Russia may wind up with the most broadly diversified banks in the world by complete accident. While banks in the US and Europe can look forward to seizing more conventional collateral assets such as houses when loan recipients run into trouble, Russian banks may truly wind up becoming banking supermarkets.
When Russian billionaire Alexander Lebedev’sOAO National Reserve Bank seized collateral offered against a loan from a cash-strapped borrower, a health quarantine was slapped on the security: 40,450 pigs.
“We had a court decision to take away the collateral, which is the pigs,” Lebedev, 49, said in an interview in Moscow.
With some estimates placing the level of loans secured by “strange assets” at state banks at close to 20%, it’s not just tens of thousands of pigs Russian banks need to make space for.
The list of unorthodox collateral filling up banks’ balance sheets is long. Sberbank received a holding of 50 percent plus one share in Wild Orchid. Russia’s biggest lingerie retailer pledged the stake as it seeks to restructure 1.6 billion rubles of debt owed to Sberbank, Anton Sergeyev, a spokesman at Wild Orchid, said by phone.
VTB has taken majority stakes in 11 alcohol producers as payment for debt and became a majority shareholder in two developers, including a project to overhaul the Dynamo soccer stadium in Moscow.
But this could be a major diversification opportunity for state-run banks. What could possibly go wrong when your institution is a major player in sex and alcohol?
“It’s becoming necessary for banks to run businesses they wouldn’t have dealt with a year or two ago,” (deputy chief of Russia’s Deposit Insurance Agency Andrei) Melnikov told reporters in Moscow today. The process may act as a “diversion” from the banks’ main activity, he said.
Russian Banks Count Pigs, Lingerie as Collateral [Bloomberg]
Attaching a booby pic to this post would be putting lipstick on a pig.
Bess:
Mind posting this video by Slim Thug about still being a “Boss” despite these recessionary times?
http://newsroom.mtv.com/2009/10/09/slim-thug-still-a-boss/
Go to 56sec.
We see nothing wrong with this and in fact would like to throw our chapeaus into the ring for consideration of Sex and Alcohol Bank Czars.
-ES & KL
Let my people go!
-Wilbur
My singlet is already in the ring. However, I will need to redo some of their offices.
- JT
best Greg post ever.
Overheard at DB:
BL: I will take all the interesting and provocative news items that appear and write on them. Greg – you take anything international or patently dull for now and try not to draw the ire of the collective readership. ok?
GM: Whatever you say, Boss!
Greg,
Once you are done with my lipstick please shove it up your ass.
Fondly,
Mum.
Let your imagination run wild, Greg. What Would Bess Do? She would ask the readers what ELSE might be currently used as collateral, at home and abroad. LB’s gold scrot? 131,384,458 cases of Boone’s on hand for collateral confirms at BAC? The souls of 2,300 new JPM analysts for anything JD wants to buy?