Russia

Conspicuous consumers helped some luxury brands report their best-ever results in Russia in 2015, even as overall retail sales dropped 10 percent, Bloomberg News reported. About half of Russians can barely afford purchases beyond food and other basics, according to national polls. Some global luxury brands are betting the trend will continue, opening new shops across the Russian capital. GUM, the ornate department store across Red square from the Kremlin, saw Bulgari and Jimmy Choo boutiques open late last year, while Hermes doubled its selling space, according to a GUM spokeswoman.

Russia is lining up seven major state companies, including Aeroflot, Alrosa, the diamond miner, and Rosneft, for potential privatisation as the Kremlin debates drastic options to replace dwindling oil revenues, the Financial Times reported. The decision to consider the first such comprehensive push in years comes as the latest slide in crude prices is expected to drive Russia into a second year of recession and has ripped a gaping hole in its budget.

Russia’s economy shrank 3.7 per cent in 2015, the worst drop since the depths of the global financial crisis, as the country struggled with a drop in the price of its oil exports and international sanctions, the state statistics service said Monday, The Globe and Mail reported. The decline is the sharpest for Russia since 2009, when the world economy was suffering from the effects of a credit crunch and financial crisis. It matched the most recent prediction from the IMF, which forecasts another fall of 1 per cent in 2016 before a return to 1 per cent growth next year.

Russian state defence company Rostec will provide additional capital to its subsidiary bank Novikombank due to revaluation of loans to companies that fell under Western sanctions, according to a Rostec statement, Reuters reported.

Russian state development bank VEB will need state funds in the second quarter of this year, its chairman Vladimir Dmitriev was quoted as saying on Friday, after the bank was granted an extension on some of its liabilities late last year, Reuters reported. Russian authorities had previously been considering a package of as much as 1.2 trillion roubles ($15.2 billion) to VEB over a couple of years, to help the state bank to deal with bad loans and pay off some of its debt.

Russia's central bank said on Thursday it had revoked the licence of Vneshprombank, a major mid-sized bank whose collapse is one of the a largest-ever in Russia, Reuters reported. The central bank said it had closed the bank, one of the top 40 by assets, after discovering it had a hole in its balance sheet estimated at 187.4 billion roubles ($2.3 billion). The move underscores the growing strain on the country's banking sector as an economic slump is exacerbated by plunging oil prices.

Russia will cut interest rates on the central bank's deposits in ailing state development bank Vnesheconombank (VEB), said Finance Minister Anton Siluanov, Reuters reported today. The proposal is part of measures aimed at helping the ailing bank, which has been hit by Western sanctions over Moscow's role in the Ukraine crisis and is facing bad loans and heavy external debt repayments. The ministry previously proposed to also extend the National Wealth Fund's (NWF) deposits in VEB for five years and to cut interest rate on these deposits.

Russia's finance ministry has proposed to extend the National Wealth Fund's deposits in state development bank Vnesheconombank (VEB) for five years, Reuters reported today. The ministry also suggested that the government should extend the Fund's deposits in VEB at an interest rate of no less than 0.25 percent with a three-year grace period, the document published on the website for official drafts (www.regulation.gov.ru) showed. Read more.

A special working group must prepare by year-end measures for state support of VEB, Russia's state development bank, its chairman Vladimir Dmitriev said today, Reuters reported. The Russian authorities are considering support for VEB worth 1.2 trillion roubles ($16.85 billion) which aims to help it deal with bad loans and repay external debt. Dmitriev said that the bank was responsible for "certain tasks" which might negatively affect its balance sheet at some point, so the state must share responsibility for funding such operations and provide "other forms" of support if needed.

Russia lashed out against the International Monetary Fund and the Ukrainian government on Wednesday as it prepares for a legal battle with Kiev over repayment of $3bn in Ukrainian debt, the Financial Times reported. Anton Siluanov, finance minister, said if Kiev failed to redeem the $3bn bond within 10 days of its December 20 maturity or accept a restructuring proposal tabled by President Vladimir Putin last month, Russia would sue Ukraine. “Well all right, go to court,” Mr Putin told Mr Siluanov in a televised government meeting.