The Russians Have Already Quietly Pulled Their Money From The West

Tyler Durden's picture

Earlier today we reported that according to weekly Fed data, a record amount - some $105 billion - in Treasurys had been sold or simply reallocated (which for political reasons is the same thing) from the Fed's custody accounts, bringing the total amount of US paper held at the Fed to a level not seen since December 2012. While China was one of the culprits suggested to have withdrawn the near USD-equivalent paper, a far likelier candidate was Russia, which as is well-known, has had a modest falling out with the West in general, and its financial system in particular. Turns out what Russian official institutions may have done with their Treasurys (and we won't know for sure until June), it was merely the beginning. In fact, as the FT reports, in silent and not so silent preparations for what will be near-certain financial sanctions (which would include account freezes and asset confiscations following this Sunday's Crimean referendum) the snealy Russians, read oligarchs, have already pulled billions from banks in the west thereby essentially making the biggest western gambit - that of going after the wealth of Russia's 0.0001% - moot.

From the FT:

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

 

Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.

 

The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement.

 

Markets were nervous before Sunday’s Crimea referendum on secession from Ukraine. Traders and businesspeople fear this could spark western sanctions against Russia as early as Monday.

It probably will. What it will also do is force Russia to engage China far more actively in bilateral trade and ultimately to transact using either Rubles or Renminbi, and bypass the dollar. Perhaps even using gold, something which the price of the yellow metal sniffed out this week, pushing itself to 6 month highs. It will also make financial ties between the two commodity-rich nations even closer, while further alienating that "imperialist devil," the US.

Of course, the west thinking like the west, and assuming that all that matters to Russia is the closing level of the Micex, believes that a sufficient plunge in Russian stocks would have been enough to deter Putin. After all, the only thing everyone in the US cares about is if the S&P 500 closed at yet another all time high, right?

What the west didn't realize, as we predicted a month ago, for Putin it is orders of magnitude more important to have the price of commodities, primarily crude and gas, high than seeing the illusion of paper wealth, aka stocks, hitting all time highs. Especially since in Russia an even smaller portion of the population cares about the daily fluctuations of the stock market. As for the oligarchs, if there is someone who will be delighted to see their power, wealth and influence impacted adversely, if only for a short period of time, it is Vladimir Vladimirovich himself, whom the west misjudged massively once more. Not to mention that the general population will be even more delighted, and boost Putin's rating even higher, if these crony billionaires are made to suffer by the west, if only a little.

(Here we would be remiss not to comment on his easy it supposedly is for Obama to freeze the assets of a few corrupt Russian billionaires, and yet the very proud Americans who nearly brought the entire financial system to the brink in 2008, are now richer than ever.)

In the meantime, some of Russia's oligarchs are effectively welcoming the challenge. Bloomberg reports:

Alisher Usmanov, the country’s richest person, controls his most valuable asset, Metalloinvest Holding Co., Russia’s largest iron ore producer, through three subsidiaries, one of which is located in Cyprus, an EU member nation. The 60-year-old also owns a Victorian mansion in London that he bought in 2008 for $70 million, according to a May 18, 2008, Sunday Times newspaper report. He’s lost $1.5 billion since the crisis began, according to the Bloomberg ranking.

 

“We are concerned with the possible sanctions against Russia but don’t see any dramatic repercussions for our business,” Ivan Streshinsky, CEO at USM Advisors LLC, which manages Usmanov’s assets, including stakes in Megafon OAO and Mail.Ru Group Ltd., said in an interview at Bloomberg’s offices in Moscow today.

 

“Mail.Ru and Megafon revenue is coming from Russia and people won’t stop making calls and using the Internet,” he said. “Metalloinvest may face closure in European and American markets, but it can re-direct sales to China and other markets.”

Great job, Obama: you just pushed Russia and China even closer by necessity! Furthermore, it should come as no surprise that while Russians were pulling their money from the west, western firms were getting out of Dodgeski.

One senior Moscow banker said 90 per cent of investors were already behaving as if sanctions were in place, adding that this was “prudent exposure management”.

 

These moves represent the flipside of the more obvious withdrawal of western money from Russian markets that has been evident over the past fortnight.

 

Traders and bankers said US banks had been particularly heavy sellers of Russian bonds. According to data from the Bank for International Settlements, US banks and asset managers between them have about $75bn of exposure to Russia.

 

Joseph Dayan, head of markets at BCS, one of Russia’s largest brokers said: “It’s been quite an ugly picture in Russian bonds the last few days and some of it has to do with international banks reducing exposure.”

 

Although foreign banks have not yet begun cutting credit to Russian companies en masse, bankers said half a dozen live deals to fund some of Russia’s biggest companies were in limbo as lenders waited to see how punitive western sanctions would be.

