Who Runs Russia? Organised crime has long been big business in Russia. But do powerful Mafiosi now enjoy the states protection?

Who runs Russia? Organised crime has long been big business in Russia. But do powerful Mafiosi now enjoy the states protection?
Russians have a strange attitude about their gangsters. What I mean is that in Russia, for a small amount of money, tour guides will actually guide you through Moscow’s Vagankovskoye cemetery, where several Mafiosi are buried. At the cemetery most Mafiosi are buried under life-sized statues or headstones. There is a radio station devoted to folk music that plays about prison life of the gangsters. But nothing demonstrates the veneration of all things gangster more than the untimely demise of a vor v zakone or Russian Mafia boss. It has almost become a ritual when a high level razborka, or execution, leads to the evening news, announcer dwelling lovingly on the details of the murder weapon, the getaway route, the model of Mercedes or the Maybach that the victim was driving. Then comes the grainy CCTV footage or mobile phone photos of the deceased slumped over his steering wheel or prone outside the entrance of a nightclub.
Within 24 hours the television stations have produced computer simulations of the attack and have made CGI style graphics of the attack. The properties of the weapons will be discussed by ballistic experts and they will also be looking into any cool gadgets involved in the operation. Top ranking “thieves in law” now own legitimate thriving businesses in Russia and they have armoured Maybachs to match. They also hang out with lawyers, judges, politicians and they have policemen on their payroll for their protection.
In a Wikileaks cable, a Spanish judge –an expert in Russian Mafia, who has studied the mob for 11 years – told US diplomats that he considers Russia a “mafia state”, where “one cannot differentiate between the activities of the government and the OC (organized crime) groups. For example, take the assassination of opposition journalist Anna Politkovskaya in 2006, those arrested included a professional mafia hitman, an active duty FSB colonel and members of a police special surveillance unit, who are all currently awaiting a second trial. Another high profile crime was the death of lawyer Sergei Magnitsky in prison in 2009. His fate was seal when he accused the police of tax fraud amounting to $230 million. However, all those involved are still free. Mafia killings of today are fewer in number compare to the early 1990s, but the quality of the killings and the method of the killings has changed. Twenty years ago, killings where carried out using knives because firearms where prohibited in the USSR. However, things changed and the mafia got round to using guns but there was a lot of collateral damage as the use of the fire arms was largely unskilled and the strategies used to carry out the hit was mainly flawed. These days, however, the level of professionalism is unbelievable and chilling. Snipers can make headshots at hundreds of metres or even escape 10 or more security cameras after a hit has been made. This simply means that new people have arrived on the scene and the old mafia groups are gone.

The New Egypt: Transition towards a difficult new dawn

At the recent Egyptian elections, the lines of voters waiting to vote stretched for hundreds of metres, but this didn’t deter the Egyptians who had come from their different homes to vote from voting at the polls. Many of them were casting their votes for the very first time. The elderly among the voters came with chairs and most who didn’t come with chairs were given or offered chairs to sit on while they waited. The general mood and atmosphere was one of excitement as many people turned out to vote in what would be a historic election, the first parliamentary poll since the revolt that toppled the regime of Hosni Mubarak in February of 2011. Elderly people who had turned out to vote believed that this was an important period for their country and for the people of Egypt. Many didn’t care who was elected, Islamists or others, it didn’t matter to them, all that mattered was that they did their part in the elections. It was clear that after several years of dictatorship and military regimes and countless rigged elections, the people where very enthusiastic as they went to the polls in the hope that they could bring to an end the chaos of the past year and the rule of the Supreme Council of the Armed Forces (SCAF)
 The multi-stage election in Egypt began on November 28, by which time it was evident that the Egyptians hard won confidence in how much they could influence change in their own government had all but evaporated. It had given way to frustration because over the past year the country has been torn by one crisis after the other. Political drift, demonstrations, labour strikes and frequent eruptions of sectarian violence between muslims and Christians have driven away investors and tourists, causing the economy to grind to a halt and as a result, life has increasing become hard for millions of poor people. The most disturbing part of the story in recent days has been the fracturing of the unity of purpose that prevailed during the protests. Basically, the people of Egypt seem to have become divided politically. There is a widening gap between the younger generation of people who started the revolt earlier in the year and the army generals who assisted to oust Mr Mubarak. This widening gap has also added to the tensions in the political scene. The military has accused activist and critics of working for foreign powers. There is a lack of trust between the activists and the military because the military has intimidated the people.
 The manner in which the military has handled the transition of power, has been at best, erratic. In the beginning, the military favored the muslim brotherhood because it was the biggest and the most organized political force. However, over the summer period, the generals have realized that islamists would dominate both the assembly and the drafting process and as a result, the military will have little control over the way the country was shaped. Having considered this, the military changed tactics and tried without success to get political forces to agree in advance to certain constitutional principles that shield the military from civilian scrutiny. Many Egyptians feel that the military are part of the old structure and have been fighting to preserve their status under the new structure. The Muslim brotherhood is proceeding cautiously in attempts to minimize confrontations with the military and also maintain a stable relationship with its key foreign partners like the United States. Despite leading in the elections, the Muslim brotherhood insists that it wants to share power with other political forces and it doesn’t plan to monopolize the drafting process. However, many businessmen and Egyptians believe that the problems facing Egypt are just too many and that any government formed is bound to fall short in the short term.

Mergers and Acquisitions between Gulf Banks: Any Hope?

