Present and past owners of OAO Bank Rossiya, the only company hit with sanctions for Russia’s takeover of Crimea, include three billionaires, two proteges of a Nobel Laureate and, according to a Spanish prosecutor, one possible mob boss.
Bank Rossiya’s rise from a Communist Party shell company to a conglomerate with $12.6 billion of assets dovetails with President Vladimir Putin’s own ascent to power. At least three of the lender’s early shareholders, including Yury Kovalchuk, who now has 40 percent, and OAO Russian Railways chief Vladimir Yakunin, have homes at Putin’s lakeside dacha compound near St. Petersburg. Another stakeholder is one of Putin’s relatives.
“The idea was to deal a blow to Putin’s inner circle,” says Andrei Katkov, a former partner of billionaire oil trader Gennady Timchenko, referring to the U.S. decision to sanction the lender and more than two dozen Russians last month. Katkov, the bank’s chairman from 1998 to 2004, when he owned a 6.4 percent stake that he later sold, wasn’t on the U.S. list.
Putin, 61, opened an account at the bank a day after the U.S. Treasury sanctioned the company and Kovalchuk, who also runs one of Russia’s largest media groups, as well as Timchenko, 61, and Yakunin, 65. Putin said the lender, based near a St. Petersburg palace named in honor of Catherine the Great’s annexation of Crimea in 1783, had nothing to do with his decision to reacquire the Black Sea peninsula.
What Bank Rossiya does have, though, is a relationship with Putin that dates back to 1991, when the former KGB colonel was named head of St. Petersburg’s foreign relations committee, just six months before the collapse of the Soviet Union.
The decline of the command economy was giving way to an era of chaos and opportunity, forcing millions of people to adapt to the emerging form of capitalism. Just as Putin traded espionage for politics, Kovalchuk, 62, and fellow physicist Andrei Fursenko, proteges of future Nobel Prize winner Zhores Alferov, swapped physics for finance.
As research funding dried up, Kovalchuk and Fursenko, now an adviser to Putin, abandoned their scientific careers to try their luck in the free market. With funding from a shoe mogul, they bought Bank Rossiya, a little-used deposit holder for the Communist Party, partly because it had an office in city hall, according to “Young Russia,” a film about the new band of bankers that director Igor Shadkhan shot in 1994 to 1996.
“We didn’t run away from science, it ran away from us,” Viktor Myachin, who joined his fellow physicists in the venture and served as chief executive officer of the bank until 2004, said in an interview. “We did experimental physics, which required equipment and materials we could no longer afford.”