When Russia's new cabinet was presented this month there were few surprises in the lineup. But the appointment of Vladimir Potanin, the president of Russia's largest private bank, as first deputy prime minister in charge of finance has reopened a difficult debate about the relations between government and big business in Russia.
While some observers interpreted the appointment as a payoff to a group of politically loyal bankers who financed President Boris Yeltsin's re-election bid, others view Potanin's appointment as a triumph for Russian business, now emerging as a political force in its own right.
According to former finance minister Boris Fyodorov, Potanin is a prominent member of the "Yeltsin group of bankers."
This group of bankers gave "quite real" support to Yeltsin's campaign and had important reasons to place their own representatives in the cabinet, "at least in order that no one could overturn the loans-for-shares auctions," Fyodorov said, referring to a highly controversial privatization deal last year which gave several banks, including Potanin's, control of Russia's biggest companies.
It is not just the business lobby in general that Potanin represents. One huge issue is whether Potanin, who has a huge range of personal business interests through his bank Uneximbank, will abuse his power and win government favors.
Potanin has formally resigned his job as president of the bank, but he still owns a stake, rumored at 10 percent. Many would suspect that he will push a few key government decisions in Uneximbank's favor.
But bankers themselves are indignant about such accusations. They insist that Potanin is much more than an insider receiving a high post for services rendered to the current administration: He may also be a man with ideas.
"It takes a lot of effort to set up a bank, keep it afloat and raise it to the level of the top ones. By far not every person can succeed in this," said Sergei Yegorov, the president of the Association of Russian Banks. "Many would like to make a try. Potanin tried and succeeded."
Indeed, Potanin has made Uneximbank, founded little more than three years ago, into Russia's leading private bank, with an increasing international reputation.
It has been argued that the success of the bank, which Potanin himself describes as "a commercial bank with a government mentality," is due chiefly to Potanin's links with the higher echelons of power, but many observers said his appointment was a sign of new times in Russian politics.
"He is a young man. He did not hold any posts in the old system," Yegorov said. "He thinks in a market economic way."
Leading liberals also see Potanin as an important asset for the reformist wing of government.
"We understand each other perfectly well," reformist Economics Minister Yevgeny Yasin said of Potanin earlier this month, adding that he would feel comfortable leaving the government in the near future knowing that the fate of economic reform is in good hands.
Potanin has been involved in some of the loudest political and corporate battles of recent years. Yet despite these confrontations widely publicized in the media, the background of this publicity-shy banker and his financial-industrial empire is partly shrouded in mystery.
The story of the irrepressible rise of Uneximbank and its sister institution, the International Financial Company, or MFK, cannot be separated from the story of Vladimir Potanin career and his meteroic rise to the top of Russia's banking world.
Little is known of the childhood and youth of Potanin except that he was born and grew up in Moscow.
He did study, however, at the prestigious Moscow State Institute for International Relations, or MGIMO, the traditional breeding ground for diplomats and other top government officials. He was an organizer of the Komsomol Young Communist League until he graduated in 1983.
MGIMO was an elite institution that attracted the relations of many of the Soviet-era bigwigs including Andrei Brezhnev, the grandson of the then-Communist Party secretary general, who graduated the same year as Potanin, Kommersant Daily said.
After graduating, Potanin went to work at a foreign trade association, Soyuzpromexport, a division of the powerful Soviet Foreign Trade Ministry, an official at the association said. Here, he began his career as an engineer and was later promoted to a senior position dealing with trade in fertilizers and ore.
When the Soviet Union collapsed in 1991 and the foreign trade regime was liberalized, Potanin had already risen to become the head of the foreign economic association, Interros, which exported raw materials to the West.
"At the time the state monopoly [on foreign trade] was weakened, mainly on the export of fuel," said a banker formerly employed by Uneximbank, who asked not to be named.
At the time, the discrepancy between domestic and international prices made foreign trade a hugely profitable business, and Interros was in a key position as the organization lobbying the interests of major raw materials exporters, he said.
"Interros ... was one of the few legal possibilities for selling the most important strategic materials [abroad]," the banker said. "The role of Potanin as the head of this organization was just irreplaceable."
Soon a number of the large foreign trade associations, including Interros, felt the need for a bank -- particularly in view of the collapse of the Soviet Vneshekonombank, the Foreign Economic Bank, in 1989 and the inefficient operations of its successor banks.
"A large group of organizations dealing with foreign trade decided to found their [own] bank in order to save money," Fyodorov said.
