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Mikhail Fridman’s Alfa Group controls Alfa Bank, which is seeking to collect more debts than any other bank.
Banks are three times more active in going after overdue corporate loans today than in March, when President Dmitry Medvedev castigated lenders who resist rescheduling payments for “corporate selfishness.”
The total amount of overdue debt sought in court by the country’s top five banks has increased by almost 250 percent, from 26 billion rubles ($792 million) in March to 91 billion rubles ($2.8 billion) today, Kommersant reported Monday, citing data from the Moscow Arbitration Court.
The leading position is held by Alfa Bank, which is attempting to recover a total of 26.4 billion rubles. The company’s biggest debtors are meat processor Prodo Group and GAZ, who have 3.9 billion rubles and 3.8 billion rubles of debt outstanding, respectively, the newspaper reported.
Just slightly behind is , with 26.1 billion rubles — although the bank would be in first place if it were counted together with its retail banking arm, VTB-24, which is seeking to recover over a billion rubles of debt itself.
Nomos Bank, MDM and round out the top five. , seeking just over 100 million rubles, is at the bottom of the list.
In March, an irritated Medvedev moved to defend struggling producers from banks seeking to recover their loans, saying lenders should not be able to halt the operations of a company even if they had legitimate complaints.
“We can’t sacrifice the future of entire enterprises and the employment of many thousands of workers to satisfy the ambitions of individual lending institutions,” Medvedev said. “It’s time to end corporate selfishness.”
The comment seemed to be aimed at Alfa Bank, the country’s largest private lender, who at the time was involved in a legal battle over loans with companies that are part of Basic Element.
Banks, however, said they are acting lawfully and have no other means of getting their money back.
“We are a 100 percent private bank, and we receive all our loans from the Central Bank and VEB on certain conditions and at a certain rate of interest,” an Alfa Bank spokesperson said in an e-mailed statement. “Therefore, the cash we loan to our clients is mostly borrowed and can be demanded back by our creditors at any time.”
Alfa Bank’s shareholders recently gave it $320 million in capital, which makes the lender highly accountable to them, the lender said. “If some of our clients are in trouble, we are ready for an open dialogue,” the bank said.
Other banks said they rush to recover loans in order to avoid being taken advantage of by debtors.
Some debtors prefer to have their companies liquidated, which allows them to be in control of the bankruptcy process, said Irina Gordeyeva, vice president at Nomos Bank.
“Banks are aware of such behavior and try to get a court ruling as soon as possible in order to control the bankruptcy process and prevent the debtor from divesting assets,” she said.
Nevertheless, stringent loan repayment policies during difficult economic times might not be in lenders’ best interests. “The banks that apply tough policies have chosen an irrational approach,” said Metropol’s Mark Rubinstein. “During a recession, the real sector expects banks to be more concessive and cooperative.”
