After Putin was elected in 2000, he vowed to eliminate “as a class” the Yeltsin-era insiders who got rich through their ties to the government. While Putin tightened his grip on power and gained popularity by reining in the oligarchs, oil output and prices surged, triggering an economic expansion that averaged 7 percent a year in his first two terms. That helped lay the groundwork for the emergence of a new class of billionaires, this one with ties to Putin himself, including Arkady Rotenberg, his former judo partner, and Timchenko.

Mordashov, Gazprom

Kovalchuk and Bank Rossiya were no exception. From 2000 through 2003, when OAO Severstal steel billionaire Alexei Mordashov bought an 8.8 percent stake, the lender’s assets surged 13-fold to 6.5 billion rubles ($180 million). Since then, after acquiring state-run OAO Gazprom’s pension fund and insurance arm, the lender’s assets have jumped another 69-fold to 449 billion rubles, making it the 14th largest bank in the country, central bank data show.

Bank Rossiya’s business depends on Gazprom, the former Soviet gas ministry and a minority shareholder in the lender, Standard & Poor’s said last August. Gazprom and the other of Bank Rossiya’s 20 largest depositors account for about 60 percent of the lender’s total liabilities, according to S&P.

In 2012, the bank loaned 319 billion rubles to corporate clients, financial institutions and government entities and just 4 billion rubles to individuals, the ratings company said. This “selective” policy has led to a ratio of non-performing loans to total lending of just 1.8 percent, which is one of the lowest in the country, S&P said.

‘Administrative Resources’

After the blacklist prompted Visa Inc. and MasterCard Inc. to stop processing its cards, Bank Rossiya said it would create its own payment system. S&P cut its outlook for Bank Rossiya to “negative” from “stable” and then withdrew the BB-/B rating last month to comply with U.S. law.

Mordashov, Severstal’s billionaire CEO, bought Bank Rossiya shares a decade ago to gain “political risk insurance,” according to a banker close to the businessman, asking not to be identified because the information is private.

Being a stakeholder in a bank run by Putin confidants and a relative of the president provides “administrative resources” that are essential to doing business in Russia, the banker said. Mordashov, 48, who now controls 5.9 percent of the lender, declined to comment through his press service.

With Mordashov’s help, Bank Rossiya in 2004 acquired Gazprom’s insurance arm, Sogaz, a bigger company. As part of that deal, Mikhail Shelomov, the son of Putin’s cousin and a Bank Rossiya shareholder, gained 13.5 percent of the insurer, a stake that later fell to 12.5 percent, regulatory filings show. Shelomov couldn’t be reached for comment through Bank Rossiya. He holds 3.8 percent of the lender.

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