From Russia with money

PROFILE: Vladimir Potanin. At just 36, the head of Uneximbank has created a financial empire. Mike Streeto reports

On A hot day last month, Russia's biggest capitalist and most influential banker, Vladimir Potanin, drew a crowd at Moscow's chic Balchug- Kempinski hotel with its stunning views of the Kremlin. Looking every inch the western investment banker, tall and elegant with piercing intelligent eyes, Potanin, who has overseen sales of some of Russia's largest state- owned companies, had a merger of his own to announce.

The International Corporation for Finance and Investment (ICFI), one of Russia's biggest financial groups credited with saving the hard currency holdings for the country after the break-up of the Soviet Union, will unite with the Renaissance Capital Group, one of the pioneers of the Russian securities market, by the end of the year. Potanin is the president of Uneximbank, ICFI's parent.

The link-up is the latest in a dazzling array of deals put together by Potanin this summer placing him at the heart of the his country's economic restructuring. As president of Uneximbank, the bank he founded in 1993 and one of Russia's largest in terms of assets, he is the leader of one of the most powerful financial and industrial groups, Unexim-MFK. This has 24 member companies in industries ranging from oil to metals to publishing. "He makes all the major business decisions," said Andrei Yashchenko, fixed income and banking analyst at United City Bank.

Potanin left Unexmimbank last summer to join the cabinet as economy minister but lost his job in March when President Boris Yeltsin fired his cabinet. His return to Uneximbank heralded an aggressive phase of expansion. In the last five months, Uneximbank and Potanin have been riding a wave of government sales of some of Russia's largest enterprises.

In July, Uneximbank led a group of investors including financier George Soros, Renaissance, Deutsche Morgan Grenfell, and ICFI in a successful $1.88bn (pounds 1.2bn) bid for a stake in RAO Svyazinvest, the telecommunications giant.

In August, Potanin's bank made a successful bid for a controlling stake in RAO Norilsk Nickel, the world's second largest producer of nickel. Uneximbank also holds a 15 per cent stake in the AO Novolipetsk Metallurgy Combine, Russia's largest steelmaker, and controls AO Sidanko, the country's fifth-largest oil producer.

This dynamic capitalist, who is still only 36, had his origins in the old Soviet power elites. He graduated from the Moscow State Institute for Foreign Relations, a school where many of the top communist party officials sent their children. He was trained as a diplomat and from 1983 to 1990 worked in the Ministry for Foreign Trade. These political connections, combined with his wit, enabled Potanin to build one of Russia's largest financial empires. His personal fortune is thought to be $700m.

Married with two children, Potanin spends his spare time playing football or skiing. He also likes chess, which suits a man with an agile mind. One of the secrets of his success is his ability to fit his strategy to the times. In 1993, he was one of several bankers to devise the "loans- for-shares" scheme to provide the government with cash. Under that scheme, Uneximbank and other banks lent the government money and received stakes in companies as collateral.

The government was supposed to repay the loans after about three years. If it did not, the steward-bankers were supposed to sell the shares to recover their principal and split any profits with the government. The trouble was that most of the stakes were sold at prices little higher than the minimum bids, and often to companies controlled by the banks who held the shares in custody. The programme aroused criticism that the state's prize assets were being sold for a song.

That is one reason why the government trumpeted its success in the sale of a 25 per cent plus one share in Svyazinvest, where Potanin's group bought the shares for $725m more than the starting price of $1.15bn. Uneximbank also paid about $110m more than the starting price for a 38 per cent stake of Norilsk Nickel - a tacit acknowledgement that the rules of the game had changed. Even so, the transfer of that stake promised to make Potanin's empire even more formidable, and other businessmen called foul.

Vladimir Gusinsky, whose own holdings included Most Bank and the Most Media group and NTV television, criticised the sale of Svyazinvest, saying the price was still too low. "We don't want to be dramatic, but there is no certainty that Russia has received the maximum profit from the Svyazinvest auction," said Vyacheslav Kostikov, a deputy of Gusinsky's.

The ICFI merger with Renaissance promises to forge a securities powerhouse. ICFI's fixed-income trading will be augmented by Renaissance's prowess in the stock market, which has climbed 186 per cent this year, making it the world's best market for investors. "We want to develop both these areas so the two groups can be leaders," said Potanin. The merger will create a securities firm with $2bn in assets, $400m in equity capital, and control over another $1bn in funds - the largest in Russia according to Potanin.

Potanin will chair the new bank's board and the chief exeuctive will be the American Boris Jordan, who founded Renaissance as a western-style investment firm to serve Russian markets. The combination of the western expertise of Renaissance with the political clout of ICFI is likely to prove a powerful combination.

Some analysts query the strategy and wonder if Potanin is not running the risk of expanding Uneximbank too fast. "It's going in every possible direction there is, trying to create a universal bank. The question is what they're trying to create out of it," said Andrei Arofikin, banking analyst at Credit Suisse First Boston in London.

Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
people''Women's rights is too often synonymous with man-hating'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments