The incredible journey of Estonian Konstantin Shvarts: from dreaming of becoming a cosmonaut to becoming a $1 billion Russian banker and a Kremlin target

Now, Estonian-born Konstantin Valeryevich Shvarts, a very successful self-made businessman who ran a $1 billion Russian bank for nearly two decades, supporting Russian opposition, finds himself in a unique and troubling situation. After finally coming back to his Motherland, Estonia in 2017, Konstantin Shvarts has been facing persistent extradition demands from Russia since early 2020s. Estonia has firmly rejected the request. “Although Moscow has never specified what I’m accused of, the underlying reason is political,” Shvarts told The Baltic Times Magazine.

Why did you decide to bring your story into the daylight now?

I am compelled to speak about it publicly, as the effort is clear – to destroy me both as a man and as a businessman already here in Estonia.  After I shared my story with the Estonian media, I was overwhelmed by attention and understanding for my situation. However, publicity is always a double-edged sword.

What do you believe instigated Moscow to act like this?

It is politically motivated.  I have no doubts about this.

I believe that my support for Russian opposition leaders, for example, like Boris Nemtsov (Boris Nemtsov, a prominent Russian opposition leader and former Deputy Prime Minister, was assassinated in February 2015 in Moscow – TBT) I knew personally and who was a vocal critic of President Putin, placed me squarely in the crosshairs.

My political leanings, paired with control over the bank – a player in the Russian banking system – made me a risk the Kremlin was unwilling to tolerate.

How did you end up in Russia, Moscow, and make a dizzying career in its highly competitive banking sector?

To go back in history, I was born in Tallinn in 1966. As a child, I dreamed of becoming a cosmonaut, so, to pursue that dream, in 1984, I moved to Moscow to study aerophysics and space research at the prestigious Moscow Institute of Physics and Technology.

Pre-independent Estonia did not offer such studies. Many aspiring, talented young people from the former Soviet republics chose the best Soviet universities in Russia, especially Moscow. I was one of them.

But around 1986–1987, amid the winds of political and economic change sweeping through the crumbling Soviet Union (spearheaded by Mikhail Gorbachev, the last leader of the USSR, who introduced glasnost and perestroika, key reform policies – TBT), instead of pursuing the dream of becoming an astronaut, I embraced the huge possibilities in business. After graduation, I launched a кооператив (cooperative – a form of legal private or semi-private business, marking a shift from a state-controlled economy – TBT) and began trading, even in remote Siberia.

After the collapse of the USSR, I remained in Russia, where I obtained citizenship and fully immersed myself in the emerging capitalist economy. By 2000, I had accumulated substantial capital, and when the opportunity arose, I acquired Empils Bank, a modest financial institution at the time.

After acquiring it from Rostselmash (one of the largest producers of agricultural equipment in Russia and Eastern Europe, based in Rostov-on-Don – TBT), we renamed it Rosenergobank. We started in a small room in a factory in Rostov-on-Don (a major city in southern Russia, located on the Don River – TBT). The bank served both natural persons and physical bodies. The clients included both organizations and private individuals.

What did you manage to achieve at the bank?

Objectively, a lot! Over the next 17 years, we grew it into a major player in the Russian financial sector. At its peak, the bank managed assets of $1 billion, employed over 1,000 people, and operated in 17 Russian regions. That was remarkable!

Can you please give some insights into the evolution of the Russian banking sector?

After the breakup of the Soviet Union in 1991, around 2,500 banks emerged in Russia. During the 1998 financial crisis (also known as the Russian ruble crisis – a major economic collapse triggered by domestic weaknesses and global pressures – TBT), about 1,000 banks closed. By early 2000, around 1,500 remained, and the surviving banks were largely independent from Kremlin influence for quite some time – believe it or not.

But in 2013, the landscape changed dramatically when the Kremlin began a purge of the banking sector. 

Interestingly, in 2012, at a meeting between Putin and students, one student ‘coincidentally’ asked: “Mister President, do you not think there are too many banks in the Russian Federation?” 

Putin agreed and even cited Germany as a comparison, claiming it had around 300 banks.

He was wrong. Those 300 were federal banks; Germany had around 1,500, including cooperatives and regional banks.

By then, I had already predicted that a crackdown on the banking system was only a matter of time. I was 100 percent right. The purge began swiftly, using the entire state apparatus to eliminate banks not aligned with the Kremlin.

Private banks were mainly targeted because they posed a political threat – they financed the opposition, expressed independent opinions and even formed their own movements. All of this applied to my Rosenergobank, too. 

Eventually, only about 300 out of 1,500 banks remained in Russia – all affiliated with Putin’s inner circle.

What happened with your bank amid the crackdown? Did you experience physical threats, coercion, visits from black-leather-jacket-clad, muscled men?

The pressure came swiftly. I began receiving offers – or rather, ultimatums – to sell the bank. When I refused, the Central Bank of Russia launched a campaign of regulatory harassment.

From 2015 to 2017, we did not conduct business. We just defended ourselves from inspections. Coercion to sell the bank was mounting.

I eventually realized we wouldn’t survive – I had to sell my 'child.' After 17 years of building the bank, it was emotionally painful. In the end, I sold my shares to representatives of Fyodor Bondarchuk, a prominent filmmaker and then-director of Lenfilm, one of Russia’s oldest film studios. While the sale was legal on paper, I still see it as a forced surrender.

As for the black-leather-jacket-clad men you mentioned, by the late 1990s and early 2000s, those men had transformed into tie-wearing businessmen and politicians. They knew they could be met by no less athletic security guards in banks who could fend them off.

What are the fates of your former fellow Russian bank owners? How many of them were forced to leave the country? How many fell from high-rises in what Russian media called ‘incidents’?

Nobody fell from skyscrapers, but the vast majority left Russia in fear for their lives. My position allowed me to be close to some of Russia’s most prominent businessmen, like Abramovich (Roman Abramovich, the Russian-Israeli billionaire and former owner of Chelsea Football Club, is in exile since 2022 – TBT), whom I met informally. I also knew some of the people of the circle of Berezovsky (Boris Berezovsky, a mathematician and oligarch who rose to power in the 1990s and was found dead under suspicious circumstances in 2013 – TBT) through his business interests in Avto VAZ factory in Tolyatti.

How long can the war-strained Russian banking system continue supporting the Kremlin?

My answer is simple: unless the price of oil falls below 20 USD per barrel, the Russian economy – and thus the Kremlin – will remain resilient. Considering such a price drop is unlikely, the Kremlin's system will continue indefinitely. But everything has an end.

What do you do now?

I want to emphasize that, throughout my years in Russia, I maintained very close ties with Estonia. Not just with my parents – my father was a professor at Tallinn University and my mother was a pediatrician – or my son Otto, whose company EatBeat, an AI-powered nutrition app promoting healthy eating through personalized meal plans based on the Nordic diet, is revving up the business – I also kept in touch with Estonia's business community.

I’ve invested in and continue to invest in innovative and future-focused ventures, especially in fintech. These ventures are working successfully.

 Despite the Kremlin’s haunting and attempts to tarnish my reputation, the businesspeople I deal with – in Estonia and abroad – know and value me for who I am. They don’t doubt my integrity, loyalty, or determination to resist the Kremlin.

Beyond financial and political activities, I take humble pride in helping organize a meeting with the Dalai Lama (Dalai Lama is the spiritual leader of Tibetan Buddhism and one of the most recognized figures in global religious and political discourse – TBT).