Promsvyazbank
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Promsvyazbank (PSB; rus, ПАО "Промсвязьбанк") is a
state-owned State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community, as opposed to an individual or private party. Public owne ...
, formerly private Russian
bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
from Moscow. It was owned by oligarchs Dmitry Ananyev and his brother Alexei Ananyev. As of 2012, it was the 10th-largest bank in Russia by assets. The bank was established in May 1995 by the Ananyev brothers, the owners of Technoserv, the largest systems integrator in the CIS. Its first customers were major telecom companies such as Rostelecom. Between 2006 and 2012, a 15.32% stake was owned by
Commerzbank Commerzbank AG () is a major German bank operating as a universal bank, headquartered in Frankfurt am Main. In the 2019 financial year, the bank was the second largest in Germany by the total value of its balance sheet. Founded in 1870 in Hambur ...
. In February 2010, an 11.75% stake was acquired by the EBRD. By February 2016, the bank provided services to more than 100,000 corporate and over 2 million private customers. In 2018, the Russian government nationalized the bank, and prosecuted its former owners;
Interpol The International Criminal Police Organization (ICPO; french: link=no, Organisation internationale de police criminelle), commonly known as Interpol ( , ), is an international organization that facilitates worldwide police cooperation and cr ...
found the prosecution to be politically motivated. Promsvayzbank was officially designated as a supporting bank of the Russian defense sector. In response to the
prelude to the 2022 Russian invasion of Ukraine In March and April 2021, the Russian Armed Forces began massing thousands of personnel and military equipment near Russia's border with Ukraine and in Crimea, representing the largest mobilization since the illegal annexation of Crimea ...
, specifically the recognition of the
Luhansk People's Republic The Luhansk or Lugansk People's Republic (russian: Луга́нская Наро́дная Респу́блика, Luganskaya Narodnaya Respublika, ; abbreviated as LPR or LNR, rus, ЛНР) is a disputed entity created by Russian-backed ...
and
Donetsk People's Republic The Donetsk People's Republic ( rus, Донецкая Народная Республика, Donetskaya Narodnaya Respublika, dɐˈnʲetskəjə nɐˈrodnəjə rʲɪˈspublʲɪkə; abbreviated as DPR or DNR, rus, ДНР) is a disputed en ...
as independent from
Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inva ...
by Russian President
Vladimir Putin Vladimir Vladimirovich Putin; (born 7 October 1952) is a Russian politician and former intelligence officer who holds the office of president of Russia. Putin has served continuously as president or prime minister since 1999: as prime min ...
on February 21, 2022, Promsvyazbank has been the target of sanctions from multiple countries including Canada, the United Kingdom, and the United States.


Early history

Promsvyazbank was founded in 1995 in Moscow by brothers and . Initially engaged in services of telecommunication companies, it later began to develop as a universal bank. By the mid-2000s, it entered the top-20 Russian banks. In the period from 2004 to 2007, the total capital of the bank increased sixfold – from 6 to 36.3 billion rubles, assets – from 41.9 billion to 293.2 billion rubles. Offices of Promsvyazbank appeared in 90 settlements of Russia. In 2014, the
Bank of Russia The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
recognized Promsvyazbank as one of the three systemically important banks. From 2006 to 2012, one of the PSB shareholders was the top German
Commerzbank Commerzbank AG () is a major German bank operating as a universal bank, headquartered in Frankfurt am Main. In the 2019 financial year, the bank was the second largest in Germany by the total value of its balance sheet. Founded in 1870 in Hambur ...
, with a 15.32% share. In 2012, Commerzbank had to withdraw as a shareholder, however, and sell its shares to the founders. In 2010, the
European Bank for Reconstruction and Development The European Bank for Reconstruction and Development (EBRD) is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies. Initially fo ...
became a shareholder, buying 11.75% of the shares. At the end of 2016, Promsvyazbank's assets amounted to 1.2 trillion rubles, the corporate loan portfolio amounted to 676 billion rubles, and the retail one – 69 billion rubles. The bank is among the top-10 Russian banks in terms of attracting private deposits. Promsvyazbank actively provided loans to the corporate sector. However, after the crises of 2008 and 2014, the quality of these loans declined. The bank began to seize enterprise debtors, hoping to recover money from their resale. At about the same time, Promsvyazbank began to actively finance projects of its owners, which in the end became one of the reasons for its nationalization.


