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Basic Element Sees `No Bottom’ to Credit Crisis

Basic Element, the investment group of Russia’s richest man Oleg Deripaska, has stopped hiring staff as it sees “no bottom” to the credit-market turmoil, said Chief Executive Officer Gulzhan Moldazhanova.The Moscow-based holding company, which controls United Co. Rusal, the world’s biggest aluminum producer, has had to inject capital into its Bank Soyuz, pledge more assets to service loans and cede shares in Canadian auto-parts maker Magna International Inc., Moldazhanova said.

“Our country’s economy and the global economy will go through a slowdown,” she told reporters in Moscow today. “Our hiring was tied to expansion” and the start of new projects.

The freeze in bank-to-bank lending has put pressure on Russian companies, including OAO Polyus Gold and OAO Russian Railways, to review and potentially cut new developments. Russian retailers are being offered credit with an interest rate of up to 35 percent, Moldazhanova said.

“There are industries that have a return to cover that credit, but not many,” she said. “Still, we have investments in industries that are fundamentally stable. We see no problems with liquidity across the group.”

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