Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Central Bank Mum on Claim It Used Palladium to Get Loan




The Central Bank declined to confirm or deny a newspaper report Thursday that it had used 300 metric tons of palladium as collateral for a $3 billion loan from a foreign bank.


"We will not comment on that," the bank's spokesman said.


Moskovsky Komsomolets said the Central Bank had exported palladium in December 1998 and January 1999.


It said the metal was deposited with Deutsche Bank and the money raised went to a Central Bank subsidiary abroad, but the eventual fate of the palladium remained unclear.


Deutsche Bank spokesmen contacted in both Moscow and Frankfurt declined to comment.


But an official with Rosbank, part of a banking group which controls Russia's sole palladium producer Norilsk Nickel, said the scheme described was feasible.


"In principle, if the state needs money it can make such a transaction," Yevgeny Ivanov, Rosbank's deputy chairman, said. "But if it has taken place, it was entirely financial in character, and caused no damage to the palladium market."


Moskovsky Komsomolets said the former chairman of the Central Bank, Sergei Dubinin, had secured a presidential decree allowing the bank to export palladium for use as loan collateral. But bureaucratic delays meant the decree was not signed until September 1998.


The paper said new Central Bank chairman Viktor Gerashchenko used the decree to export the metal.


Dubinin is on vacation until next week, his spokeswoman said Thursday.


Dealers and analysts were puzzled Wednesday by Swiss import data that showed more than 33 tons of semi-finished palladium had arrived in Switzerland in June, with 32 tons of it coming from Germany.


A German dealer suggested that the metal could be of Russian origin and might be linked to collateralized loan schemes.


But Rosbank's Ivanov dismissed this as improbable. "Annual export quota volumes for Russian [palladium] concentrate and semi-fabricated products are much lower than 33 tons."


He said that the metal could come from stocks, by some estimates as high as 150 tons, which have been accumulated by market participants in previous years when more palladium was sold to the market than consumed by the industry.


But he still had some doubts about the reported volume.