Frustrated Russia blasts EBRD for funding ban

In an exclusive interview with GlobalMarkets, Russia’s executive director on the EBRD has hit out at the bank’s decision to shut five offices, saying it went against shareholders’ desire to see more private sector development

  • By Virginia Furness
  • 15 Oct 2017
Email a colleague
Request a PDF


Morozov
Morozov: ‘crazy decision’ © Some rights reserved World Economic Forum
The European Bank of Reconstruction and Development’s decision to close five offices in Russia last week has dealt a potentially fatal blow to relations with its founding partner, Denis Morozov, Russia representative at the EBRD told GlobalMarkets. He said it was evidence the bank is not living up to its founding principles as a multilateral development institution, . 
“The EBRD is an agent of good change,” he said. “If the EBRD shareholders want to see some more positive developments in Russia — private sector development, creation of a middle class, greater transparency, support for SMEs — blocking all activity of this kind in Russia is a crazy decision.”
The offices closed by the EBRD last week in Ekaterinburg, Krasnoyarsk, Rostov, Vladivostok and Samara were focussed on the EBRD’s Advice for Small Business Programme. 
He believes the office closures also hint at a full exit from the country and says that even if the EBRD does try to return, ill will in Moscow will mean that hostilities could continue. “The EBRD has sent a very strong signal that at this stage it doesn’t have any plans of coming back,” he said. “It was rather expected, so we will focus our efforts on developing our relations with other IFIs like AIIB and New Development Bank.”
EBRD spokesperson Jonathan Charles said that the institution was committed to Russia, which remains its third biggest operation globally. “There are a lot of people in the bank who feel very strongly about Russia,” he said.
The bank suspended funding to Russia in 2014 after what Morozov called “political guidance” from the European Council which called for an expansion of “restrictive measures” on Russia following the invasion of Crimea and the downing of Malaysia Airlines Flight 17. Morozov said the decision was made outside the EBRD’s established legal procedures, under pressure from the bank’s shareholders, guided by the G7 and the European Council. 
He warned that the decision to suspend lending not only undermined the credibility of the EBRD in Russia, but set a dangerous precedent and raised concerns about the bank’s operations in other countries, which shareholders are “worried about”. 
“This shows the poor governance of institutions like the EBRD. They promote the best standards, but internally they can do whatever they like.”
Russia launched a complaint against the EBRD on grounds that it had breached Article 8.3 of its founding principles at the EBRD Annual Meeting in Nicosia this year. The EBRD’s board of governors voted almost overwhelmingly against the claim. 
 “It was a big shock to the institution,” said Morozov. “The Europeans wanted to send a signal to Russia indirectly. The decision was adopted [by the EBRD] without any proper analysis, proper consideration, and serves to violate the rules of the bank. It was a political, emotional decision and was very short sighted.”
Charles told GlobalMarkets that the case was considered thoroughly and was not supported by the governors’ vote. He added that if operational requirements in Russia changed, the bank would be ready to re-examine its infrastructure and staffing requirements. Four of the offices have been financed to date by the Russia Technical Cooperation Fund and the Russian Federation has decided not to fund the Programme beyond this year.


  • By Virginia Furness
  • 15 Oct 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 390,564.78 1474 8.99%
2 JPMorgan 358,442.23 1626 8.25%
3 Bank of America Merrill Lynch 344,395.33 1215 7.93%
4 Goldman Sachs 257,185.44 862 5.92%
5 Barclays 252,851.12 991 5.82%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 36,645.46 176 6.31%
2 Deutsche Bank 36,386.11 128 6.26%
3 Bank of America Merrill Lynch 30,712.91 97 5.28%
4 BNP Paribas 30,600.75 184 5.27%
5 Barclays 30,394.96 86 5.23%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 21,398.51 94 8.80%
2 Morgan Stanley 17,329.08 90 7.13%
3 Citi 16,974.50 104 6.98%
4 UBS 16,643.68 66 6.85%
5 Goldman Sachs 16,179.39 87 6.66%