The paradox of Russian enrichment: the wealth of oligarchs grows against the background of war and sanctions

While the Russian economy suffers from sanctions and war, the fortunes of the country’s richest citizens have risen to record levels. According to information According to the Ministry of Finance, the total capital of Russians who own assets worth 1 million dollars or more increased by 62% in 2023, reaching 13.1 trillion rubles.

“In 2023, we record an unprecedented growth of the Private Banking market. The most significant driver of the growth of the financial capital of NHWI clients in Russia was the inflow of “new money”, which is mainly due to the reduction of capital outflow from Russia”, — notes the project director of Premium & Private Banking Frank RG.

This growth is taking place against the background of a massive outflow of capital from the country, a fall in the ruble exchange rate and a decline in the standard of living of ordinary citizens.

Frank RG experts explain this paradox by several factors:

• Despite the sanctions, the outflow of capital from Russia has slowed down, allowing oligarchs to maintain and even increase their fortunes in the country.
•  High oil and gas prices, which are the main source of income for many Russian oligarchs, have contributed to the growth of their fortunes.
• The Russian government has taken steps to support big business by providing soft loans and other preferences.

It is interesting that millionaires actively diversify their assets, investing them in different currencies and jurisdictions. The dollar and yuan remain the most popular currencies, while the UAE and EU countries are the most popular investment destinations. However, the share of the EU and Switzerland as places to store capital has decreased, while China is gaining in popularity.

The Ministry of Finance notes that in 2022 the situation was diametrically opposite: the capital of wealthy Russians experienced a sharp drop of more than 20%, shrinking to 10.9 trillion rubles. This decline was caused by a combination of factors, including massive capital outflows from the country, a stock market collapse and investors shifting to less liquid assets such as gold, real estate and business investments.