VTB Arm Named Sole Pension Depository

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VTB Arm Named Sole Pension Depository

The Moscow Times

August 28, 2003

The Finance Ministry named a state-owned company the sole depository for pension funds Wednesday, leading some to question the seriousness of the government's pension reform plans.

A subsidiary of Vneshtorgbank, United Depository Co., or ODK, will hold pension savings accounts for those Russians who choose an asset manager, Deputy Finance Minister Bella Zlatkis told reporters. ODK will oversee investments made by companies that are given the right to manage pensions after those firms are announced Sept. 8, she said.

Pension accounts for those who do not choose an asset manager by Oct. 15 will automatically be channeled to state-owned Vneshekonombank.

Wednesday's decision will give ODK control over some 40 billion rubles ($1.33 billion) in pension savings.

Some experts criticized the contest.

"It's a farce and a slap in the face of [pension] reform," said Pyotr Lanskov, head of the Infrastructure Institute, a research arm of PARTAD, a professional association of depositories.

ODK "was set to win even before the contest was announced," he said.

Lanskov added that the criteria were contrived to give ODK the advantage. For instance, the stipulation that bidders had to have more than 3 billion rubles ($100 million) worth of bank guarantees in order to participate in the contest "made no economic sense," he said.

Andrei Vorontsov, an aide to Zlatkis, said the Finance Ministry was only following rules approved by the Cabinet.

Other observers questioned why there should be only one depository.

It is too early to talk about competition, Zlatkis said. "We'll see how it works the first year."