So the bottom line is that Russia, thinking a few steps ahead, already has withdrawn the bulk of its assets from the West, and why not. Recall that a year ago it was revealed that the same Russians who were supposed to be punished in Cyprus had mostly withdrawn their funds in advance of the bail in: they tend to know what is coming. It was the ordinary Cypriot citizens, who had done nothing wrong, who were most impaired.

And so while the Russian response is already known, we wonder just how true is the inverse: just how prepared is the west, and especially Europe, to exist in a world in which a third of Germany's gas is suddenly cut off? We can't wait to find out early next week.

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IridiumRebel's picture

He who panics first, panics best. Seems the Russians were privy to events about to unfold. 

Cue Fonestar BTC plug in 3...2...1...

LetThemEatRand's picture

It's never too late to panic. 

zionhead101's picture

Sell USD and BUY Euro's, that's the kind of Panic I like to see :)

The EURO  is going to be KING, and that is what UKRAINE/SYRIA was all about, ... ZIO- knows the USD is going down,...

CHINA/RUSSIA remain silent about BULLSHI, cuz they know once the USD collapses and US-MIL can't make PAYROLL on the ZIO-MERCENARY army, then the US-MIL becomes paper-tigers, and then the entire world can tell the US "GO FUCK YOURSELF".

H. Perowne's picture

"Oh, and Funboy . . . don't be happy, worry."

Praying for rain. Praying for tidal waves.

knukles's picture

Man-o-chevas, if you didn't know any better, you'd think that the leadership of the United States is trying to destroy the country.

And just you all wait until Russia and China start to take only Yuan, rubles or gold in exchange.
It's OK, you can hold your breath.

old naughty's picture

Don't you get the feeling that they all knew, only us sheeples don't.

"Oligarchs playing decisive role".

Someone (waving the wand behind curtain) know.

Market-less; border-less; sovereign-less (oh sh't).

SWRichmond's picture

We have always been at war with Eastasia.

kliguy38's picture

nothing quiet about it .....I heard they yelled Foch you assholes all the way back on their Gulfstreams.........

Mister Kitty's picture

Russia is about to feel the full force of American economic power.  I wouldn't want to be in their shoes.  They will be crushed.  Bitches.

MsCreant's picture

So should I interpret your name as Mr. Pussy?

Are you an effigy troll?

SilverIsKing's picture

I'm fairly certain that if they withdraw their funds from the banks, they have to return their toasters.

NoDebt's picture

"Now you will pay the price for your lack of vision."  Cue the fingertip lightning bolts.  

GetZeeGold's picture

 

 

From the article...

 

"As an adapter to the thinking of men of power, Obama was a quick study. It took him less than half a year as president to subscribe to Dick Cheney’s view on the need for the constant surveillance of all Americans. "

TheGoldMyth's picture

GetZeeGold....I guess you mean 'puppets of power'.

Most leaders (Puppets) are pre-programmed and hardwired to self destruct as a fail safe making replacement with a newer model seamless.

TheGoldMyth's picture

No such thing as a Russian or American/etc leader in this privatised political lobotomy.

No such thing as "the Chinese" or "the Russians" in a privatised country.

TheGoldMyth's picture

The object is not just to own all the gold, the object is to own the people through debt.
Allow me to control the debt (Blah blah blah), and i care not who makes the laws.

McMolotov's picture

I hear the Chinese are offering Spiderman towels.

sunaJ's picture

Just about said the same before I saw your response.  God I love you.

 

zhandax's picture

"just how prepared is the west, and especially Europe, to exist in a world in which a third of Germany's gas is suddenly cut off?"

No need for heat in about two weeks unless you are in...never mind.

Squid-puppets a-go-go's picture

and 100% of swedens gas. If ikea grinds to a halt, where will we all get our shitty ill fitting furniture from?

I dont think the consumers of the West are quite prepared for an Ikeapocolypse

jeff montanye's picture

and speaking of ill-prepared, as obama continues his grand tour of the graveyards of the late british empire, perhaps he might check out "the charge of the light brigade":

http://en.wikipedia.org/wiki/Charge_of_the_Light_Brigade

http://poetry.eserver.org/light-brigade.html

 

old naughty's picture

OMG, latest speculation: MH370 downed by new weapon !

JC, we need good news.

silvermail's picture

"No need for heat in about two weeks unless you are in...never mind."

Industry in Europe is already working on solar energy?
And by the way, what about gas supplies fall and winter? Or do you think that this summer, Europe will replace Russian gas on any other gas?

Kirk2NCC1701's picture

Sorry, OT, but I wanted to post the breaking news regarding the Malaysian Flight MH370...

Malaysian authorities now confirmed the Hijacking Theory, turned Hijacking FACT for flight MH370. 

