Key Highlights
- The Central Bank of Russia says recent nationalisations violated minority shareholder protections.
- Moscow Stock Exchange challenges state’s seizure of gold miner UGC stake.
- Growing dissent among Russia’s financial elite over return to state-led control.
Russia’s Central Bank has taken the unprecedented step of declaring that several recent state asset seizures breached minority shareholder rights. This is a rare public challenge to the Kremlin’s expanding nationalisation drive.
The move comes as the government intensifies its takeover of private and foreign-owned firms amid the ongoing conflict in Ukraine.
As Moscow’s confrontation with the West over the Ukraine conflict intensifies, the government has seized and redistributed tens of billions of dollars’ worth of assets belonging to both foreign investors and Russian billionaires.
Yet, within the banking industry, a quiet but growing chorus of technocrats is warning that the state’s aggressive actions risk reversing decades of progress toward a market-based economy.
Insiders within the industry warn that the trend threatens to erode confidence in Russia’s fragile finance industry, with regulators voicing concerns over creeping Soviet-style command structure.
Dispute Over UGC Takeover
According to Reuters, the Moscow Stock Exchange (MOEX) filed a formal complaint with the central bank after the state seized a majority stake in gold miner UGC.
While the central bank did not challenge the seizure itself, it ruled that the government failed to make a mandatory buyout offer to minority shareholders which is a clear violation of Russia’s joint-stock company law.
“The state’s actions in the UGC case are undermining the last semblance of private property rights in Russia,” said a source familiar with the discussions.
The central bank has since directed Russia’s state property agency to issue a buyout offer to affected investors. It is a rare move that underscores growing unease among regulators.
Investor Confidence at Risk
UGC, once seen as a safe domestic investment, counts around 10% of shares held by retail investors. Analysts warn that ignoring mandatory buyout rules will further discourage investment.
“How can you convince anyone to buy shares after this?” one market observer remarked.
Warnings from Financial Leaders
Top finance officials are also voicing concern. MOEX chairman Sergei Shvetsov criticized the inconsistency of state policy, saying it deepens the so-called “Russian discount” that continues to depress the stock market.
Central Bank Deputy Vladimir Chistyukhin cautioned that ongoing property rights violations could alienate foreign investors even after peace returns.
Despite the criticism, the government is reportedly preparing to sell off the seized UGC stake, which is valued at 100 billion roubles ($1.23 billion), under President Vladimir Putin’s new privatization directive.