Nationalization

Promsvyazbank's problems began in 2017. The trigger was a letter to clients from an analyst of Alfa-Capital, Sergei Gavrilov, in which Gavrilov named Promsvyazbank as being among four problem banks threatened by restructuring. In autumn, the presence of problems at the bank was confirmed by
Moody's Moody's Investors Service, often referred to as Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides internationa ...
. In December 2017, the
Central Bank of Russia The Central Bank of the Russian Federation (CBR; ), doing business as the Bank of Russia (russian: Банк России}), is the central bank of the Russian Federation. The bank was established on July 13, 1990. The predecessor of the bank can ...
(CBR) introduced a temporary administration at Promsvyazbank, and then announced that it had found signs of illegal transactions, including the disappearance of credit folders worth more than 100 billion rubles. Soon the Ananyev brothers, the bank's co-founders, left Russia. The new administration has been requesting compensation from the ex-owners for the damage it claims to have suffered because of their mismanagement. In 2019 their property (planes, cars, paintings, etc.) was sized by court order. Later the Ananyevs were charged with multi-million-dollar embezzlement, arrested ''
in absentia is Latin for absence. , a legal term, is Latin for "in the absence" or "while absent". may also refer to: * Award in absentia * Declared death in absentia, or simply, death in absentia, legally declared death without a body * Election in ab ...
'' and added to
Interpol The International Criminal Police Organization (ICPO; french: link=no, Organisation internationale de police criminelle), commonly known as Interpol ( , ), is an international organization that facilitates worldwide police cooperation and cr ...
’s wanted list. In December 2020, Interpol removed the brothers from its list, finding the Russian prosecution to be politically motivated. Three years later, Dmitry Ananyev, one of the co-founders of PSB, said that the plan to nationalize the bank and use it for the needs of the defense industry originated from the CBR back in 2015. According to the banker, pressure was put on him, including threats to open a criminal case or even to kill him. In January 2018, the Central Bank recognized the capital base of PSB as negative and reduced its authorized capital to 1 ruble. PSB was delisted from the
Moscow Stock Exchange The Moscow Exchange (MOEX; rus, Московская биржа, r=Moskovskaya birzha, p=mɐˈskofskəjə ˈbʲirʐə, a=) is the largest exchange in Russia, operating trading markets in equities, bonds, derivatives, the foreign exchange market ...
. In March, the State
Duma A duma (russian: дума) is a Russian assembly with advisory or legislative functions. The term ''boyar duma'' is used to refer to advisory councils in Russia from the 10th to 17th centuries. Starting in the 18th century, city dumas were f ...
adopted a law according to which the PSB would become the property of the state. An additional share issuance was carried out in the amount of RUB 113.4 billion. These shares were redeemed at a nominal price by the state Deposit Insurance Agency of Russia, which transferred them to the
Federal Agency for State Property Management The Federal Agency for State Property Management (Rosimushchestvo) () is a subdivision of the Russian Ministry of Economic Development that manages Russia's federal state property. History The agency was formed by a presidential decree, No.314, ...
in May 2018. According to the decision of the Russian government, PSB has become a captive bank for the Russian defense sector.
Petr Fradkov Petr Mikhaylovich Fradkov (russian: Пётр Михайлович Фрадков; born 1978) is a Russian economist and banker serving as the chairman and CEO of Promsvyazbank and the general director of the . On 28 February 2022, in relation to ...
, the eldest son of the former prime minister (2004-07) and former foreign intelligence chief (2007-16)
Mikhail Fradkov Mikhail Yefimovich Fradkov ( rus, Михаи́л Ефи́мович Фрадко́в, p=mʲɪxɐˈil jɪˈfʲiməvʲɪtɕ frɐtˈkof; born 1 September 1950) is a Russian politician who served as Prime Minister of Russia from 2004 to 2007. An In ...
, was appointed head of the bank (in the position of chairman of the interim administration). In September, the Central Bank terminated the temporary administration. Petr Fradkov became the chairman of the PSB. As a result of the reorganization measures, by the end of 2018, Promsvyazbank had RUB 149.5 billion of equity capital and RUB 1280.8 billion of assets.


Sanctions and Ukraine crisis

Due to the transformation of Promsvyazbank into a "defense" bank, the Russian authorities had concerns about US sanctions. A number of steps have been taken to protect customers and the bank's management. Customers were asked to sell or withdraw foreign securities, and convert or withdraw dollar deposits. The composition of the bank's board was classified, Petr Fradkov is the "sole executive body". (He said that he was not afraid of personal sanctions). On February 21, 2022, Russian President
Vladimir Putin Vladimir Vladimirovich Putin; (born 7 October 1952) is a Russian politician and former intelligence officer who holds the office of president of Russia. Putin has served continuously as president or prime minister since 1999: as prime min ...
signed a decree declaring the
Luhansk People's Republic The Luhansk or Lugansk People's Republic (russian: Луга́нская Наро́дная Респу́блика, Luganskaya Narodnaya Respublika, ; abbreviated as LPR or LNR, rus, ЛНР) is a disputed entity created by Russian-backed ...
and
Donetsk People's Republic The Donetsk People's Republic ( rus, Донецкая Народная Республика, Donetskaya Narodnaya Respublika, dɐˈnʲetskəjə nɐˈrodnəjə rʲɪˈspublʲɪkə; abbreviated as DPR or DNR, rus, ДНР) is a disputed en ...
independent from
Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inva ...
. This prompted several countries to ready and impose
economic sanctions Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may ...
on companies and individuals deemed close to the
Russian government The Government of Russia exercises executive power in the Russian Federation. The members of the government are the prime minister, the deputy prime ministers, and the federal ministers. It has its legal basis in the Constitution of the Russia ...
. On February 22, 2022, British Prime Minister
Boris Johnson Alexander Boris de Pfeffel Johnson (; born 19 June 1964) is a British politician, writer and journalist who served as Prime Minister of the United Kingdom and Leader of the Conservative Party from 2019 to 2022. He previously served as F ...
announced sanctions against five banks, including Promsvyazabank. United States President Joe Biden also imposed sanctions against multiple Russian individuals and companies, including Promsvyazbank. In addition, Canadian Prime Minister
Justin Trudeau Justin Pierre James Trudeau ( , ; born December 25, 1971) is a Canadian politician who is the 23rd and current prime minister of Canada. He has served as the prime minister of Canada since 2015 and as the leader of the Liberal Party since 2 ...
announced he was moving to impose sanctions as well.


