Bankers Lose Economic Dominance

Russia's bankers, already reeling from a series of crises that have tarnished the public image and market position of their industry, are being replaced by industrial managers as the powerhouses of the economy, according to a new survey.


In the latest rating by Vox Populi public opinion service of the country's 50 most influential businessmen, bankers for the first time comprise less than half the list and have ceded the top spot to an industrialist, Rem Vyakhirev, the head of Gazprom.


While the survey offers a subjective assessment, it accurately reflects a fundamental shift in the nature of the Russian economy over the last year, analysts say.


"Under conditions of high inflation it was the banks that had the biggest advantage," said Andrei Illarionov, director of the independent Economic Analysis Institute. "Industry was trying to cope with the new economic conditions."


But the leveling of inflation, the imposition of a ruble trading band that limits profits from hard-currency trading, and the August liquidity crisis on the interbank lending market hurt the position of the banks. At the same time, industrial enterprises were beginning to recover from the post-Soviet crash, he said.


"The years under [Prime Minister Viktor] Chernomyrdin were spent helping Soviet industrial monsters adapt to the modern economy," Illarianov said. "And they have coped with it. Now they have embarked on the most important issue -- the issue of power."


Illarionov noted that Vyakhirev's top spot on the Vox Populi list is a reflection of the natural gas monopoly's position near the pinnacle of power: Chernoymrdin used to have Vyakhirev's job at Gazprom. Second is Boris Berezovsky, head of LogoVAZ and deputy head of ORT Russian Public Television.


Other prominent industrialists on the list include Vagit Alikperov, head of LUKoil, still in the fifth position; Vladimir Kadannikov of automaker AvtoVAZ, up to eighth from 10th; Nikolay Bekh of truckmaker KaMAZ, up six spots to 10th, and Anatoly Filatov of Norilsk Nickel, entering the list for the first time at 36th.


Bankers still retain plenty of influence, of course, making up 12 of the first 20 spots and 22 of 50. But some of their leading lights have slipped since the last survey in December: Vladimir Gusinsky, head of MOST-Bank, from first to third; Stolichny's Alexander Smolensky of Stolichny Bank from second to fourth; and Vladimir Vinogradov of Inkombank -- widely thought to have been a leading victim of the August crisis -- from fourth to 12th.


Pavel Zotov, head of public relations with Tveruniversalank, said the new ratings reflect a more realistic picture of the industry.


"Now people understand the position of the bankers more accurately," he said. "Before they used to be under the influence of bankers' populist advertising. After the crisis it became clear that they are just people who manage other people's money and they are subject to all sorts of collisions. Their position isn't unshakable."


But, Zotov stressed, banks are still in a strong financial position and have not lost their pivotal role in Russia's economy.


It is clear, however, that the limelight banks occupied in the early phase of Russia's transition to a market economy is now being shared more widely.


"Private business development in Russia took the way typical of many countries: at first trade and services started developing, then banking and construction," said Christopher Granville, head of the analytical department with United City Bank.


Now, Granville said, is the period for restructuring of enterprises. "This restructuring is painful but the process has already started," he said, adding that success for any individual company would depend on its management and market position.


The Russian government has encouraged banks to play a leading role in this restructuring, using their reserves of capital to invest in industry, and offering the state's stake in a number of top blue-chip companies to commercial banks in return for loans.


But banks themselves are in a weaker position on the stock market than they were a year ago, said Anton Lobanov, an analyst with the Skate-Press Consulting Agency.


"The role of bank on the secondary market has plummeted," Lobanov said. "There are fewer and fewer quotations on banks' stocks, no one trades them. No one wants to seek influence in managing a bank, since they are making less money than before. They are a risky investment."


The Vox Populi poll, its third, had a narrow but informed base. Fifty specialists from business, mass media and public organizations chose from 146 heads of banks, exchanges, funds, joint stock companies, joint ventures and trading houses to come up with the influence list. Influence was measured on the scale of zero to 11, with 11 the highest.


Vox Populi officials were not available for comment on the ratings.