Promsvyazbank Goes on Gold-buying Spree: Finance Ministry

Russian lender Promsvyazbank, which was effectively nationalized last year, has stepped up gold purchases in the market, Deputy Finance Minister Alexei Moiseev said on Tuesday, according to Reuters.

His comments follow reports earlier this month by business daily Kommersant which cited a PSB earnings report that the bank’s precious metals purchases jumped to 23.9 billion rubles ($362.15 million) from 0.8 billion roubles ($12 million) in the first half of the year.

Based on the central bank’s gold purchase prices, the purchases of the precious metal were the equivalent of more than 8 tons of gold, the newspaper said. The PSB report, however, was later deleted and the bank republished it without the precious metals report.

Asked about the jump in the precious metals purchases, deputy finance minister Moiseev confirmed Kommersant’s report that PSB was buying gold but did not comment on specific figures cited by the paper. “The jump is due to the fact that the bank is looking for niche markets and has started operating in the gold market,” Moiseev told reporters.

The most active players on the Russian gold markets among the banks are the state-controlled Sberbank and VTB, who both have special trader teams for conducting such operations.

Moiseev did not specify how PSB was buying gold or why. PSB officials were not immediately available for comment.

Asked why the PSB report which initially showed a jump in the purchases of the precious metal was adjusted, he said: “Gold matters are not completely transparent and open, this is why we decided to do so.”

In 2017, the Bank of Russia took over PSB, once among Russia’s biggest private banks, and turned it into a lender for the country’s defense sector.

The move was aimed to shield Sberbank and VTB from potential new U.S. sanctions. The government has also freed PSB from the obligation to disclose financial results and board of director members.