Fedor Shpig. That same Fedya – Ukrainian banking genius and dairy king. PART 1
Fedor Shpyg is a distinguished dairy farmer and banker in Ukraine. He built two banks from scratch, sold them at a dizzying price to foreign investors, and invested in the milk flow. Needless to say, Shpyg now lives in the lap of luxury—owning expensive cars, the country's most popular dairy brands (Yagotynske, Slaviya, and Molochny Shlyakh), and opening grain terminals and movie theaters.
How to make money out of thin air and ride the milk wave, says Skelet.Org.
Fyodor Shpig. Lenin raised us.
Fedir Ivanovich Shpig was born on January 30, 1956, in the village of Kobyzhcha in the Chernihiv region, part of the Bukovinian community. The future dairy magnate came from a humble background. His father, Ivan Filippovich Shpig, worked on the railroad, and his mother, Maria Grigorievna Litvin, worked on a collective farm. In his rare interviews, Shpig revealed that he was a keen football player as a child. He played on a local team and even traveled with them to the largest all-Union football competition, "Leather Ball." It's worth noting that this competition ceased to exist in 1986. As soon as Fedir Ivanovich became a member of parliament, an amateur league of the all-Ukrainian "Leather Ball" club was created in 1998 with his participation.
Alexander Derkach
In 1976, Shpig completed his secondary education, graduating from the Kyiv Shipbuilding College with a degree in design engineering. He was immediately drafted into the army, and for two years, the young man served his country. Upon returning home, he found his first job at the Leninskaya Kuznitsa Central Design Bureau. After working there for just a year, he transferred to the Brovarymebel association as a design engineer.
In the early 80s, the young and promising designer rose through the party ranks, zealously promoting Leninist ideas. In 1982, he became the head of the Central Committee of the Leninist Young Communist League (LKSMU). During his Komsomol work, Fyodor Ivanovich had two fateful encounters—with his current business partner. Alexander Derkach, who served as the first secretary of the Kyiv regional Komsomol committee from 1982; and with Pyotr Miroshnikov, head of the sector of the Republican Headquarters of Student Brigades, the future founder of the "banking movement" of independent Ukraine.
Petr Miroshnikov
The men occasionally crossed paths, but didn't interact much. However, as subsequent events revealed, they were all waiting for the collapse of the USSR to start their own businesses and get rich out of thin air. But more on that later.
Before joining the banking system, Party member Shpig earned a degree in economics from the Kyiv Institute of National Economy. He later defended his PhD thesis, "Commercial Bank Management."
How the "party gold" was laundered
In 1989, the Supreme Soviet of the USSR considered the liquidation of the State Bank of the USSR. A day later, the deputy chairman of the State Bank signed a resolution terminating the financial institution. Meanwhile, cunning party officials "befriended" Moscow businessman Vladimir Vinogradov, who at the time was the head of Inkombank. The Marxist-Leninists, without thinking twice, suggested that Vinogradov establish a branch of the Russian bank in Kyiv. Thus, the Innovative Commercial Bank Inkombank was established in Ukraine. The first non-state bank was headed by former Komsomol official Pyotr Miroshnikov.
After some time, the Ukrainian branch decided to spin off. It happened surprisingly painlessly: Inkombank received its stake in the newly formed Inko, and Miroshnikov and Vinogradov remained friends. The question hung in the air: where would a simple Komsomol member get the money to open his own bank? Officially, the new bank's shareholders (the Vulkan plant, the Rotor association, the Atek excavator plant, Azovstal, the Academy of Sciences of Ukraine, and the Nezavisimost newspaper) contributed to the authorized capital; Miroshnikov himself owned only 3%. Unofficially, as it became known Skelet.OrgThe money was given by high-ranking officials of the Central Committee of the CPSU; it was the so-called “party gold,” which was then searched for for a long time, both abroad and throughout the Soviet Union.
