March 29, 2023

Moscow Tries to Remake Itself as Financial Center

MOSCOW — Having tried and failed to become a major financial center, Moscow is trying yet again — only this time it finds itself competing for business with Warsaw, not London, Tokyo and New York.

Moscow wants companies to list on the Moscow stock exchange. It wants money center banks to expand here, as well as insurance companies and law firms that deal with securities, to make Moscow the hub for the former Soviet Union or Eastern Europe.

To do all that, city leaders are inviting business to glittering new skyscrapers, including the Mercury City Tower, which at 75 stories is the tallest building in Europe.

“The idea is to upgrade the position of Moscow in ratings, to become closer to the leaders of innovation and to the big boys of international financial centers,” Andrei V. Sharonov, the deputy mayor for economic affairs, who led a roadshow tour promoting the city in Asia, said in an interview.

This spring, the city government sent deputy mayors to Tokyo, Singapore, Frankfurt, London, Boston and New York to tell banks and other financial companies they should take a closer look at Moscow. The trip was the first concerted effort by the city government to woo investors as tenants for the new high-rise financial district called Moscow City.

Certainly Moscow has a lot of wooing to do. A city of traffic-clogged highways and sprawling concrete apartment blocks, Moscow is widely known as a singularly difficult place to do business. It did attract the big banking houses from New York and London after the fall of Communism. But cronyism, the lack of transparency and shady accounting gave companies pause. Weak courts and selective enforcement encouraged companies to conduct business outside Russia.

Political change in Russia further sapped enthusiasm. Vladimir V. Putin, a skeptic regarding greater integration with the West, succeeded Dmitri A. Medvedev, who was seen as a modernizing figure, as president in a switch known as “the castling” for its resemblance to the chess move.

Mr. Medvedev had named senior Western bank executives to an advisory council for transforming Moscow’s financial sector. They included Jamie Dimon, the chief executive of JPMorgan Chase; Vikram S. Pandit, the former chief executive of Citigroup; and Lloyd C. Blankfein, the chief executive of Goldman Sachs.

But the Global Financial Center Index, published in March by Z/Yen, a consulting agency, placed Moscow 65th out of 79 cities studied. London was first, followed by New York and Hong Kong. The ranking placed Moscow between Bahrain and Mumbai. A survey by the World Bank and the International Finance Corporation even ranked Moscow No. 30 out of 30 Russian cities for ease of doing business.

“Moscow was never going to be an international financial center,” a Western banker working here, who was not authorized to speak for his employer on the matter, said of the effort. “That was a joke.”

So Moscow is setting its sights a little lower. Its biggest problem is to be taken seriously even as a regional center.

The midsize companies in neighboring Ukraine or other former Soviet republics are choosing to go public in Warsaw. They are hardly bothering to look at the carefully laid out welcome mat in Russia. Kernel, a Ukrainian corporate farming enterprise, and Coal Energy, a Ukrainian producer of steam coal, listed in Poland, where a policy of investing pensions in the stock market helps the local exchange.

The Warsaw stock exchange, in fact, has so many Ukrainian company listings it has a Ukraine index. Micex, the Russian stock exchange, has no such index because it has so few listings.

Moscow must compete, said Mr. Sharonov, the deputy mayor, because “there are a lot of other opportunities and competitors all over the world.”

Moscow’s roadshow was intended to illustrate the city’s efforts to become more livable for foreign executives and residents, Mr. Sharonov said. A new interchange links the financial district to nearby roads, for example, easing congestion.

Also, under the federal program to promote banking here, Russian financial regulators tied up loose ends in ways that pleased stock traders and other financial professionals, but have not been widely noticed.

Russia created a central securities depository, introduced standard accounting rules for publicly listed companies and is well on the way to consolidating nearly all financial regulatory authority in the central bank by 2015. And, without much fanfare, the government now insists that all listed Russian companies report financial results in accordance with international accounting standards.

“It’s a substantive change,” said Bruce Bower, the managing director of Verno Capital, a hedge fund that focuses on Russia. “The government realized that by doing a little work, for the first time, it could make a difference.”

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Media Decoder: Baton Rouge Newspaper Sees an Opportunity in New Orleans

It’s a Hail Mary pass for New Orleans newspaper lovers dreading the day that the city no longer has a daily paper. Starting on Monday, the first day that The Times-Picayune no longer prints every day, The Advocate from Baton Rouge will offer home delivery of a New Orleans edition.

Many of the bylines in the paper will be familiar to readers there. The Advocate hired seven people who had left The Times-Picayune to staff its New Orleans bureau. The publisher, David Manship, whose family has owned the paper since 1909, said that The Advocate had not had a reporter in New Orleans since its correspondent moved back to Baton Rouge, some 80 miles to the northwest, during Hurricane Katrina.

In May, The Times-Picayune announced that it would scale back print production to three days a week and shift its emphasis to its free Web site, Widespread layoffs followed, and some longtime Times-Picayune employees left voluntarily.

Mr. Manship said the new edition would feature coverage of basic news beats like city government. He will wait to see how it is received before deciding whether to expand into areas like arts coverage.

“If this thing goes like we hope it would, then we would add some additional staff,” he said.

But The Times-Picayune is not taking this expansion into its turf lightly. Ricky Mathews, the president of the NOLA Media Group who on Monday will take over as publisher of The Times-Picayune, said that the company had been planning for six months to build its presence in Baton Rouge. He said the paper already had three reporters there but would now add 16 staff members to its Baton Rouge bureau — 12 on the editorial side and four on the sales side.

He said he welcomed the competition.

“We believe that competition is good and what we’ve got to do is serve this region really well no matter who it is,” Mr. Mathews said.

In New Orleans, the newspaper war has already begun. Starting on Monday, The Advocate has handed out 11,000 to 18,000 free copies throughout the city each day. Mr. Manship said more than 6,000 households had signed up for home delivery.

Both papers hope the changes will help with their declining circulation. According to data tracked by the Audit Bureau of Circulations, The Times-Picayune’s circulation from Monday through Friday declined to 134,639 in March, from 142,700 the same time the year before. The Advocate’s circulation from Monday through Friday declined to 76,263 in March, compared with 82,695 the same time the year before.

Mr. Manship said that the success of the New Orleans edition depended heavily on advertisers in that city.

“If the advertising community in New Orleans doesn’t support it, then I would have to rethink the whole thing,” he said. “If I don’t make money on it, as nice a guy as I am, I can’t afford to throw money into a hole.”

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