Vadim Kleiner admits that “in the early days” his job could be a little dangerous, but now he assures me he has good relations with many of his old “enemies”. He says: “They understand it’s just business. Purely money. Nothing personal.”
Kleiner has worked at Hermitage Capital Management for five years. But this being Russia and Hermitage being the famously activist investment company set up by Bill Browder, Kleiner’s work remit is different from that of the average equity analyst. He says: “I sit on boards, negotiate with government ministers, battle on the legal front and then send out reports and research notes.”
One such report recently landed him in hot water. In December, he made a presentation to the Adam Smith Institute’s Russian banking conference in London, entitled: “Hermitage’s Plan To Boost Sberbank Value”. The report, in customary Hermitage fashion, did not mince its words. It accused Russia’s largest bank of, among other things, making subsidized loans to oligarchs at the expense of ordinary Russian depositors; making even more subsidized loans to management and related parties and being overstaffed, inefficient and inequitable.
What made it worse was that Kleiner is a member of Sberbank’s supervisory board, because Hermitage is a minority shareholder in the bank.
Sberbank, unused to public criticism, hit back at Kleiner. It accused him of damaging the image and reputation of the bank, and said it would have been better if he made the allegations to it first. It said his comments were against the law. Kleiner says it is the job of independent directors to be awkward, and that he tried to put his findings before the board, but was not allowed to get his point on the agenda.
He says Sberbank board meetings are not always long on content and claims one of the four annual meetings last year ran for just five minutes.
Rates dispute Sberbank has denied Kleiner’s more serious allegations. It says its loan rate to companies, oligarch or otherwise, compares favourably with many Russian banks.
Both sides cite different evidence to support their views. It’s hard to say who is right, though Troika Dialog senior analyst Andrei Ivanov says: “According to my calculations, Sberbank does pay around 3% less interest to depositors [Kleiner claims it is 4% less], and does charge companies 3% to 3.5% less than commercial banks, so to some extent you could say Sberbank is subsidizing big Russian companies through depositors.”
However, Ivanov thinks Kleiner has exaggerated the issue of loans to management or related parties. He admits: “I don’t know who these related parties are, but such loans make up around 1% of the total loan portfolio, while for many commercial banks, loans to management or related parties can be as much as 30%.”
Sberbank says most of the loans are not to management but to two related companies, though it has not named them.
The upshot of all this is that Sberbank is gradually having to behave like a normal firm – justifying its activities in detail to board members and journalists alike. It is also having to be much more active in opening up to its supervisory board, including the new senior management at the Russian central bank.
Other large Russian companies watching the boardroom rumble and having a laugh at Sberbank’s expense should watch their own backs: Kleiner is standing for the boards of both UES and Gazprom this year.
Hermitage is trying to get Gazprom to improve its transparency and win back some of its former gas distribution business through the former Soviet satellite countries.
Kleiner has already had some success at UES, where he has been on the restructuring board for two years. He says: “Two years ago we started to complain about the unfair restructuring plan at UES, and now the latest variant put before the Duma this month had exactly the provisions we wanted, thanks in part at least to meetings I had with German Gref [Putin’s chef economic adviser], who also sat on the board. The UES board is now the most advanced of all the big Russian companies.”
