EBRD: Losing other people's money
Its supporters find two ways to excuse the EBRD its Russian debacle. First, they say, it has done no worse than the other foreign financial institutions whose balance sheets have been pounded in Russia. All that means is that its internal credit controls failed as miserably as everyone else's - faint praise indeed. Second, they point out, the EBRD is fatally handicapped by its charter and its structure. Here the supporters have a point.
The bank is for all practical purposes restricted to taking minority stakes. Even in a regulatory environment that protects the rights of minority shareholders, that means the bank can never exert much influence over its investments. In Russia, where since 1996 it has been clear that a minority shareholding is probably worse than no shareholding at all, this dictat was disastrous. Commercial lenders hae now learnt this lesson and try for control. CSFB's proposed Nikitsky GKO recovery fund will take equity stakes in Russian businesses and projects, but only if it has control.
The EBRD also suffers from its need to show so-called "additionality". This is civil-service speak for doing more than the existing investors can.