That bank, which was to become the United Export-Import Bank, or Uneximbank, was set up in 1993 with MFK, linked to the same group of foreign trade companies as one of Uneximbank's main shareholders, said Modest Kolerov, Uneximbank's chief spokesman. MFK had been in operation since February 1992 and Potanin was its vice president at the time.
At first, however, the Central Bank was reluctant to register Uneximbank, Fyodorov said. Fyodorov was still finance minister and, after being approached by "a close friend," he wrote a letter to Central Bank chairman Viktor Gerashchenko endorsing the application.
"I looked [and] shareholders there were all respectable foreign trade associations, no gangsters, and I knew dozens of the people there," Fyodorov said.
But Potanin's backers in the foreign trade establishment, including Oleg Davydov, the current deputy prime minister in charge of foreign economic relations, also fell in behind the bank.
"I would explain the close relations of Mr. Potanin to the government partly by the composition of the founders and clients of the bank -- which are the monsters and pillars of our export-oriented economy," said the banker, who asked not to be identified. "It means that what is beneficial to the clients of Unexim is beneficial [also] for the bank and the state."
Some sources suggest these close relations have also been quite beneficial to Potanin himself. According to estimates quoted by the weekly magazine Itogi, Potanin owns "not less than 10 percent of Uneximbank." The shareholders' capital of the bank as of July 1 was 1.86 trillion rubles ($352 million).
In his dealings with the government Potanin has shown a rare ability to reconcile the seemingly irreconcilable. In last year's political squabbles over the loans-for-shares privatization program, he managed to canvas the support of both first deputy prime ministers, the liberal Anatoly Chubais and Oleg Soskovets, the representative of the country's conservative industrial lobby.
It may be that his natural disposition as a team player will help him in his new capacity. "He is a man who stands for teamwork and I admire that in him," Yegorov said.
As an avid and talented soccer player, Potanin is not afraid to let others dribble with the ball, Kommersant Daily said. According to the paper, Potanin has used this experience to introduce what is, by Russian standards, a democratic and open management style at Uneximbank.
Potanin, who is married with two children, is also an able skier and chess player. His religious beliefs are unknown, but the Russian Orthodox Church has bestowed several high decorations on him for his help in founding an orthodox university in Moscow, said Larisa Zelkova, a bank spokeswoman. "In his opinion the church is an important part of our culture," Zelkova said.
But if Potanin has shown his diplomatic skills when dealing with many of the majors on the Russian political scene, he has also proven himself an uncompromising force in the cutthroat world of Russian big business.
In a recent rating of Russia's most influential businessmen compiled by the Vox Populi polling organization, Potanin was ranked sixth, but when it comes to winning favors from the state, amid strong commercial competition and political criticism, his skills are second to none.
Last year's loans-for-shares program that gave Uneximbank and MFK control over two of Russia's largest companies, the oil producer Sidanko and Norilsk Nickel, at auction sales that were obviously rigged is a case in point.
It was Potanin who proposed the scheme to the Russian cabinet on March 30 last year, as the spokesman of a consortium of banks, proposing to pay $2 billion in exchange for trust management of stakes in a string of Russian blue-chip companies.
In the end the project was modified to feature several auctions for prime stakes in Russian companies, where the winners -- mostly banks -- granted the government loans in exchange for control over the shares.
However, Uneximbank played an insider role throughout the process, up to and including the organization of several of the auctions on behalf of the government.
Potanin is now in the market for more favors from the government. Under the scheme the banks could only hang on to the stakes for a maximum of three years, but Uneximbank has recently entered into negotiations so that the banks can keep the shares in trust for the longer term, a bank spokesman said earlier this month.
Potanin's record at the helm of a business empire, whose core is Uneximbank, MFK, and the financial-industrial group Interros, while receiving generally high marks from analysts, has not been without its flaws.
Unexim and MFK, Russia's third and fourth largest in terms of capital, had combined assets of nearly 25 trillion rubles ($4.7 billion) as of July 1, Interfax reported.
In terms of turnover per employee, they are undoubtedly among the most successful in Russia, partly because they don't have any expensive retail network to finance.
"In my opinion there are no banking professionals in the country more talented than him," Fyodorov said of Potanin.
That is a position shared by many in the banking industry. "He headed a good bank and was a good banker," said Yakov Dubenetsky, the president of Promstroibank. "There is a sense of euphoria in the banking community because of this [appointment]."
But an ambitious strategy to take over key companies in Russian industry has put Potanin to his real test and given his sleek surface its first visible scratches. The bulk of Uneximbank's industrial holdings, including Norilsk Nickel, are managed through Interros, said Kolerov.
