Chairman LEACH. Part of this gets a little bit—and I wonder if you could comment on this, to the definition of a bank. That is, we use the word ''bank.'' We all have in mind a bank in our hometown, but it appears that increasingly Russian banks, as a few other societies in the developing world, are individually controlled, possibly money laundering centers. Because something is called a bank doesn't necessarily mean it is a bank in our description of the term, and so of the banks that you have relationships with, would you call these traditional banks, or would you say some of them weren't? You had this issue of Menatep which was closed and another Russian bank that was closed, and what I am getting at is there any difference between the company Berlin controlled and each of these individual banks or some of these individual banks, and do you have a judgment on that?
Mr. RENYI. Mr. Chairman, I haven't looked at every single one of the roughly 160 banks that we do business with today. That clearly is a process that is under way, however.
In the traditional sense of a bank that I think generally the population here would consider of a retail branch, retail bank, clearly there would have to be a number of those banks that would not be viewed as purely Russian retail banks, but what I would more commonly describe as business banks, banks that are institutional banks, banks that principally did business with other Russian companies acting as their commercial bank.
Chairman LEACH. Did you ever do security services for any of these banks? For example, it strikes me—I visualize moneys coming into your bank. I don't visualize them going out. That is, as they go out, do they go to other banks, do you buy securities for these?
Mr. RENYI. We would be—the sources of those funds clearly would come from those banks' clients. Moneys—dollar funding, any dollar assets that those banks would have would be in our bank as well as other correspondent banks that those banks might have.
The flow out of those accounts could be for the purchase of goods, for importation into Russia; it could be the purchase of securities. In that fashion it could have gone to an investment bank, a broker dealer, where maybe securities may have been bought. Some of those moneys can flow to overnight investments.
Chairman LEACH. You don't buy securities.
Mr. RENYI. We are not a broker-dealer, no, sir.
Chairman LEACH. Do you have a sense—I mean, you are an expert in the banking system, and there are allegations that an increasing number of banks in Russia are controlled by organized criminal elements. Do you have a sense for that or not?
Mr. RENYI. I really don't, Mr. Chairman. Our diligence today, certainly over the past several years, not only incorporates on-site visitations to these banks, but also visitations to the Central Bank and the authorities there to get, as best we can, a line, if you will, as to the reputation, the local reputation, of those banks, of those entities. If, in fact, during the course of those conversations that type of conversation might have come up, clearly I would not necessarily be privy to it, but I feel comfortable that those relationship managers in the Eastern European area would have done something about it and closed the accounts.
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Date: 2007-05-26 09:17 pm (UTC)Mr. RENYI. Mr. Chairman, I haven't looked at every single one of the roughly 160 banks that we do business with today. That clearly is a process that is under way, however.
In the traditional sense of a bank that I think generally the population here would consider of a retail branch, retail bank, clearly there would have to be a number of those banks that would not be viewed as purely Russian retail banks, but what I would more commonly describe as business banks, banks that are institutional banks, banks that principally did business with other Russian companies acting as their commercial bank.
Chairman LEACH. Did you ever do security services for any of these banks? For example, it strikes me—I visualize moneys coming into your bank. I don't visualize them going out. That is, as they go out, do they go to other banks, do you buy securities for these?
Mr. RENYI. We would be—the sources of those funds clearly would come from those banks' clients. Moneys—dollar funding, any dollar assets that those banks would have would be in our bank as well as other correspondent banks that those banks might have.
The flow out of those accounts could be for the purchase of goods, for importation into Russia; it could be the purchase of securities. In that fashion it could have gone to an investment bank, a broker dealer, where maybe securities may have been bought. Some of those moneys can flow to overnight investments.
Chairman LEACH. You don't buy securities.
Mr. RENYI. We are not a broker-dealer, no, sir.
Chairman LEACH. Do you have a sense—I mean, you are an expert in the banking system, and there are allegations that an increasing number of banks in Russia are controlled by organized criminal elements. Do you have a sense for that or not?
Mr. RENYI. I really don't, Mr. Chairman. Our diligence today, certainly over the past several years, not only incorporates on-site visitations to these banks, but also visitations to the Central Bank and the authorities there to get, as best we can, a line, if you will, as to the reputation, the local reputation, of those banks, of those entities. If, in fact, during the course of those conversations that type of conversation might have come up, clearly I would not necessarily be privy to it, but I feel comfortable that those relationship managers in the Eastern European area would have done something about it and closed the accounts.
Chairman LEACH. Thank you very much.
Does anyone else have any further questions?
Yes, Mr. Lazio.