Russian billionaires have seen a windfall in dividends totaling $11.3 billion, fueled by economic stabilization following Russia’s prolonged conflict in Ukraine. Data compiled by Bloomberg reveals that more than a dozen business leaders garnered substantial payouts in 2023 and the first quarter of 2024, signaling a resurgence in corporate profitability amidst geopolitical tensions.
Leading the dividend rankings is Vagit Alekperov, prominent shareholder and former president of Lukoil PJSC, who received approximately 186 billion rubles. Despite being sanctioned by the UK and Australia, Alekperov has avoided penalties from the US and EU thus far. Following closely are Alexey Mordashov of Severstal PJSC, with 148 billion rubles, and Vladimir Lisin of Novolipetsk Steel PJSC, who received 121 billion rubles. Mordashov faces sanctions from the US, UK, and EU, while Lisin remains unrestricted.
The list also includes Gennady Timchenko, a close ally of President Vladimir Putin, and Tatyana Litvinenko, who acquired a stake in PhosAgro PJSC prior to her husband Vladimir’s sanctioning by the US in 2023. Vladimir Litvinenko, a key figure at St. Petersburg Mining University and a former campaign manager for Putin, adds a political dimension to the dividend recipients.
The economic backdrop for these dividends reflects a sharp recovery in Russia’s GDP, which grew by 5.4% in the first quarter compared to the previous year. This growth follows extensive government spending to bolster defense industries, shield domestic enterprises from sanctions, and provide social welfare support.
Despite initial fears of economic collapse under sanctions, many Russian corporations, including state-controlled giants like Gazprom Neft PJSC and Sberbank PJSC, have maintained robust profitability and continued dividend distributions. Sberbank recently approved a record 752 billion rubles in dividends for 2023, underscoring the resilience of Russia’s financial sector.
Looking ahead, challenges loom for Russian businesses, including potential tax increases and supply chain disruptions. The threat of secondary sanctions on banks dealing with Russia adds further uncertainty, with recent measures impacting the Moscow Exchange’s trading capabilities in major currencies.
Russia’s Finance Ministry has revised its 2024 budget deficit projection upwards to 2.12 trillion rubles, exacerbated by inflation exceeding double the 4% target. The Bank of Russia may respond with interest rate hikes, potentially reaching 18% to counter inflationary pressures.
Amid these complexities, Russian tycoons face strategic dilemmas in allocating their dividends. While domestic investments have seen a surge, uncertainties and limited opportunities pose significant hurdles. High-interest rates on ruble deposits offer a safe haven for funds, prompting cautious approaches among business leaders.
In conclusion, while dividends offer immediate returns amidst economic turbulence, Russian tycoons navigate a landscape fraught with geopolitical challenges and financial uncertainties, influencing their investment decisions and economic strategies moving forward.
