Russia's New Czars: Call it Billionaire's Row

MOSCOW -- Russia's richest citizens may control as much as $350-billion (U.S.), equivalent to about two-thirds of the country's gross domestic product, according to Scorpio Partnership, a British wealth-management firm.

Their wealth is double that of all the millionaires in Poland, the Czech Republic and Hungary combined, Scorpio's research showed. London-based Scorpio conducted 50 interviews with wealth managers in the four countries.

The number of Russian billionaires has jumped since 1991 as the former communist nation sold off state assets, including oil, gas and metal companies, often at below-market prices. Russia now has 30 billionaires -- 27 of whom made their fortunes in oil, metals or mining -- third only to the U.S. and Germany, Forbes magazine said in April. Russian GDP, the total value of goods and services produced in the country, was $520-billion last year.

"Russian millionaires are consolidating their position as the primary European wealth-management market opportunity east of Switzerland," Scorpio said in a report.

Banks are setting up wealth-management offices in Russia and sending their bankers into the oil- and gas-rich regions of Siberia to find new clients. HSBC Holdings PLC, Europe's largest bank by market value, last year said it would start offering private banking services to wealthy Russians while Credit Suisse Group opened an office in St. Petersburg to lure clients with $1-million or more to invest.

Russia's wealthy are buying items they never had the chance to own during Soviet times, such as summer homes on the Mediterranean, yachts, private jets and jewellery, said two Swiss-based bankers that focus on the ountry. For example, a client recently bought a $750,000 necklace. The two declined to be named because they are bound by confidentiality arrangements.

The nation's wealthy prefer to put their money under management with bankers into low-risk, fixed-income deposits abroad, the bankers said. Putting money away for their children's education is also becoming more popular, they said.

The average monthly wage in Russia, a country of 145 million, is about $300, and one in four people live below the poverty line. President Vladimir Putin has said one of his main goals during his second term is to lift more people out of poverty.

The growth in the number of wealthy people "is a bad sign for Russia," said Vladimir Kashin, a Russian lawmaker. "Alongside the growth in millionaires, we are witnessing the impoverishment of a large segment of society, including the intelligence and scientists."

Roman Abramovich, who controls OAO Sibneft, is the nation's richest man, with a $14.7-billion fortune. He is followed by Vladimir Lisin, who controls OAO Novolipetsk Metallurgichesky Kombinat, and Viktor Vekselberg, who controls Sual Group.