President Dmitry Medvedev warned Russian banks against destroying large, crisis-hit companies, in remarks that could signal support for indebted billionaire Oleg Deripaska. "A situation where a certain organisation can halt the work of a big holding, even if it has a legitimate set of demands, is impermissible," Itar-Tass news agency quoted Medvedev as telling First Deputy Prime Minister Igor Shuvalov on Monday.
-- Says large holding companies should be protected
-- Tells banks to stop "corporate egoism"
-- Urges acceleration of state guarantees to companies
The issue of whether the state should bail out tycoons who face difficulties in paying back foreign loans taken out during a decade of economic boom is at the heart of the dispute about anti-crisis measures needed to salvage Russias economy.
Some influential figures in the government say a collapse of major companies could lead to explosive growth in unemployment and undermine social and political stability in the country, a matter of primary concern to the Kremlin. Medvedev did not name specific banks or holdings on Monday, but referred Shuvalov to remarks he made last month in the Siberian city of Irkutsk.
Then, Medvedev tasked the government with helping rescue the debts of major corporations crucial to the national economy, the collapse of which could lead to thousands of lay-offs and trigger public unrest.
"I told you then to use the power of state enforcement," Medvedev told Shuvalov on Monday. "If you wish, you can change the legislation. If you wish, you can handle the issue individually. But we cannot sacrifice entire companies with many thousands of staff to meet the ambitions of certain credit organisations," Medvedev said.
"Its time to stop the corporate egoism," he said. "Give this advice to our colleagues: if they fail to understand the problem, we will look at the issue from a different point of view."
Medvedevs Irkutsk speech was a response to comments by Deripaska, the main owner of UC RUSAL. The aluminium firm, which is $14 billion in debt, has since signed a two-month standstill deal on the $7.4 billion it owes to international banks. But Russias Alfa-Bank, controlled by billionaire Mikhail Fridman, said last week it was pursuing Deripaska for about $1 billion it says it is owed by his companies.
SOCIAL, POLITICAL STABILITY The government has compiled a list of over 1,000 "strategic companies" that can theoretically count on state help, although it has said inclusion does not automatically guarantee help. But help for tycoons, when ordinary Russians are feeling the effects of the financial downturn, could be politically risky for Medvedev and powerful Prime Minister Vladimir Putin, who are striving to ensure broad support for their anti-crisis policy. Another group of government officials believes the government should focus assistance on banks to maintain macroeconomic stability.
In February, Deputy Prime Minister Igor Sechin poured cold water on Medvedevs positive signals to Deripaska by saying UC RUSAL, already helped when state bank VEB bought over a $4.5 billion foreign debt, still had the means to rescue itself.
On Monday, Medvedev urged the government to accelerate the granting of state guarantees for strategic enterprises, part of the rescue package intended to keep industries afloat.
"It is March 16 today but not a single state guarantee has been released," he said. "You need to do this faster." Shuvalov said key companies had already asked the state for over 350 billion roubles ($10 billion) in aid, including 213 billion roubles in state loan guarantees, and had been granted over 2 trillion roubles in loans from state banks. Shuvalov said not all key companies who had asked for funds would necessarily be granted them.