to set up a new production or modernize existing facilities, and that the credit period is frequently too short to be repaid on time.

(MT)

Kudrin Foresees $94Bln Budget Shortfall Through 2016

Former Finance Minister Alexei Kudrin said the country's budget income is likely to be short of three trillion rubles ($94 billion) in the next three years due to the slowdown in the economy's growth.

The former finance minister also said that this year's economic growth will be below the earlier forecasted 1.8 percent and will stand at 1.6 percent.

"Our growth potential for 2014 is about 2 percent, but may be even lower," Kudrin said, adding that in the next five years the annual economy's growth will not exceed the mark of three percent.

The government draft budget for 2014 to 2016, which is pending review in the State Duma, was criticized last week by the Audit Chamber for its forecast of annual economic growth of 3.3 percent.

(RIA Novosti)

MegaFon Contributes $91M to Skolkovo Business Center

Mobile operator MegaFon's board of directors has approved a contribution of 2.9 billion rubles ($91 million) to a non-profit organization whose projects include the construction of a business center at the state-owned Skolkovo technology park, Interfax reported Monday.

The recipient, a non-profit partnership called Development-Innovation-Technology, was co-founded by UTV, a media holding owned by MegaFon's majority shareholder Alisher Usmanov and the company's general director Ivan Tavrin, according to information on the Spark database of companies.

MegaFon joined the partnership in 2012 and contributed 1.05 billion rubles ($33 million) that year, the company's annual report said.

The planned Skolkovo business center will extend over more than 27,000 square meters and contain a 700-seat auditorium, exhibition areas, and office spaces among other amenities.

(MT)

Recycling Fees to be Tax Deductible

Recycling charges included in the price of any goods sold in Russia will be tax deductible, Deputy Prime Minister Arkady Dvorkovich said Monday.

Companies will be able to make the deductions from their taxable profits, Dvorkovich said, putting to bed a dispute between ministries on the issue, Interfax reported.

A law equalizing the levy of recycling fees on foreign and domestic car producers was signed by Vladimir Putin on Monday after a long battle with the World Trade Organization. In accordance with the principles of the trade club, which Russia joined in 2012, all goods should be given the same level playing field, Dvokovich said.

The government is currently drafting legislation that would guarantee the targeted use of funds received in the form of recycling fees.

(MT)

VTB 24 Plans $3Bln Sale of Mortgage Securities

VTB 24 plans to package 100 billion rubles ($3.1 billion) worth of mortgages into securities for sale on the market, in the largest-ever deal of this kind in Russia, Vedomosti reported Monday.

The state-owned bank is planning five separate sales, a VTB 24 executive told Vedomosti. Securitization refers to the practice of pooling various types of mortgages and repackaging them as new security, which is then sold off to investors who would draw their shares of profits from cash payments on the underlying mortgages.  

"I have never heard of banks securitizing such volumes, this is a very big number," said Dmitry Sapronov, product development chief of OTP bank

VTB 24, the retail arm of Russia's second-largest bank, securitized 18.6 billion rubles worth of mortgages in December 2012.

(MT)

Tinkov Raises Expectations With $1.1Bln London IPO

Russian entrepreneur Oleg Tinkov's consumer credit provider TCS is aiming to raise about $1.1 billion in its London flotation — higher than the $870 million previously expected, a financial market source said Monday.

TCS Holding Group, owner of Tinkoff Credit Systems, has rivaled state-controlled banks and grabbed market share in the high-margin business of consumer credit. The company focuses on Russia's regions where it delivers credit cards by courier.

The increased size of the offering is coming from existing shareholders selling more than previously planned, the source said.

Existing shareholders who plan to reduce their stakes are Oleg Tinkov and his private-equity backers — Vostok Nafta, Goldman Sachs, Baring Vostok and Ukraine's Horizon Capital.

The offer will still include the planned sale of new shares, raising $175 million for the company, the source said.

(Reuters)

RDIF Investment on High-Tech Projects Reaches $700M

The Russian Direct Investment Fund has allocated $700 million to project financing and is considering giving 12 billion rubles ($377 million) of further funding for future projects, Prime Minister Dmitry Medvedev said.

Medevdev, speaking at a council on foreign investments, said the Fund has attracted $2 billion and hopes to attract an additional 25 billion to 30 billion rubles from private investors, including foreigners, Interfax reported Monday.

The creation of favorable conditions for large-scale investment in the economy is one of the government's priorities, Medvedev said.

(MT)