Bank chooses nuclear home

June 14, 1996

A casual observer walking along Lomonosovsky Prospect where it skirts Moscow State University's leafy campus could be forgiven for taking a second look at the large, new logo spread across the top of the Soviet-era academic building.

In bold blue letters two metres high and a metre across, the corporate identity of Mi-Bank, one of Russia's younger financial institutions, is emblazoned above the four-storey block. The green, tree-lined walkways that fringe the site are reflected in plate-glass doors beneath an imposing canopy, marble steps leading up to them.

Every day the bank's security guards roll out the display showing the latest dollar-rouble conversion rates, and a steady stream of customers come and go.

But this is not Mi-Bank's Moscow corporate headquarters: it is the D. V. Skobeltsyn Institute of Nuclear Physics. The bank merely rents space under a lucrative university-brokered deal with its directors, all former MSU physics faculty students.

Moscow State is going commercial to bridge its budget gap. And attracting private finance is not merely a matter of paying for luxuries - in a university where last year's budget of 180 billion roubles (Pounds 24 million) was under-funded by over 15 per cent, other sources of funding simply have to be found.

Mikhail Kulakov, a vice rector in charge of commercial affairs at the university and a professor of economics, said: "Today the university's rector has to spend a lot of time and effort on seeking additional sources of finance. You'll often see him on television making speeches trumpeting the pre-eminence of Moscow State and emphasising its historic position as Russia's leading university."

"The last few years have been tough for the university, but we are now much more optimistic and certain that it will thrive. Perhaps, after all, it was not so painful for the university to get used to the market economy, we've learned to use the market mechanism for the good of the institution."

They are sentiments with which Vladimir Radchenko, deputy director of the Institute of Nuclear Physics can today agree.

But three years ago the mechanisms of the market economy had delivered a very rough deal for him and his staff, once among the most financially well-favoured scientific researchers. Lucrative space agency research contracts, long established in Soviet times, had collapsed, computer and lab equipment was hopelessly outdated, and the institute's share of the university budget barely covered salaries.

A group of institute graduates who had prospered in business and bought a bank approached Dr Radchenko with an offer too good to turn down: to lease the bank surplus space in return for rental income and building repairs of more than $100,000 a year.

"Without this deal the institute would have faced a very uncertain future," Dr Radchenko says. "Thanks to it, we've been able to invest in state of the art computer equipment, the best possible satellite and internet links, four new laboratories and a computer room for use by staff and students.

"In addition to this, we've an excellent client relationship with the bank. Because its directors are physicists they understand our needs and we talk the same language. The institute gets excellent financial assistance and consultation in this way."

The bank also offers financial services to the university for the payment and distribution of staff salaries and student stipends.

More mundane sources of income come from the small number of shops and kiosks which have always operated on campus, although in Soviet days they did not contribute anything to the university budget.

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