Russia

Rosneft has asked the Russian government for as much as Rb1.5tn ($42bn) in support, in a clear sign of the growing cost of western sanctions against Moscow, the Financial Times reported. The Russian government will consider a request from Igor Sechin, the powerful head of Rosneft, to offset the impact of western restrictions against the state-owned company within the next two weeks, Arkady Dvorkovich, deputy prime minister, told journalists on Thursday.

Two Russian travel operators declared bankruptcy as sanctions over Ukraine weaken the ruble and curb demand for foreign travel, particularly among state employees, Bloomberg News reported yesterday. Moscow-based Labirint suspended operations Aug. 2, while Intaer followed today, cutting off services to about 30,000 customers who bought trips to destinations including Greece, Turkey and Egypt, according to the Federal Tourism Agency.

The head of Russia's state development bank has ruled out taking part in a rescue of ailing miner Mechel, possibly making a rival government-promoted debt-for-equity deal involving creditors a more likely option to save the company, Reuters reported. Russia has been looking into ways to help Mechel, a coal-to-steel group with $8.6 billion in debt and 70,000 workers, for several months and has proposed two schemes, both involving a change in ownership.

An international court ruled that Russia owes shareholders of the now-defunct oil giant Yukos more than $50 billion for what it described as the Kremlin's "devious and calculated expropriation" of assets designed to bankrupt the firm, The Wall Street Journal reported. The compensation award is the largest the Permanent Court of Arbitration in The Hague has ever rendered, lawyers said. But it is only half what shareholders had sought, and any attempts to collect are expected to drag on for years.

With the latest round of sanctions against Russia, the United States Treasury Department said it had “increased the cost of economic isolation for key Russian firms,” like the state oil company Rosneft and the banking arm of the natural gas giant Gazprom, the International New York Times reported. The isolation, though, does not extend to the companies’ growing reliance on Chinese lending, a trend in the Russian natural resources industry that will blunt the effect of sanctions aimed at the finances of Russian oil companies. Energy companies form the backbone of the Russian economy.

The London High Court is convening a meeting of creditors of Russia’s aluminum giant RUSAL to vote on a scheme of arrangement of restructuring the company’s $5.15 billion debt, RUSAL said in a statement on Friday. RUSAL, which is the world’s largest aluminum producer, has earlier applied to the London and Jersey courts for the first time in Russia’s corporate history for debt restructuring after failing to win unanimous support from its creditors, the ITAR-TASS News Agency reported. The date of holding the creditors’ meeting was not specified in the statement.

Russian bank VTB's investment unit VTB Capital said it does not have any plans to provide liquidity or capital resources to Bulgaria's Corporate Commercial Bank (Corpbank), which was taken over by the country's central bank on Friday after a run on the bank, Reuters reported. VTB Capital owns around 9.1 percent of Corpbank's shares and bought the shares as part of a structured finance transaction, it said in a statement. Its exposure to Corpbank did not exceed 10 million euros from the outset, the bank said, adding that the amount was subsequently fully hedged.

President Vladimir Putin is trying to transform Crimea into the Singapore of the Black Sea. That effort so far has cost Russia’s newest republic its entire banking system and all three of its McDonald’s, Bloomberg News reported. After Putin annexed Crimea in March, the government in Kiev banned all lenders operating under Ukrainian law from the region. Now almost every bank on the peninsula, from billionaire Igor Kolomoisky’s Privatbank, Ukraine’s largest, to Italy’s UniCredit SpA (UCG) has been shuttered.

Russia’s first-quarter economic growth slowed to the weakest in a year as the standoff against the U.S. and its allies over Ukraine shrivels up investment. Gross domestic product advanced 0.9 percent in January-March from a year earlier after a 2 percent gain in the previous quarter, the Moscow-based Federal Statistics Service said in an e-mailed statement, providing its first estimate of first-quarter GDP. That was above the 0.7 percent median estimate of 19 economists in a Bloomberg survey. The Economy Ministry had projected that output expanded 0.8 percent.

Russian companies are facing tougher lending restrictions from western banks as sanctions against the country start to bite. Banks are insisting that new loans to Russian businesses that are not directly targeted by sanctions carry clauses forcing immediate repayment or default if sanctions affect those companies. “If someone sneezes towards your company, the loan becomes immediately due and payable,” said the chief financial officer of a large Russian group. Loan deals have almost dried up in the past two months since the Ukraine crisis erupted and Moscow annexed Crimea.