Congrats to all the Captain Obvious posters, who miraculously and correctly deduced that the flight was Hijacked, after the MSM informed us that the 777 engines kept sending out real-time data streams about their multi-parameter conditions (Vital Signs) back to Boeing (in Chicago, US) for 4-5 hours after it was reported missing, and which led many MSM Super-Sleuths to conclude that Foul Play might be at work.  Congrats, Sherlock Jr.!   :-o

The relevant questions that Captain(s) Unobvious might now ask include:

(1)     Why did it take so long for Boeing to come forward with this data?  E.g., did they have to reveal it because they could not risk the legal liability and PR damage if this was going to be leaked sooner or later anyway?  IOW, the fear of the Snowden effect.

(2)     (a) Since when has this technology been Available for in-situ Beta-testing, and (b) since when has it been in Regular use?

(3)     Based on question (2), does this mean that Boeing actually has data on other plane crashes that it does not wish to share?  It does not take a genius or an overly active imagination in a post-Snowden era, to envision a scenario, where US Agencies (NSA, CIA) wanted to have this information about planes, but did not wish to have the FAA or the Public to know about it.

(4)    Given that Expert Pilot skills were required after the hijacking, did the plane not actually land somewhere, and is it not possible (or likely) that the passengers and plane are being “repurposed”?

zhandax's picture

This info was released on Wednesday, but at first the Malaysians denied it.  A better question is why?

jeff montanye's picture

just a shot in the dark but how far is north korea from where the plane went "off course"?

they do have a record, like the u.s., of taking things that don't actually belong to them.

for an admittedly fictive insight, see:  http://www.amazon.com/The-Orphan-Masters-Son-Pulitzer/dp/0812982622

Zymurguy's picture

Kim Jong needed a new private jet.

chubbar's picture

ACARs has been around since the mid nineties at least. The data it collects is mainly engine data. 2 engine aircraft operators are requried to collect this data on all aircraft that are in the ETOPS (extended operations over water) program as the operators have to show engine reliability to remain in the program. Without this collection the aircraft can only operate less than 60 minutes from a suitable airport, which is problematic for an operator intending to fly people internationally with 2 engine aircraft. The acars also is used by the cockpit crew to send info to operations, get weather updates, check gate delays, etc, etc. I don't see anything nefarious with ACARS data collection and I'm pretty paranoid in most cases.

Freddie's picture

Russia is about to feel the full force of American economic power.  I wouldn't want to be in their shoes.  They will be crushed.

Are we going to send over those 350 pounders in scooter shopping carts (because they are too fat to walk) who shop at Wal Mart with EBT to crush them?

That'll teach em.

zionhead101's picture

We will send the entire 250M USA FSA to Russia and bankrupt their sorry asses trying to feed our FSA.

 

NoDebt's picture

OK, that's pretty fucking funny.

zhandax's picture

I thought the FSA was only about 160MM.  Is it already time to switch to hard liquor?

FredFlintstone's picture

Maybe Zionhead is counting retirees on SS, government pensioners from all levels (city, state, federal), all government employees, etc.

Squid-puppets a-go-go's picture

I LOVE it when people overestimate american power and influence. It helps hasten their demise.

scrappy's picture

Cue the old "Rat Patrol Music"

 

The "O" Patrol.

Curiously_Crazy's picture

Hehe yeah but the issue will be in the transportation. You'd need a Russian transporter (Antonov) which can carry a good 250 tonnes; The largest western transporter as far as I know is the Lockheed C5 which with a max capacity of around 120 tonnes would barely make the trip worthwhile.

DeadFred's picture

I saw one lady at Walmart the other day who could fill that puny plane all by her lonesome.

ebear's picture

That was no lady, that was my wife!

MrPalladium's picture

What sort of investor visits Wallmart??

TheRideNeverEnds's picture

one that was short the market in 2013.

jaxville's picture

Ow!!! It hurts, please stop!

nightshiftsucks's picture

No dickhead,we're going to send over those nonexsistent F35 squadrons you stupid fuck.Hey Freddy where do you live ? maybe we could hook up for coffee or something stupid fuck.

prains's picture

...do you spend too much time flexing in front of the mirror?

Tall Tom's picture

Of course he is too chickenshit to reveal his address?

 

Well my address is 12223B Woodside Ave., Lakeside, CA.

 

To him I say, instead of coffee let's go hunting. Bring your guns.

TheGoldMyth's picture

The shopping carts and fat people are a clever way to divert resources into robotic drone etc manufacturing. Fat people and shopping carts do not require rare earth magnets and expensive ninja trained police and so forth.,

TheGoldMyth's picture

Actually i should qualify that. There are healthy fat people and skinny people. It is the fat and skinny people who are diseased by processed foods who fit the category of being a low threat when armed with a shopping cart not containing rare earth magnets or robotic devices.

Pee Wee's picture

Have ninja "police" figured out how to catch a bullet in their teeth?

No?