However, Interros has been in for a rough ride over the last year as the hoped-for growth in Russian industry has failed to materialize.
In October 1995 Interros entered into what was at the time termed "a strategic alliance" with another conglomerate formed around the trading house Mikrodin. Together the groups controlled stakes in some 25 Russian companies.
The alliance, however, soon turned sour as Mikrodin ran into serious financial problems, chiefly because of its engagement in ZiL, the troubled Moscow truckmaker.
With Mikrodin in the doldrums, Interros and Uneximbank have been busy cutting their losses -- last week Potanin and Moscow mayor Yury Luzhkov signed an agreement selling Mikrodin's 30 percent stake in ZiL to the city government for a reported $6 million.
Meanwhile Uneximbank officials are distancing themselves from Mikrodin. "Interros is an entirely separate operation from Mikrodin," Kolerov said.
Analysts said the Mikrodin affair had shown Potanin is not invincible and that close links with the government is no money-back guarantee on business success. "Those banks that have good relations with the existing administration are not necessarily the ones that will be leaders in the banking market 10 years from now," said a senior Western analyst in Moscow.
Uneximbank management, however, has not only proven itself capable of winning favors from the government but has also been successful developing its own business, he said, pointing to its restructuring efforts at Norilsk Nickel and Sidanko.
At Sidanko, an oil giant with three times the reserves of Mobil, the fourth largest Western oil company, Potanin and his team have shown that they are able to get down to work, Western analysts said. "They have been a force for good at Sidanko," said Stephen O'Sullivan, a senior oil analyst with MC Securities in London. "They have [made] big changes at Sidanko," which earlier was "a federation rather than a company," but is now emerging stronger and more unified, he said.
In recent months Sidanko has bought up shares in the market to gain full control over its own best-known subsidiary, the Chernogorneft production center.
Sidanko also has its sights set on the large Purneftegaz production unit which is currently a part of the state-owned Rosneft holding.
"We understand that [Prime Minister] Viktor Chernomyrdin has agreed with ... Vladimir Potanin that Purneftegaz will be transferred to the ownership of Sidanko," MC Securities wrote in a recent research note.
An additional 34 percent of Sidanko stock will be offered at an investment tender in September. Analysts said the tender, where the bidder has to hold at least 13 percent of Chernogorneft stock to be admitted, had been tailor-made by the government to suit Uneximbank's needs.
While other Russian banks have either opted for "co-habitation" with the old management, such as Menatep at the YUKOS oil company, or been defeated by it, such at Rossiisky Kredit at the Lebedinsky ore factory, Uneximbank has put up a fight -- and won.
"Their approach is very proactive, very much hands-on," O'Sullivan said of the bank's impact at Sidanko, where it recently sacked most of the company's top management in a major overhaul.
"Potanin and the bank have really brought a new management spirit to the enterprises they have taken over," said another analyst, who asked not to be identified.
At Norilsk Nickel, Potanin has also put his fighter instincts to use. After taking over the controlling stake in November last year, Uneximbank immediately decided to assert control over the company by calling an extraordinary shareholders' meeting.
This in turn triggered a drawn-out control battle that was only resolved in May when the old management was ousted and a representative of Uneximbank, Alexander Khloponin, was appointed as the company's CEO.
Following a Yeltsin decree earlier this month granting Norilsk extensive tax breaks, potentially in the $1 billion range, the bank has been upbeat about the possibilities of turning the company around.
"Under the terms of the loans-for-shares auction we pledged to attract $1 billion in investments for the enterprise," Kolerov said, "and we are determined to do so."
Following his appointment, Potanin has indicated that he will seek to encourage foreign investment and be pushing for a long-overdue tax reform. He also said he would change the emphasis of the government's privatization program toward more efficient management of state property.
Bankers said they did not expect Potanin to lobby their cause in the cabinet. "I do not think he is a man who would be obliging in this respect," Yegorov said. "He will approach things from the point of view of state interests."
Observers said Potanin's background gives him strong authority when dealing with financial policies but that he may face difficulties in mastering the ways of the government apparatus.
"It will be difficult for him to work [in the government]," former finance minister Vladimir Panskov said earlier this month. "He is not a bad politician, but he is no bureaucrat."
Others, however, were more optimistic, pointing to Uneximbank's strong team of financial experts, part of which is likely to follow Potanin to back him up in his new position -- as well as his natural talents for forging links.