Mergers and Acquisition between the Gulf Banks: Any Hope?
There has been little mergers and acquisition deals between the Gulf banks in recent years and there are several reasons for this. The size of banks within the Gulf region has remained small and unfortunately they have been unable to compete on the same level as more international banks around the world. There have been calls to create a global player within the region, however, this has been hindered by the fact that banks in the region are faced with hurdles of legislative requirements for any merger to take place with another bank. There are usually differences between shareholder and board of director’s interests over the issue of merging and acquiring another bank and this has led to limitations in corporate activities.
Acquisition and mergers between banks in the GCC region is estimated to be around $15 billion, which really is a small amount. However, much of this estimate has come from the merger between the National bank of Dubai and Emirates bank international in 2007. Since then, no other bank in the region has bought a competitor or merged with another.
The Bahrain Islamic Bank and its smaller rival, the AL Salam Bank has proposed to merge to create a $4.5 billion bank. If the merger goes ahead, it will become the largest Islamic lender in the Gulf Arab Kingdom and could pave the way for more consolidation, mergers and acquisitions within the region. The two Bahraini lenders have stated that they received approval from the central bank for their planned merger. If successful, the merger will be the first for the GCC based Islamic institutions. Many challenges remain however not least bank valuation, board and senior management appointments, and strategic direction.
When taking an overview of the banking markets in the region, including the larger systems found in the UAE, it is easy to see that there are many financial institutions chasing too few customers with in the region. This can especially be seen the Qatar markets, where many institutions are really chasing and search for new customers. In the UAE there are over 50 banks including both local banks and foreign banks. This together with the current banking conditions and the weak asset growth, suggests that the market is ripe for a corporate activity.
Emirates NBD took over the troubled Dubai Bank in October 2011. It was a take over that was initiated by the authorities and doesn’t signal any change in the attitude towards mergers or take overs. The Dubai Bank suffered tremendously from the local financial downturn and it recorded a loss in 2009. After this, it was taken over by the Dubai Government before being transferred to Emirates NBD
Foreign ownership rules have made it difficult for foreign banks to acquire banks in the region. In fact, a number of foreign banks are beginning to scale back their operations within the region. This can be attributed to several reasons. The first of which is the fact that global crisis has had a knock on effect on the banks and secondly there has been a significant fall in the volume of financial activity in the region. The pace of IPOs in the GCC region has halved to $400 million this year from $800 million in the same period in 2010 and $10 billion in 2008. The volume of deals in the Gulf state has also fallen 60 percent to $25 billion this year from $40 billion in the year earlier period.

GCC Retail Banking Expands

The retail and the SME sectors in the Gulf Banking sectors are  in slightly better shape that the corporate and commercial sectors. The reason for this is that the commercial sector has been hit hard by the regional and global downturn. This is due to the correction in the real estate sector and the investment sectors respectively. Having said this, there are still significant challenges facing the retail sectors in the GCC regions.
The retail banking sector in the Gulf is still developing despite the advanced level of sophistication at many banks.  The retail banking sector has be affected by regulatory frameworks and new guidelines which has led to the development within the sector. It is expected that the retail banking services by the Gulf banks will become more innovative as the regulatory framework for retail banking in the region is expanded or broadened.
Banks in all gulf banking markets will readily comment that one of the main stumbling blocks for the true development of retail banking in the Gulf is the problematic bankruptcy laws. Banks are positive that changes in the laws by the government will spur growth in the sector with banks given more confidence in financing retail and SME clients.
The current Euro debt crisis and the downturn in the global economy has had a negative knock on effect on the UAE banking sector. Investor confidence and sentiment has weakened due to the problems facing the world economy. As a result of this, the retail asset growth has been weaker than expected.
Given these conditions, the GCC banks have become more circumspect in retail banking loans. They are unwilling to lend more and have put in place more stringent rules and guidelines. Competition for customers is tough among the banks and most banks have put in place strategies that will distinguish them from the rest of the pack. High competition for customers has led to banks becoming more customer- oriented. Mashreq Bank, for example, is following a more integrated approach and providing end to end service  and so are most of the regions other banks.
How about Asset quality with in the retail banking sector? Well the fact is that asset quality within the retail banking sector has become more stabilized over the past year. This is the result of more a more conservative path taken by the banks. Banks within the region have put in place more conservative policies to watch over customer borrowing and loans. During the boom periods of the GCC economies, the banks were not watchful or vigilant about the number of credit cards and personal loans that each customer took out. This made it easy for customers to get loans and credit cards at the time. However, the rules have changed and the risk appetite has fallen and banks and regulators have introduced far more stringent lending criteria and monitoring processes. But having said that, the banks have remained in a very vulnerable position because there is a lack of credit bureau to aggregate risk information and exposures. Basically, there is a lack of proper risk assessment for each customer, which has led the banks into a more risk exposed position.
So what are the predictions for the UAE retail banking sector? Retail revenue for the UAE banks is expected to be weaker for 2011 and this is because of the personal loans limits that were introduced by the central bank at the start of 2011. Stricter lending policies by the bank and personal loan limits have led to subdued loan asset growth. The UAE retail banking revenues are expected to be lower by between 15-20 percent in 2011.
In contrast, the Saudi retail loans are expected to remain strong on positive demographics. The Saudi retail sector is favored by good liquidity and asset quality which are both factors that are expected to keep the countries retail loan growth healthy in 2012. According to SAMA data, retail lending is currently increasing by around 11 percent year on year, social welfare spending by the government along with bonus salaries will keep demand retail loans high.
The Gulf region has a low interest rate environment and the result of this is that banks has been compressed at the margins. However, in the growing retail sectors- where margins are much higher, banks have been supported with significant retail loan books on the balance sheet.