You think your portfolio's in bad shape? Take a look at the Russians.
Russia's 10 richest men collectively shed $131-billion (U.S.) of wealth in 2008, a 63-per-cent drop, according to an annual survey published by Moscow's Finans magazine. The missing fortune is roughly equivalent to the gross domestic product of New Zealand or Peru.
The biggest loser was Basic Element chairman and owner Oleg Deripaska, who had occupied the top position in Finans's 2007 ranking. His wealth went to $4.9-billion from $40-billion, putting him in a lowly eighth spot. The figures cannot be precise, given the complex meld of private and public investments, some more indebted than others, held by the oligarchs. Forbes magazine put Mr. Deripaska's precrunch worth at $28-billion, considerably less than the previous Finans ranking.
Mr. Deripaska's wealth has tracked the commodities plunge. UC Rusal, the world's biggest aluminum company, is his main holding (but does not trade publicly). In the autumn, he lost his $1.5-billion investment in Canada's Magna International to a margin call.
The man on top this year is the oligarch who profited from Mr. Deripaska's pain: Mikhail Prokhorov. The basketball-loving president of the Onexim Group investment fund sold his stake in Norilsk, the world's biggest nickel maker, to Mr. Deripaska's Rusal last spring, just before the commodity markets imploded, and is sitting on a mountain of cash.
Mr. Prokhorov climbed in the 2008 Finans ranking, not because his worth has increased, but because he lost less than the others. The magazine put his wealth at $14.1-billion, down from $21.5-billion. Russian analysts expect him to use his superior financial position to buy his rivals' distressed assets on the cheap.
The most flamboyant oligarch, Roman Abramovich, the yacht-loving owner of Britain's Chelsea Football Club, lost nearly half his fortune. Finans put his new worth at $13.9-billion. Among other investments, he took a beating on Evraz, the steel and mining group that has Canadian plants. Still, he ranked second in the Finans list.
Over all, the number of Russian billionaires, measured in U.S. dollars, fell to 49 from 101. In 2007, when commodity prices and the Russian stock market were soaring and the ruble was appreciating, Russia trailed only the United States in the ranks of the ultrawealthy.
Last year, the Russian stock market lost 70 per cent. The ruble has lost more than a third of its value against the euro and the dollar since the summer.
Russia's deepening economic woes suggests the oligarchs will have another rough year. Yesterday, the Russian government forecast a 2.2-per-cent contraction in GDP. The previous forecast was a fall of only 0.2 per cent. But most economists and executives expect GDP to fall by 5 per cent or more this year, putting the economy on track for the worst performance since 1998, when GDP contracted by 5.5 per cent. For most of this decade, Russia was growing at 6 to 7 per cent a year.
The immediate threat for the oligarchs is debt restructuring. In 2009, Russian companies must repay some $140-billion in foreign debt. They may not be able to do so without government bailouts. Last year, state-controlled Vnesheconombank lent $4.5-billion to Rusal to allow it to restructure its foreign loans. If the state had not come to the rescue, the company might have been seized by its European and American creditors.
Finans magazine's ranking of the top 10 wealthiest Russians (U.S. dollars):
Mikhail Prokhorov, down from $21.5-billion.
Roman Abramovich, down from $23-billion.
Vladimir Lisin, down from $22.2-billion.
Vagit Alekperov, down from $13.5-billion
Suleiman Kerimov, down from $18-billion.
Mikhail Fridman, down from $22.2-billion.
Vladimir Potanin, down from $21.5-billion.
Oleg Deripaska, down from $40-billion.
Dmitry Ribolovyev, down from $11.7-billion.
Alisher Usmanov, down from $13.3-billion