"He will succeed in establishing connections with high-ranking bureaucrats and get results. He is an amazingly open person with a great sense of humor," Fyodorov said.
While some observers interpreted the appointment as a payoff to a group of politically loyal bankers who financed President Boris Yeltsin's re-election bid, others view Potanin's appointment as a triumph for Russian business, now emerging as a political force in its own right.
According to former finance minister Boris Fyodorov, Potanin is a prominent member of the "Yeltsin group of bankers."
This group of bankers gave "quite real" support to Yeltsin's campaign and had important reasons to place their own representatives in the cabinet, "at least in order that no one could overturn the loans-for-shares auctions," Fyodorov said, referring to a highly controversial privatization deal last year which gave several banks, including Potanin's, control of Russia's biggest companies.
It is not just the business lobby in general that Potanin represents. One huge issue is whether Potanin, who has a huge range of personal business interests through his bank Uneximbank, will abuse his power and win government favors.
Potanin has formally resigned his job as president of the bank, but he still owns a stake, rumored at 10 percent. Many would suspect that he will push a few key government decisions in Uneximbank's favor.
But bankers themselves are indignant about such accusations. They insist that Potanin is much more than an insider receiving a high post for services rendered to the current administration: He may also be a man with ideas.
"It takes a lot of effort to set up a bank, keep it afloat and raise it to the level of the top ones. By far not every person can succeed in this," said Sergei Yegorov, the president of the Association of Russian Banks. "Many would like to make a try. Potanin tried and succeeded."
Indeed, Potanin has made Uneximbank, founded little more than three years ago, into Russia's leading private bank, with an increasing international reputation.
It has been argued that the success of the bank, which Potanin himself describes as "a commercial bank with a government mentality," is due chiefly to Potanin's links with the higher echelons of power, but many observers said his appointment was a sign of new times in Russian politics.
"He is a young man. He did not hold any posts in the old system," Yegorov said. "He thinks in a market economic way."
Leading liberals also see Potanin as an important asset for the reformist wing of government.
"We understand each other perfectly well," reformist Economics Minister Yevgeny Yasin said of Potanin earlier this month, adding that he would feel comfortable leaving the government in the near future knowing that the fate of economic reform is in good hands.
Potanin has been involved in some of the loudest political and corporate battles of recent years. Yet despite these confrontations widely publicized in the media, the background of this publicity-shy banker and his financial-industrial empire is partly shrouded in mystery.
The story of the irrepressible rise of Uneximbank and its sister institution, the International Financial Company, or MFK, cannot be separated from the story of Vladimir Potanin career and his meteroic rise to the top of Russia's banking world.
Little is known of the childhood and youth of Potanin except that he was born and grew up in Moscow.
He did study, however, at the prestigious Moscow State Institute for International Relations, or MGIMO, the traditional breeding ground for diplomats and other top government officials. He was an organizer of the Komsomol Young Communist League until he graduated in 1983.
MGIMO was an elite institution that attracted the relations of many of the Soviet-era bigwigs including Andrei Brezhnev, the grandson of the then-Communist Party secretary general, who graduated the same year as Potanin, Kommersant Daily said.
After graduating, Potanin went to work at a foreign trade association, Soyuzpromexport, a division of the powerful Soviet Foreign Trade Ministry, an official at the association said. Here, he began his career as an engineer and was later promoted to a senior position dealing with trade in fertilizers and ore.
When the Soviet Union collapsed in 1991 and the foreign trade regime was liberalized, Potanin had already risen to become the head of the foreign economic association, Interros, which exported raw materials to the West.
"At the time the state monopoly [on foreign trade] was weakened, mainly on the export of fuel," said a banker formerly employed by Uneximbank, who asked not to be named.
At the time, the discrepancy between domestic and international prices made foreign trade a hugely profitable business, and Interros was in a key position as the organization lobbying the interests of major raw materials exporters, he said.
"Interros ... was one of the few legal possibilities for selling the most important strategic materials [abroad]," the banker said. "The role of Potanin as the head of this organization was just irreplaceable."
Soon a number of the large foreign trade associations, including Interros, felt the need for a bank -- particularly in view of the collapse of the Soviet Vneshekonombank, the Foreign Economic Bank, in 1989 and the inefficient operations of its successor banks.
"A large group of organizations dealing with foreign trade decided to found their [own] bank in order to save money," Fyodorov said.
