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. Last Updated: 07/27/2016

Gazprom Aims to Widen Influence




Natural gas monopoly Gazprom may not be Russia's next financial-industrial group, but the company's recent acquisitions show Gazprom's desire to widen its influence beyond the energy sector.


Gazprom has always held a mishmash of assets unrelated to its core gas activities, but chairman Rem Vyakhirev is now turning to banking and media assets to strengthen its control over customers and over its controlling shareholder -- the federal government.


The gas giant last week said it will acquire a 25 percent stake in Inkombank, Russia's second-largest bank in terms of assets, and is also in the process of purchasing another 25 percent stake in Promstroibank, Russia's 17th largest bank by assets.


While some analysts dismiss the buying spree as expansion for expansion's sake, others see a method to Gazprom's madness. The banking holdings will give Gazprom more leverage to collect cash from customers and could help the monopoly boost its already potent political clout.


Collecting payment from debtors is the most obvious advantage, analysts say. Inkombank in particular is a major lender to Russian industry, giving Gazprom an extra measure of control over companies that owe it money.


Gazprom needs to get creative to force cash payment in an economy reliant on barter. Its cash collection last year amounted to 15 percent of total receipts, up from 12 percent in 1996. Owning a large chunk of Inkombank could boost that percentage significantly.


"Let's say a big metals plant comes back to Inkombank to renew its loan," said one oil analyst who asked not to be identified. "All of a sudden they find it more difficult because there is someone on the Inkombank board who says, we'd like to lend you money, but first you should pay Gazprom."


Owning stakes in the two banks will also give Gazprom access to 140 regional bank offices, helping further in payment collection. Gazprom also owns stakes in Bank Imperial and National Reserve Bank and runs the fully owned subsidiary Gazprombank.


Finances aren't the only motivating factor in Gazprom's banking acquisitions. The assets could give the company greater influence in the Kremlin and an additional source of funding to bankroll a presidential campaign.


Gazprom, which accounts for a staggering quarter of Russia's federal tax collection, has always held considerable sway with the government. But with its favorite protector, former Prime Minister Viktor Chernomyrdin, out of a job, the monopoly could be seeking additional avenues of influence.


Russian banks have long been the government's most reliable buyers of government securities. While foreign investors are currently attracted to high yields on GKOs, Russia will again be looking to banks when rates come down.


"If you are a bank with a large pool of money, you are one of the entities that can lend the government money when it goes into the GKO market," the oil analyst said. "Owning a stake in a bank is important in Russia -- it gives you influence in politics."


The media also lend considerable political influence, and Gazprom is clearly turning greater attention to that sphere. In January, the monopoly created Gazprom-Media, a wholly owned division that will steer Gazprom's considerable holdings in regional television and newspapers, as well as its 30 percent stake in NTV and its 3 percent in ORT.


"It is quite natural that Gazprom wants to create media friendly to it and to its future nominee for president," said another oil analyst, who requested anonymity.