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. Last Updated: 07/27/2016

Business in Brief

AIG to Enter Russia

WASHINGTON (Prime-Tass) -- American International Group plans to create a new investment fund for Russia worth about $30 million to $50 million, Itar-Tass reported AIG CEO Maurice Greenberg as saying Wednesday.

AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States.

Greenberg also said AIG was looking to buy a Russian insurance company. AIG is currently discussing such a possibility with the Russian Military Insurance Company, which specializes in space-related insurance activities, Greenberg added without elaborating.

AIG would not be held back from entering the Russian market by opposition from local insurance companies, he said.

4% Growth Forecast

MOSCOW (Reuters) -- The Economic Development and Trade Ministry said Wednesday that the country's economy will show annual growth of around 4 percent this year and stuck to its annual inflation target of 14 percent.

"The dynamics of [economic] growth will remain positive until the end of the year," said Arkady Dvorkovich, deputy head of the ministry.

"The range of growth for the whole year is forecast at between 3.8 and 4.2 percent, although we think that the most likely outcome will be 3.9 to 4.0 percent," he told a conference.

Vimpelcom Ad Woes

MOSCOW (Vedomosti) -- A Vimpelcom commercial that claims mobile phone subscribers will be charged on a second-by-second basis has been declared misleading and illegal by the Anti-Monopoly Ministry. The cellular operator responded by saying the ministry is too late, as the erroneous ad has already been fixed.

The commercial tells consumers they will be charged per second, as opposed to per minute, when using the company's Beeline plans. Ministry spokeswoman Larisa Bulgak said Vimpelcom charges customers per second under only a few of its tariff plans. The television commercial contains no warning that some of Vimpelcom's tariffs are charged on a per-second basis only after the first minute of conversation.

The ministry ordered Vimpelcom to withdraw all its print and electronic advertising immediately. The company has also been fined 400 minimum wage units, currently equivalent to 180,000 rubles ($5,690).

Vimpelcom's public relations head, Mikhail Umarov, expressed surprise at the ministry's actions. Vimpelcom fixed the problem after ministry representatives first informed it of its complaints at the beginning of August, he said.

Cell Use Rockets

MOSCOW (Prime-Tass) -- The number of mobile phone subscribers in Russia has doubled since September 2001 to 13.5 million as of early September 2002, Deputy Communications Minister Alexander Pronin said Wednesday.

The number of mobile subscribers stood at 10.7 million in late July, up from about 8 million at the beginning of the year, the Communications Ministry reported in late July.

Russia's cellular market real development has gone beyond analysts' expectations, Pronin said. While analysts had earlier predicted the total number of mobile phone users to increase by 3 million in 2002, the actual growth amounted to about 5.7 million users by September.

No Ukrainian Miracle

KIEV (Reuters) -- Ukraine's central bank said Wednesday that it had cut its forecast for gross domestic product growth this year from 6 percent to between 4.8 percent and 5.2 percent due to the global economic downturn.

Anatoly Halchynsky, head of the central bank council and an economic adviser to Ukrainian President Leonid Kuchma, also said the central bank expected gross domestic product growth to stabilize in 2003, standing at around 4.5 percent to 4.8 percent.

"We think that the forecast for [GDP growth] this year of 6 percent will not be realized. … Six percent would be a Ukrainian miracle. I do not believe in that miracle," he said.

Gazprombank Profits

MOSCOW (Prime-Tass) -- The net profits of major private bank Gazprombank totaled $153 million in January-June according to international accounting standards, the bank said in a statement Wednesday.

The bank posted a net profit of $81 million in 2001, but comparative data for the first half of 2001 were not available.

The increase in profits was due to rising revenues in the bank's loan portfolio, revenues from investment projects and an increase in the value of the bank's hard currency-denominated assets and securities portfolio, the statement said.

Sberbank Gold Spree

MOSCOW (Prime-Tass) -- No. 1 bank Sberbank plans to buy more than 20 tons of gold from producers this year, Sberbank's currency and nontrade operations department head, Vladimir Tarankov, said Wednesday.

The state-controlled bank has bought 12 tons from gold producers so far this year, he added.

Domestic banks have contracts to purchase 178 tons of gold from producers this year.

$40M Aeroflot Credit

MOSCOW (Prime-Tass) -- Flagship carrier Aeroflot is expected to take out a one-year, $40 million loan from a syndicate of Russian and foreign banks in October 2002, Pavel Gurin, head of the investment and banking operations department at the Russian division of Raiffeisenbank, said Wednesday.

He said Raiffeisenbank Austria, its Russian branch, ZAO Raiffeisenbank, and Citibank will provide the loan at an interest rate of LIBOR plus 3.5 percent.

Gurin said seven banks participated in Aeroflot's tender for the loan.

Aeroflot chief treasurer Sergei Sukovatov, who also took part in the conference, said the loan would be used to lease new planes as part of the company's plans to upgrade its foreign-built fleet of 27 jets.

In addition, Sukovatov said Aeroflot may issue eurobonds in late 2003 worth up to 100 million euros ($98 million).

Moscow Sees $8Bln

MOSCOW (MT) -- Moscow plans to tally $8 billion in investment in 2002, Interfax reported Deputy Mayor Iosif Ordzhonikidze as saying Wednesday.

He said the figure is comparable to Moscow's budget for the year. Last year, $5.6 billion was channeled into Moscow.

Germany is the No. 1 investor in Moscow, followed by the United States, the Netherlands, Britain and Switzerland.

He said 24 percent of the sum is represented by direct investment.