As Russian troops invade Ukraine, tens of billions have been wiped from the fortunes of Russia’s billionaires.
After factoring in the tumble of the Russian ruble against the U.S. on Thursday, Forbes estimates that Russian billionaires have lost more than $126 billion in wealth since February 16, compared to our initial report of a nearly $90 billion loss. Numbers throughout have been changed to reflect the plunging value of Russia’s currency.
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Russian President Vladimir Putin summoned some of the nation’s business leaders today to a meeting at the Kremlin. At the meeting were at least 13 billionaires: Vagit Alekperov, Pyotr Aven, Andrei Bokarev, Andrei Guriev, Mikhail Gutseriev, Suleiman Kerimov, Andrey Melnichenko, Leonid Mikhelson, Alexey Mordashov, Vadim Moshkovich, Vladimir Potanin, Dmitry Pumpyansky and Vladimir Yevtushenkov, according to state-owned news agency TASS.
“What is happening is a necessary measure,” he reportedly told them. “We were simply left with no chance to do otherwise.”
None of the billionaires have apparently commented, some likely too scared of Putin to speak out against the invasion. But they are not immune.
His attack on Ukraine has not only wreaked havoc on Ukraine, it has destabilized markets around the world and hit the fortunes of even his closest allies. Tens of billions of dollars have been wiped from the fortunes of Russia’s billionaire elite as the country’s stock market and the ruble plunged after President Vladimir Putin launched a full-scale invasion of Ukraine.
Russia’s roughly 116 billionaires have lost more than $126 billion since February 16, Forbes calculates. Of that, an estimated $71 billion was wiped out on Thursday, after Russia’s Moex index closed down 33% and the ruble plunged to a record low against the dollar. The threat of sanctions extending beyond the small circle of billionaire oligarchs and businesses already targeted by the United States, United Kingdom, and European Union could bite further into the fortunes of Russia’s richest.
At least five of the billionaires at the Kremlin Thursday – Alekperov, Mikhelson, Mordashov, Potanin and Kerimov – were among the day’s biggest billionaire losers. Altogether at least 11 Russian billionaires lost $1 billion or more each on Thursday.
Alekperov, a former Caspain oil sea rig worker and former Soviet oil minister who set up Lukoil, Russia’s largest independent oil producer, was the biggest loser. He saw $4.2 billion, or around 17.1% of his fortune, disappear as Russian oil and gas stocks plunged. Lukoil shares, which are listed in London and Moscow, are down more than 30% since the start of the military build up to the invasion.
Lukoil was targeted by the U.S. along with other Russian energy companies like state-owned Rosneft in 2014 by financial and technological sanctions over Russia’s seizure of Crimea and could again be targeted by Washington, Brussels and London.
Billionaire Gennady Timchenko, who was targeted this week by British sanctions, was also among those whose fortunes took the biggest hits. Timchenko, who owns stakes in various Russian businesses, including gas company Novatek and petrochemicals producer Sibur, saw around $4.2 billion wiped from his fortune.
Timchenko, who is still worth more than $19 billion, was named as a part of Putin’s “inner circle” in sanctions imposed by the U.S. Treasury after Russia’s annexation of Ukraine’s Crimea peninsula in March 2014. Those sanctions led Timchenko, who claims to have met Putin in the early 1990s, to sell his 43% stake in Gunvor, then the world’s fourth largest oil trading group. The U.S. had claimed that Putin himself had investments in Gunvor and may have had access to the group’s funds, allegations denied by the Geneva-based trading house. Gunvor has disputed that allegation.
The British government earlier this week also sanctioned three other super wealthy Russians , including Putin’s former son-in-law (and former billionaire) Kirill Shamalov. Following Russian strikes on Ukraine it also announced an asset freeze of Russia’s banks, and a ban on Russian nationals from holding more than $66,000 (50,000 pounds) in a U.K. bank account.
Prime Minister Boris Johnson has also reportedly pushed Western leaders to go further and eject Russia from the SWIFT international payments system, one of the main pipelines for international finance and banking. Czech President Milos Zeman, once one of Putin’s keenest supporters in Europe, also called for Russia to be cut out from SWIFT for a “crime against peace” despite hesitance from some European leaders over the economic fallout for all parties of locking Russian businesses and energy companies out of the payments system.
