Russia

The World Bank on Wednesday slashed its forecast for Russia's economy over the next two years, saying growth would stagnate amid a lack of structural reforms and Western sanctions over Russia's role in the Ukraine conflict, The Wall Street Journal reported. In its biannual report, the World Bank cut its forecast for Russian economic growth to 0.3% in 2015 and 0.4% in 2016 under its baseline scenario from 1.5% and 2.2%, respectively—well below the government's estimates.

Russia will remain committed to developing its market economy as the state offers billions of dollars of aid to help the country’s biggest companies weather sanctions imposed by the U.S. and Europe, Bloomberg News reported. Prime Minister Dmitry Medvedev met with business leaders to discuss state aid to cope with the strain as Russia’s economic slowdown is exacerbated by the sanctions, Economy Minister Alexei Ulyukayev said today at an investment forum in the Black Sea city of Sochi, site of the Winter Olympics.

A planned $2bn deal between Rosneft and oil trader Vitol has been shelved, in the latest sign that tougher western sanctions are hampering the Russian state oil group’s ambitions, the Financial Times reported. Vitol, the world’s largest independent oil trader, had been in talks for several months to raise about $2bn from US and European banks to make an advance payment to Rosneft in exchange for future oil supplies. The talks were first reported by the FT in March.

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.