That bank, which was to become the United Export-Import Bank, or Uneximbank, was set up in 1993 with MFK, linked to the same group of foreign trade companies as one of Uneximbank's main shareholders, said Modest Kolerov, Uneximbank's chief spokesman. MFK had been in operation since February 1992 and Potanin was its vice president at the time.
At first, however, the Central Bank was reluctant to register Uneximbank, Fyodorov said. Fyodorov was still finance minister and, after being approached by "a close friend," he wrote a letter to Central Bank chairman Viktor Gerashchenko endorsing the application.
"I looked [and] shareholders there were all respectable foreign trade associations, no gangsters, and I knew dozens of the people there," Fyodorov said.
But Potanin's backers in the foreign trade establishment, including Oleg Davydov, the current deputy prime minister in charge of foreign economic relations, also fell in behind the bank.
"I would explain the close relations of Mr. Potanin to the government partly by the composition of the founders and clients of the bank -- which are the monsters and pillars of our export-oriented economy," said the banker, who asked not to be identified. "It means that what is beneficial to the clients of Unexim is beneficial [also] for the bank and the state."
Some sources suggest these close relations have also been quite beneficial to Potanin himself. According to estimates quoted by the weekly magazine Itogi, Potanin owns "not less than 10 percent of Uneximbank." The shareholders' capital of the bank as of July 1 was 1.86 trillion rubles ($352 million).
In his dealings with the government Potanin has shown a rare ability to reconcile the seemingly irreconcilable. In last year's political squabbles over the loans-for-shares privatization program, he managed to canvas the support of both first deputy prime ministers, the liberal Anatoly Chubais and Oleg Soskovets, the representative of the country's conservative industrial lobby.
It may be that his natural disposition as a team player will help him in his new capacity. "He is a man who stands for teamwork and I admire that in him," Yegorov said.
As an avid and talented soccer player, Potanin is not afraid to let others dribble with the ball, Kommersant Daily said. According to the paper, Potanin has used this experience to introduce what is, by Russian standards, a democratic and open management style at Uneximbank.
Potanin, who is married with two children, is also an able skier and chess player. His religious beliefs are unknown, but the Russian Orthodox Church has bestowed several high decorations on him for his help in founding an orthodox university in Moscow, said Larisa Zelkova, a bank spokeswoman. "In his opinion the church is an important part of our culture," Zelkova said.
But if Potanin has shown his diplomatic skills when dealing with many of the majors on the Russian political scene, he has also proven himself an uncompromising force in the cutthroat world of Russian big business.
In a recent rating of Russia's most influential businessmen compiled by the Vox Populi polling organization, Potanin was ranked sixth, but when it comes to winning favors from the state, amid strong commercial competition and political criticism, his skills are second to none.
Last year's loans-for-shares program that gave Uneximbank and MFK control over two of Russia's largest companies, the oil producer Sidanko and Norilsk Nickel, at auction sales that were obviously rigged is a case in point.
It was Potanin who proposed the scheme to the Russian cabinet on March 30 last year, as the spokesman of a consortium of banks, proposing to pay $2 billion in exchange for trust management of stakes in a string of Russian blue-chip companies.
In the end the project was modified to feature several auctions for prime stakes in Russian companies, where the winners -- mostly banks -- granted the government loans in exchange for control over the shares.
However, Uneximbank played an insider role throughout the process, up to and including the organization of several of the auctions on behalf of the government.
Potanin is now in the market for more favors from the government. Under the scheme the banks could only hang on to the stakes for a maximum of three years, but Uneximbank has recently entered into negotiations so that the banks can keep the shares in trust for the longer term, a bank spokesman said earlier this month.
Potanin's record at the helm of a business empire, whose core is Uneximbank, MFK, and the financial-industrial group Interros, while receiving generally high marks from analysts, has not been without its flaws.
Unexim and MFK, Russia's third and fourth largest in terms of capital, had combined assets of nearly 25 trillion rubles ($4.7 billion) as of July 1, Interfax reported.
In terms of turnover per employee, they are undoubtedly among the most successful in Russia, partly because they don't have any expensive retail network to finance.
"In my opinion there are no banking professionals in the country more talented than him," Fyodorov said of Potanin.
That is a position shared by many in the banking industry. "He headed a good bank and was a good banker," said Yakov Dubenetsky, the president of Promstroibank. "There is a sense of euphoria in the banking community because of this [appointment]."
But an ambitious strategy to take over key companies in Russian industry has put Potanin to his real test and given his sleek surface its first visible scratches. The bulk of Uneximbank's industrial holdings, including Norilsk Nickel, are managed through Interros, said Kolerov.