British opposition lawmakers called for Prime Minister Boris Johnson to go further and seize the assets of the Russian billionaire Roman Abramovich. The billionaire owner of Premier League soccer team Chelsea FC, who made his fortune in Russia’s oil industry after the fall of the Soviet Union, has repeatedly become caught in the long-running diplomatic tensions between London and Moscow.
“We have more individuals on our list, who we are ready to sanction,” U.K. Foreign Secretary Liz Truss told LBC radio on Wednesday when questioned if Abramovich was a target for sanctions. “Nobody is off the table.”
Abramovich, who had more than $1 billion wiped from his fortune this week, is reportedly without a British visa after his entrepreneur visa reportedly expired in 2018, but has been able to visit his soccer team thanks to newly acquired, Israeli and Portuguese citizenships. Any moves the British government makes towards his ownership of his beloved soccer team could be threatened by a $2 billion loan he made to Chelsea. Sports fans and many others will be watching.
Russia’s Big Losers (measures Thursday’s one day drop)
Down $4.5 billion, – 16.5%
Major shareholder of gas producer Novatek.
Down $4.2 billion, – 17.1%
Former Caspian oil sea rig worker and former Soviet oil minister is chairman of Russia’s largest independent oil company, Lukoil.
Down $4.2 billion, – 14.4%
Majority shareholder in steel company Severstal, which he ran for 19 years as CEO.
Down $4.2 billion, -18.1%
Timchenko was hit with sanctions on Tuesday after Putin deployed forces to the two regions in eastern Ukraine.
Down $4.1 billion, – 13.5%
Chairman of NLMK Group, a leading manufacturer of steel products.
Down $3.2 billion, – 22.7%
A trained economist, Kerimov made a career investing in distressed companies in Russia. Most of his fortune now comes from his family’s stake in Russia’s biggest gold producer, Polyus.
Down $3 billion, – 10.7%
Named as a close associate of the Russian president by the U.S. Treasury in 2018, most of his fortune is held in mining giant Norilsk Nickel.
Down $2 billion, – 52.2%
The founder of Russian bank, Tinkoff, was sentenced last year for filing a false tax return and agree to pay more than half a billion to the U.S. government. .
Down $1.7 billion, – 38.9%
Former head of the investment division of state-owned Rostec, which controlled military contractors in Russia, he now gets most of his fortune from his stake in VSMPO-AVISMA, the world’s largest titanium producer for the aerospace industry.
Down $1.4 billion, – 14.2%
Former military man-turned-financial whiz is Alekperov’s right hand man at Lukoil.
Down $1.2 billion, – 8.4%
British opposition lawmakers have demanded the seizure of Abramovich’s assets including Chelsea football club. It won’t be so easy.
Global Financial Ramifications
“You’re watching markets go off overnight and throughout the day today, and you’re watching crypto do the same thing,” Doug Boneparth, a certified financial advisor and founder of Bone Fide Wealth, said.
One of the numerous costs of war is the worldwide financial ramifications. Experts are particularly concerned about a high human death toll. Ukrainian President Volodymyr Zelensky declared that more than 100 Ukrainians had been killed alone on the first day of the invasion.
Experts predict that instability in global financial markets, including cryptocurrencies, will follow as the battle drags on. Bitcoin fell below $35,000, and Ethereum fell below $2,400 soon after the invasion began, but both have subsequently rebounded.
With no signs of slowing what US President Joe Biden called this week as an act of war by Putin, analysts warn cryptocurrency investors should brace themselves for more significant turbulence.
The Price Of War
Meanwhile, market data show that Russia’s invasion of Ukraine has weakened risky assets such as cryptocurrencies, while conventional sanctuaries such as gold and the US dollar have risen.
Because of its volatility and rising link to stock markets, Bitcoin’s status as a “secure” asset, similar to gold, is declining.
Will cryptocurrency detach from stocks, or will it continue to follow the same trajectory as equities? Only time will tell if crypto investors were merely experiencing an early knee-jerk reaction to the scenario.
The crypto market’s reaction right now is somewhat reasonable, given that it has been in decline for the previous few months, which implies that cryptocurrencies are highly volatile investments, a trait that has become even more evident as a result of Russia’s attack on Ukraine.
Market analysts believe the best thing investors can do right now is to remain cool and avoid making hasty decisions in response to market movements.
Featured image from Wealthy Gorilla
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