Modern history

* In 2018, the Russian government initiated the transfer of loans issued to defense enterprises to Promsvyazbank. In the summer of 2019, Petr Fradkov estimated their volume at 250 billion rubles. * In December 2019, a law was passed that finally endowed PSB with the functions of a supporting bank for the military-industrial complex. This law prohibited the sale of state-owned shares of the bank. * In December 2019, Promsvyazbank became the owner of more than 99% of . This bank had a wide network of branches, was in the top 30 in terms of private deposits, and in the top 10 in terms of mortgage lending. The bank has been under restructuring since 2008, its shares were on the balance sheet of the state
Vnesheconombank VEB.RF, or VEB (russian: ВЭБ.РФ (ex-Vnesheconombank)), is a Russian state development corporation. It was founded in 2007 as a development institute. VEB.RF is an investment company and development institute in Russia. It has financed more t ...
. To transfer Sviaz Bank to a new owner, its shares were first transferred to the
Federal Agency for State Property Management The Federal Agency for State Property Management (Rosimushchestvo) () is a subdivision of the Russian Ministry of Economic Development that manages Russia's federal state property. History The agency was formed by a presidential decree, No.314, ...
. Then Promsvyazbank carried out an additional issue of its shares, which were exchanged for the shares of Sviaz Bank. In May 2020, Sviaz Bank was fully incorporated into Promsvyazbank. This increased its assets by RUB 200 billion, and its capital grew by RUB 22 billion. * In December 2020, Promsvyazbank acquired Roscosmosbank, a subsidiary bank of
Roscosmos The State Space Corporation "Roscosmos" (russian: Государственная корпорация по космической деятельности «Роскосмос»), commonly known simply as Roscosmos (russian: Роскосмос) ...
. According to media reports, the bank was sold at the price of the authorized capital (4.19 billion rubles), and as payment Promsvyazbank issued promissory notes with maturity until 2032. The merger was completed by May 2021. The equity of Promsvyazbank increased by 33 billion rubles. 120 subsidiaries of Roscosmos and about 200 thousand employees became its clients. The branch network of Promsvyazbank was replenished with branches at cosmodromes, including
Baikonur Baikonur ( kk, Байқоңыр, ; russian: Байконур, translit=Baykonur), formerly known as Leninsk, is a city of republic significance in Kazakhstan on the northern bank of the Syr Darya river. It is currently leased and administered ...
. * According to the report for 2020, the total assets of Promsvyazbank as of December 31 were RUB 2764 billion, total equity was RUB 248.4 billion, operating income was RUB 104.1 billion and net profit was RUB 25.9 billion. * In March 2021, Promsvyazbank proposed to the government to create a “capitalization fund” to finance large projects. As conceived by the initiators, when financing projects approved by the state, banks can attract endowment capital from a special fund in the amount of 2 trillion rubles. The proposal is being studied at the Russian Ministry of Industry and Trade. * In April 2021, the Bank of Russia approved a plan to transfer the rehabilitated to Promsvyazbank. Bad assets will be transferred to Trust Bank. * In the April 2021 rating of The World’s Best Banks by
Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
, PSB was ranked 14th among Russian banks. * In 2022,
Government of Russia The Government of Russia exercises executive power in the Russian Federation. The members of the government are the prime minister, the deputy prime ministers, and the federal ministers. It has its legal basis in the Constitution of the Russia ...
sets up to increase bank's capital by 13 billion 731 million rubles from public funds. * In February 2022, the bank acquired non-State pension fund "Gefest" from "United Metallurgical Corporation". * In 2022, Promsvyazbank increased its authorized capital to 175.2 billion rubles.


References


External links


Official website
{{Authority control Banks of Russia Companies based in Moscow Banks established in 1995 1995 establishments in Russia Government-owned banks Russian entities subject to the U.S. Department of the Treasury sanctions