People close to the situation said that on Tuesday Russia allowed Alfa Group, a conglomerate controlled by businessman Mikhail Fridman, to tap its $50 billion rescue fund to pay back a $2 billion loan to a group of banks led by Deutsche Bank AG. The funding allowed Mr. Fridman to avoid having to give up his 44% stake in one of Russia’s biggest cellphone service providers, OAO Vimpel Communications, which he had pledged to Deutsche Bank as collateral for the loan.
Alfa’s difficulties had triggered concerns among investors who feared that Russia was attempting to protect the company from paying its loan obligations. The new revelation will likely signal that the Russian government wants to avoid tarnishing its reputation with banks and investors abroad.
The Kremlin’s move comes as a number of Russia’s wealthiest people and companies are feeling the pain of the credit crunch. Some have been hit as banks have demanded added collateral for loans secured by shares whose value has now plunged. Others have short-term loans coming due that they can’t refinance except at punishing terms in suddenly tight Western credit markets. After years of heavy borrowing by the country’s richest tycoons and industrialists as well as big state companies and banks, the government now has the power to decide whom to save — and on what terms.
The situation is a twist on the recent rash of ambitious government efforts around the world to bail out troubled financial institutions.