Inko was officially located at 81 Nizhneyurkovskaya Street in Kyiv, but in reality, it occupied two or three rooms in the State Statistics Committee building. A piece of paper with the financial institution's name hung on the front door. The first room served as a dressing room and a cloakroom with chairs for clothes, while the second was occupied by the employees. They were far removed from the progressive Moscow bankers. Their Komsomol style betrayed them—black suits with fitted jackets and tapered trousers. The bank clerks' address was also perplexing: "Who are you talking to, comrade?..." The mystery of the commercial transaction was also astonishing: the clerk would examine the payment slip, make a note, and then simply stamp it. Pyotr Miroshnikov invited "that very" Fedya to work for this shady firm, which would later become a huge bubble. In 1991, Fedor Shpig became a key figure in the bank's central office—head of the credit resources department. Simply put, he personally handed out loans. The money from Fyodor Ivanovich was received by some fly-by-night companies. According to information Skelet.OrgAfter receiving his first (!) loan, Shpig bought himself a brand-new VAZ 2106 (for a Soviet citizen, this was like buying a Porsche today), and some time later, he renovated his apartment in Pechersk, located at 9V Lesi Ukrainky Boulevard, to a lavish standard. Later, the banker would acquire other cars, a luxurious dacha, and even his own bank, Aval. He secretly hoarded the proceeds from loans and kickbacks.
The period of rapid development of "Inco" coincided with the presidency Leonid KravchukWhen Komsomol connections were favored and competition was nonexistent, the bank was even allowed to service powerful government agencies and was regularly "fed" with preferential loans from the National Bank. For example, in 1992, Inko had 17 branches, but by 1994, it had grown to nearly 60. Surprisingly, the bank's authorized capital amounted to billions of karbovanets. For a post-Soviet person, this was mountains of money, and in dollar terms, it was essentially the cash at the average exchange office in a remote European town. But the most astonishing thing was that people trusted Inko, which recklessly loaned to anyone who wanted it, indiscriminately. Perhaps they trusted the all-powerful CPSU, whose "death" they didn't take seriously. Many former party workers also transferred money to the financial institution, following orders from above.
Fyodor Shpig. Cans on a conveyor belt.
"Aval". Fyodor Shpig couldn't sit in the shadows for long. Especially since he had a large sum of money from credit-exempt clients. And then, luck struck. In 1992, Pyotr Miroshnikov began developing a major project to transfer Pension Fund accounts to his own bank. At a certain point, a separate institution, Aval, was created for this purpose. Initially, 90% of the shares in the new structure belonged to Inko, with the remainder belonging to the Pension Fund. Miroshnikov handed over the reins of Aval to Fyodor Ivanovich. He then bought the shares and transferred some of Inko's money to his own creation.
Shpig hired a man from his past, Oleksandr Derkach, and appointed him Chairman of the Board. The financial institution joined the Association of Ukrainian Banks, but struggled. Two years later, Fedir Ivanovich decided on a radical restructuring and created the postal and pension bank "Aval." The bank's responsibilities included a "gold mine"—servicing the Pension Fund and the Ukrainian Post, and soon, the Ministry of Internal Affairs and customs. This opened the door to vast sources of financial resources. Billions of hryvnias began flowing through the bank's accounts, lending with these funds in the 1990s, generating fabulous profits—loan rates often exceeded 50-60% per annum. Aval's authorized capital soared to a record 5 billion rubles. This begs the logical question: why did officials "pull" Fedir Shpig's average bank to such heights? According to the official version, in the 1990s, there were no other financial institutions besides Aval that could service large enterprises and "drain" money. However, there is a second version. According to information Skelet.OrgShpiga received help from the notorious corrupt official Pavlo Lazarenko. There are documents personally signed by Prime Minister Lazarenko, which ordered state-owned enterprises to switch to Aval Bank. Interestingly, after Lazarenko fled the country, the bank's business began to improve.