However, Interros has been in for a rough ride over the last year as the hoped-for growth in Russian industry has failed to materialize.
In October 1995 Interros entered into what was at the time termed "a strategic alliance" with another conglomerate formed around the trading house Mikrodin. Together the groups controlled stakes in some 25 Russian companies.
The alliance, however, soon turned sour as Mikrodin ran into serious financial problems, chiefly because of its engagement in ZiL, the troubled Moscow truckmaker.
With Mikrodin in the doldrums, Interros and Uneximbank have been busy cutting their losses -- last week Potanin and Moscow mayor Yury Luzhkov signed an agreement selling Mikrodin's 30 percent stake in ZiL to the city government for a reported $6 million.
Meanwhile Uneximbank officials are distancing themselves from Mikrodin. "Interros is an entirely separate operation from Mikrodin," Kolerov said.
Analysts said the Mikrodin affair had shown Potanin is not invincible and that close links with the government is no money-back guarantee on business success. "Those banks that have good relations with the existing administration are not necessarily the ones that will be leaders in the banking market 10 years from now," said a senior Western analyst in Moscow.
Uneximbank management, however, has not only proven itself capable of winning favors from the government but has also been successful developing its own business, he said, pointing to its restructuring efforts at Norilsk Nickel and Sidanko.
At Sidanko, an oil giant with three times the reserves of Mobil, the fourth largest Western oil company, Potanin and his team have shown that they are able to get down to work, Western analysts said. "They have been a force for good at Sidanko," said Stephen O'Sullivan, a senior oil analyst with MC Securities in London. "They have [made] big changes at Sidanko," which earlier was "a federation rather than a company," but is now emerging stronger and more unified, he said.
In recent months Sidanko has bought up shares in the market to gain full control over its own best-known subsidiary, the Chernogorneft production center.
Sidanko also has its sights set on the large Purneftegaz production unit which is currently a part of the state-owned Rosneft holding.
"We understand that [Prime Minister] Viktor Chernomyrdin has agreed with ... Vladimir Potanin that Purneftegaz will be transferred to the ownership of Sidanko," MC Securities wrote in a recent research note.
An additional 34 percent of Sidanko stock will be offered at an investment tender in September. Analysts said the tender, where the bidder has to hold at least 13 percent of Chernogorneft stock to be admitted, had been tailor-made by the government to suit Uneximbank's needs.
While other Russian banks have either opted for "co-habitation" with the old management, such as Menatep at the YUKOS oil company, or been defeated by it, such at Rossiisky Kredit at the Lebedinsky ore factory, Uneximbank has put up a fight -- and won.
"Their approach is very proactive, very much hands-on," O'Sullivan said of the bank's impact at Sidanko, where it recently sacked most of the company's top management in a major overhaul.
"Potanin and the bank have really brought a new management spirit to the enterprises they have taken over," said another analyst, who asked not to be identified.
At Norilsk Nickel, Potanin has also put his fighter instincts to use. After taking over the controlling stake in November last year, Uneximbank immediately decided to assert control over the company by calling an extraordinary shareholders' meeting.
This in turn triggered a drawn-out control battle that was only resolved in May when the old management was ousted and a representative of Uneximbank, Alexander Khloponin, was appointed as the company's CEO.
Following a Yeltsin decree earlier this month granting Norilsk extensive tax breaks, potentially in the $1 billion range, the bank has been upbeat about the possibilities of turning the company around.
"Under the terms of the loans-for-shares auction we pledged to attract $1 billion in investments for the enterprise," Kolerov said, "and we are determined to do so."
Following his appointment, Potanin has indicated that he will seek to encourage foreign investment and be pushing for a long-overdue tax reform. He also said he would change the emphasis of the government's privatization program toward more efficient management of state property.
Bankers said they did not expect Potanin to lobby their cause in the cabinet. "I do not think he is a man who would be obliging in this respect," Yegorov said. "He will approach things from the point of view of state interests."
Observers said Potanin's background gives him strong authority when dealing with financial policies but that he may face difficulties in mastering the ways of the government apparatus.
"It will be difficult for him to work [in the government]," former finance minister Vladimir Panskov said earlier this month. "He is not a bad politician, but he is no bureaucrat."
Others, however, were more optimistic, pointing to Uneximbank's strong team of financial experts, part of which is likely to follow Potanin to back him up in his new position -- as well as his natural talents for forging links.
"He will succeed in establishing connections with high-ranking bureaucrats and get results. He is an amazingly open person with a great sense of humor," Fyodorov said.