Bloomberg News

Ulyukayev May Head Russian Central Bank, Storchak Says

December 27, 2012

Bank Rossii first deputy chief Alexei Ulyukayev may have an edge over other candidates to replace Sergey Ignatiev as chairman of Russia’s central bank when he retires next year, a Finance Ministry official said.

Russia needs a central banker with experience in international finance, which makes Ulyukayev a strong contender, Deputy Finance Minister Sergei Storchak said. Ulyukayev, 56, joined Bank Rossii in 2004 after four years as first deputy to then-Finance Minister Alexei Kudrin.

“The ideal candidate today is someone who knows the financial system as a whole, all three of its components -- monetary, financial and fiscal,” Storchak said in an interview in Bloomberg’s Moscow office Dec. 24.

Ignatiev, 64, has run the regulator for more than 10 years and his third and final term ends in June. Named Europe’s best central bank chief by The Banker magazine in 2011, he helped bring inflation down to a post-Soviet low and oversaw the accumulation of what was then the world’s third-largest foreign- currency and gold reserves, which peaked at $598 billion in August 2008. He spent more than a third of that cash pile to manage a gradual devaluation of the ruble that helped commercial banks survive the 2008-2009 credit squeeze.

Ulyukayev, who speaks English and French, received a doctorate from Pierre-Mendes France University in Grenoble, France, after graduating from Moscow State University, according to the central bank’s website. He was an economic adviser to the government in the 1990s and also served as a Moscow city legislator and as deputy director of the research group now known as the Gaidar Institute for Economic Policy. Bank Rossii didn’t respond to a faxed request for comment on Ulyukayev’s possible promotion.

Beefed-Up Bank

The next central bank governor will have expanded powers once the regulator subsumes the Federal Financial Markets Service, which is also headed by a former Kudrin deputy, Dmitry Pankin. Ignatiev said last week that Ulyukayev and Sergey Shvetsov, a deputy chairman of the central bank, are leading a group charged with overseeing the process, which is scheduled to start next year.

“Sergey Ignatiev has never played a very active role in international issues,” said Storchak, who oversees Russian debt and foreign financial relations at the Finance Ministry. “He was more focused on the monetary policy inside the country, and that’s not enough today.”

G-20 Presidency

Russia needs the central bank’s help to shape proposals on a global financial overhaul during the country’s presidency of the Group of 20 nations, Storchak said. Russia took over the rotating role at the G-20 on Dec. 1 and will lead the Group of Eight leading industrial economies in 2014.

“The priority for reform is a delicate topic -- shadow banking,” Storchak said. “The chairman will need to be extremely understanding of our G-20 partners because each jurisdiction has its own understanding of what shadow banking means.”

By those measures, Ulyukayev may be the best candidate, Natalya Akindinova, head of the Center for Development at the Higher School of Economics in Moscow, said by phone.

“He has been specializing in finance and monetary policy all his life and has established a huge range of international contacts,” Akindinova said.

Putin’s Ally

Kudrin, 52, a long-time ally of President Vladimir Putin, was considered a leading candidate to replace Ignatiev, Akindinova said. He may now be more interested in pursuing a political career, she said.

Kudrin left as finance minister last year after a dispute with then-President Dmitry Medvedev over military spending. Putin said last week that Kudrin remains part of his “team.” Kudrin declined to comment on possible successors to Ignatiev when asked at a press conference last week.

“I’m not sure Kudrin would be interested,” said Storchak, 58, adding that he himself was “too old” for the job because the new chairman should be in a position to hold the post for at least 10 years. A central banker must have “the drive” to fit the role.

By law, Putin must nominate a candidate at least three months before Ignatiev’s term ends, and that candidate must be approved by a simple majority in the State Duma, the lower house of parliament. If the candidate is rejected, the president has two weeks to nominate another candidate.

To contact the reporters on this story: Stepan Kravchenko in Moscow at skravchenko@bloomberg.net; Scott Rose in Moscow at rrose10@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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