“Singapore Case” and the Soviet Banking Sector Abroad (Late 1960s — 1970s)

Abstract

This article analyses the history of the “Singapore case” of Moscow Narodny Bank (MNB), one of the most prominent Soviet financial cases of the second half of the 1970s. Using documents from the Russian State Archive of the Economy, the author describes the reasons for opening a bank in this south-eastern country, focusing on the phenomenon of the Soviet banking sector abroad in the late 1960s and 1970s. The article shows that while the USSR’s decision to open banks in Western countries was based on economic interests (reducing foreign exchange costs, supporting lending to socialist countries), in the countries of the Global South political circumstances prevailed. Singapore played an important role in promoting Moscow’s diplomatic interests. At the same time, the Soviet Union paid far less attention to economic relations with the island state, although a branch of Moscow Narodny Bank was opened there in 1971. Drawing on documents, the article shows how the Soviet bank became a leading bank in Singapore within a few years, providing a large volume of loans to private companies. At the same time, the article reveals that most loans were granted without observing basic financial rules and for risky real estate transactions. This, together with the global financial and commodity crisis, was a key factor in the creation of a debt of almost US $450 million. The reasons for this incident were both subjective (the incompetence of the Soviet management of the branch and the criminalisation of the actions of representatives of local banking structures) and objective — the lack of a coherent foreign policy of the USSR in Southeast Asia.