Russian Banker Warns Asset Seizures Are Deterring Business Investment

Russian state asset seizures are discouraging major businesses from investing in their core operations, according to Andrei Kostin, chief executive of state-controlled VTB, the country's second-largest bank.

Speaking at a forum of the Association of Banks of Russia, Kostin said property rights had become a central concern for entrepreneurs. Many business owners, he noted, are directing money away from their main operations out of fear that their holdings could be taken from them.

"I think these fears are exaggerated, but they do in fact exist," Kostin said. He called for careful scrutiny of the laws and decisions that have been adopted, adding that business must be protected.

The government press office did not immediately respond to a request for comment.

Since 2022, authorities have seized assets worth around 7.6 trillion roubles, or roughly $89.5 billion, on grounds including corruption and national security, according to a September estimate by Moscow-based law firm Nektorov, Saveliev & Partners.

In 2024, President Vladimir Putin acknowledged a series of asset seizures but said they were justified only where owners' actions harmed Russia's security or national interests.

Earlier this year, Russia adopted a law imposing a time limit on most lawsuits challenging privatisation deals, after the country's largest business lobby appealed to Putin over a surge in state seizures of private property.

The central bank has noted a rise in Russian investment in foreign companies. Its data shows more than $17 billion in capital outflows from January to July, along with a further $10 billion in cross-border transactions it said it was unable to identify.

Subsidiaries of foreign companies operating in Russia have also been affected. Earlier this month, the Kremlin transferred control of the Russian assets of Swiss food giant Nestle and French retailer Auchan into temporary administration, one of the most significant actions against Western firms in recent years. The Kremlin said at the time that the decision was due to the companies being from "unfriendly" countries.

Kostin said the overall investment climate was worsening, though he noted an increase in Chinese investment and interest from Arab investors. "The main factor going forward will be geopolitics," he said. "If geopolitics improves, the economic situation will improve, and investment growth will follow. If it does not improve, then we will continue overcoming difficulties."

He added that the situation was under control and that banking sector capitalisation was increasing.

Central Bank Governor Elvira Nabiullina, speaking at the same event, agreed with Kostin's assessment. "As for the assessment of the situation in the banking sector, and especially the need to improve the investment climate for sustainable economic growth, there can be no argument," she said.