Aval's reputation spread within months—large salaries, bonuses, financial assistance, vacation packages—but the work was backbreaking—out in the field, attracting clients and negotiating contracts. Nevertheless, it attracted the region's best managers: in 1994, Yakov Smoliy, the current acting head of the National Bank; in 1995, it was Andriy Rozhok, who holds the post of Chairman of the Board of PJSC Prominvestbank; and in 2001, it was Arseniy Yatsenyuk, the former Prime Minister of Ukraine. Incidentally, Arseniy Petrovich owes his career solely to Shpih, who helped him rise to prominence.
During the financial crisis of the late 90s, Shpig and Derkach not only kept Aval afloat but also elevated it to a leading position. In 1999, the bank took second place in the category "Bank Where You Would Make a Deposit." It's worth noting that the institution had no trained financiers or management professionals; all operations were carried out haphazardly.
In 2004, after the Orange Revolution, a crisis erupted in the country. Ukrainians rushed to withdraw their money from banks. Aval Bank also suffered from the raids. In a matter of weeks, an eighth of all deposits were lost. Then the National Bank came to the rescue, issuing a stabilization loan. Shpyg was saved from collapse, but he had learned his lesson. A year later, he and his partner Derkach sold Aval Bank. This transaction can, without exaggeration, be called the deal of the century. For it, the Komsomol friends received a then-record $1,028 billion—approximately 3,7 times the financial institution's capital. Two Austrian groups, Raiffeisen International and Erste Group, competed for this lucrative prize. The latter offered $950 billion. The competitors waited a full day to respond—in the end, they offered $1 billion for the bank and $28 million for the processing center. Thus, Raiffeisen International acquired all rights to Aval.
Where did the buyer come from, and why were the Austrians interested in Aval? The fact is, the Raiffeisen Group wanted to break into the top league of European finance, but lacked the capacity. So the managers devised a plan: buy up banks and open their own branches. The choice fell on Shpih's financial institution. The Austrians offered Fyodor Ivanovich the chance to buy his brainchild, but he declined, acting on the principle of "never accept the first offer." But Raiffeisen didn't back down and stunned him with a $550 million offer. Upon hearing the price, Shpih accepted, but he slyly turned to advisors—the investment boutique FinPoint and the American bank Merrill Lynch. The "Wolves of Wall Street" hatched a brilliant plan: they pitted two long-standing rivals, Erste Group and Raiffeisen, against each other. Austrian groups vied with each other in offering money to Shpih, and he was only calculating how much would end up in his pocket.
"Prestige"Fedor Shpig and Oleksandr Derkach were unable to enjoy and spend their billions; they were drawn to banks that hadn't yet been established. Less than six months after the meteoric sale of Aval to the Raiffeisen Group, the business partners registered a new financial institution, Prestige. They invested virtually all their earnings into it. The authorized capital exceeded 300 million hryvnias.
According to its founders, Prestige targeted large private clients. It serviced their assets. This became a completely new direction in the Ukrainian banking sector. It's no surprise that many firms began turning to Prestige. In May 2006, after six months of operation, the bank entered the top 20 leading financial institutions, according to the Association of Ukrainian Banks. At the peak of his brainchild's financial activity, Shpig decided to sell it. He immediately found a client: the Austrian banking group Erste. Yes, the same one that failed to snatch Bank Aval from its competitors. Initially, the Austrians announced they would acquire only 50,5% of Prestige shares for $35,3 million, but a few months later they bought the remaining shares for $104 million. Three times the price. Of course, there was an agreement between Erste representatives and their "Komsomol" friends to create a new financial structure. The Austrians wanted to enter the Ukrainian market, and who better to turn to than Shpig and Derkach, who were churning out successful banks like crazy? The "Prestige" scheme was likely devised during the negotiations for the sale of Aval. As a result, Erste acquired not just a business, but a license. This is a whole new level of money: Shpig and Derkach received a kickback under this "capital plus bonus for work" scheme. That's over $60 million.
Interestingly, the Austrians knew who they were dealing with and decided to play it safe by requiring the businessmen to sign a document agreeing not to establish banks for three years.
Arina Dmitrieva, for Skelet.Org
CONTINUED: Fedor Shpig. That same Fedya – Ukrainian banking genius and dairy king. PART 2
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