How one Russian oligarch beat the crisis and made a fortune

Tue Apr 26, 2016 5:47am EDT
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By Dmitry Zhdannikov

LONDON (Reuters) - As Russia was descending into financial crisis, some of its most influential oil and stocks traders gathered at the exclusive River Club in central Moscow at the invitation of state lender Sberbank.

It was December 2014, and the future looked bleak as oil prices tumbled, but Sberbank had a special cause for celebration.

"We have just performed a pretty unique deal for Russia," a Sberbank manager told guests, explaining that the lender had completed a transaction to protect a big client against oil price falls just as crude went into a tailspin. He did not name the client.

The beneficiary of the scheme, bankers and oil industry figures told Reuters, was Russian magnate Mikhail Gutseriyev who by hedging - essentially, taking out an insurance policy against the price of crude falling - made hundreds of millions of dollars.

The deal was a milestone for Russia's energy industry. While hedges on the scale of the scheme set up for Gutseriyev are used by U.S. and British oil firms, Russian oil executives have traditionally steered clear of such complex financial transactions.

It was a lucrative scheme borne out of adversity: while others in the Russian industry avoided hedges, Gutseriyev had no option because he was beholden to his biggest creditor.

"Gutseriyev had large debts to Sberbank and was effectively told to hedge going into 2015 by Gref," said one industry source familiar with the deal, referring to Sberbank's chief executive, German Gref.

Maxim Poletayev, Sberbank's first deputy chairman, confirmed to Reuters that the deal had been struck with Gutseriyev in 2014. He said Sberbank had sold the hedge contract on to a foreign banking syndicate shortly after.   Continued...

Mikhail Gutseriyev, president of oil and gas company RussNeft, attends The Russia Forum 2012 in Moscow, Russia, February 2, 2012. REUTERS/Anton Golubev/File Photo