The Russian elite are now not only vulnerable to the economic downturn, but they also get bailed out by the government. Copycats.
WSJ: The Kremlin is stepping in to bail out one of the country’s richest men, in what could be the first move in a shakeout among the powerful businessmen known as oligarchs, whose holdings are spread throughout the Russian and world economies.
People close to the situation said that on Tuesday Russia allowed Alfa Group, a conglomerate controlled by businessman Mikhail Fridman, to tap its $50 billion rescue fund to pay back a $2 billion loan to a group of banks led by Deutsche Bank AG. The funding allowed Mr. Fridman to avoid having to give up his 44% stake in one of Russia’s biggest mobile phone service providers, OAO Vimpel Communications, which he had pledged to Deutsche Bank as collateral for the loan.
Alfa’s difficulties had triggered concerns among investors who feared that Russia was attempting to protect the company from paying its loan obligations. The new revelation will likely signal that the Russian government wants to avoid tarnishing its reputation with banks and investors abroad.
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