Information Message on the Results of Investing Funds of the Reserve Fund and the National Wealth Fund
Russia’s Finance Ministry hereby informs about the results of investing funds of the Reserve Fund and the National Wealth Fund from January 1 to November 30, 2013.
The Reserve Fund
As of December 1, 2013, the aggregate amount of the Reserve Fund was 2 885.29 billion rubles, which is equivalent to 86.93 billion US dollars. The amounts of balances in separate accounts to record funds of the Reserve Fund were:
38.08 billion US dollars
29.40 billion euros;
5.40 billion pounds sterlings.
The aggregate calculated income from placing funds of the Reserve Fund in foreign currency accounts of the Bank of Russia recalculated in dollars for a period from January 15 to November 30, 2013 was 0.21 billion US dollars, which is equivalent to 7.09 billion rubles. The exchange rate difference from recalculating balances of funds in the said accounts for a period from January 1 to November 30, 2013 was 286.13 billion rubles.
The National Wealth Fund
As of December 1, 2013, the aggregate amount of the National Wealth Fund was 2 922.79 billion rubles which is equivalent to 88.06 billion US dollars including:
1) In separate accounts to record funds of the National Wealth Fund with the Bank of Russia:
27.58 billion US dollars;
24.09 billion euros;
4.38 billion pounds sterlings;
2) 474.02 billion rubles and 6.25 billion US dollars were deposited with Vnesheconombank.
The aggregate calculated income from placing funds of the National Wealth Fund in foreign currency accounts of the Bank of Russia recalculated in dollars for a period from January 15 to November 30, 2013, was 0.16 billion US dollars, which is equivalent to 5.32 billion rubles. The exchange rate difference from recalculating balances of funds in the said accounts from January 1 to November 30, 2013 was 220.45 billion rubles. The exchange rate difference from recalculating funds placed on Vnesheconombank’s deposits in US dollars was 17.63 billion rubles.
The aggregate income from placing financial resources of the Fund on Vnesheconombank’s deposits from January to November of 2013 was 28.88 billion rubles which is equivalent to 0.91 billion US dollars
Indicators of the aggregate amount of the Reserve Fund and the National Wealth Fund as well as of calculated incomes (losses) from placing funds of the Reserve Fund and the National Wealth Fund were calculated on the basis of official exchange rates of foreign currencies set by the Bank of Russia as of the date prior to the reporting date and of cross rates calculated on the basis of the said exchange rates.
Detailed statistics on transactions with funds of the Reserve Fund and the National Wealth Fund is posted on the Internet site of the Russian Finance Ministry in the following sections: “The Reserve Fund” and “The National Wealth Fund” in appropriate subsections in Russian and English, the statistics is updated on a regular basis.
Origin: Press Service of Russia’s Finance Ministry
Vnesheconombank Chairman Vladimir Dmitriev’s Interview to the TV Channel Russia 24
TV Channel Russia 24
HOST: You’ll hear an interview with Vnesheconombank Chairman Vladimir Dmitriev on our channel. My colleague Maria Bondareva asked him about cooperation between Russia and Ukraine in the banking sector on implementing investment projects and about the future of these lines of activity.
CORR: Good afternoon Vladimir Alexandrovich.
Vladimir DMITRIEV, Vnesheconombank Chairman: Good afternoon.
CORR: Vladimir Alexandrovich, Vladimir Putin has said recently that the amount of Russia’s investments in the Ukrainian economy is about 30 billion dollars. What’s VEB’s share in this sum?
Vladimir DMITRIEV: VEB invested about 500 million dollars in Ukraine’s banking sector. In 2008, we factually rescued one of system-forming banks preventing it from going bankrupt and helped Ukraine to avoid serious implications for its banking business and for banking sector as whole. Now the bank is one of the largest banks in Ukraine. And if we talk about Russia’s presence in Ukraine’s banking sector we should mention Sberbank, Bank VTB, Alfa Bank and of course Vnesheconombank’s Ukrainian subsidiary bank. These banks form the basis of the Ukrainian banking system, at least if we mean non-government banks. Moreover, Vnesheconombank helped a number of Russian investors to purchase one of the largest metals company in Ukraine, namely, the Industrial Union of Donbass. In this case we made an investment of about 8 billion dollars. And it was not only a matter of purchase. Vnesheconombank supported this large metals company and it provided support not only for its products but also for about 40 thousand workers. And here I mean not only the Industrial Union of Donbass but also Zaporozhstal where we are responsible for managing this integrated iron & steel works together with one of the biggest Ukrainian businessmen Renat Akhmetov.
CORR: You’ve told us about your subsidiary bank in Ukraine which is one of the largest banks in the country. Generally speaking, how is the bank doing? What are your plans to upgrade it?
Vladimir DMITRIEV: When we purchased the bank by way of investing pretty large funds we didn’t expect that we would come up against a lot of problems from the previous management and previous owners. We acted on the assumption that the bank’s credit history was favorable and it had a solid loan portfolio. But as credit repayment dates came due we could see that borrowers failed to meet Prominvestbank’s requirements. In fact, we inherited bad loans worth up to a billion dollars. But we have to state that most borrowers are in a position to repay credits but use various mechanisms for evading their obligations. And now we face the need to additionally capitalize the bank and take tough legal action against mala fide borrowers. Nevertheless, the bank is actively operating in various sectors of Ukraine’s economy. And it seeks to bring the amount of credits to enterprises which are tied by integration relations with Russian enterprises to 20%. I believe that this is a realistic target figure.
CORR: What can you tell us about the amount of Ukrainian residents’ enterprises’ and banks’ credits to Russian banks?
Vladimir DMITRIEV: I can say that Russian banks and our Bank are actively involved in retail lending. It is safe to say that the amount of retail credits is constantly on the rise. I know that Sberbank is now implementing a serious program aimed at developing a branch network and retail lending in Ukraine catching up with the largest Ukrainian non-government banks in terms of its scale and potential nearing other Russian banks that have been operating on the Ukrainian market for a long time. I’ve already said about a task we are setting before our Bank as our Bank is a shareholder after all and a state corporation whose mission is to strengthen integration ties with adjoining states and CIS countries. For this reason, other banks also seek to seriously influence various sectors of the Ukrainian economy and above all those that are tied by cooperation relations with Russian enterprises. And it is quite natural because big business has been cooperating traditionally with Russian partners in various sectors and here I mean nuclear power engineering, mechanical engineering, transport and space industries and the military industrial complex. We have partner relations with Russian enterprises in the sectors that are of great importance for Ukraine’s economy.
CORR: This means that VEB is actively involved in funding the Ukrainian economy.
Vladimir DMITRIEV: Yes, it is. We fund Russian enterprises working with their Ukrainian partners and we also fund various sectors of Ukraine’s economy through our subsidiary bank.
CORR: You’ve also said that you maintain contacts with representatives of Ukrainian business. How do they size up heir integration partnership with Russia and friendly relations with it?
Vladimir DMITRIEV: As Russia is Ukraine’s main trade partner it goes without saying that Ukrainian business is interested in enhancing trade and economic ties with Russia. And it is also interested in investing in the Russian economy, so we have a two-way street – on the one hand Russian business invests in the Ukrainian economy and on the other hand a lot of Ukrainian businessmen work actively in Russia. Moreover, given the current situation in Ukraine, a difficult budget and income situations, Russian business hopes that in the course of forthcoming privatization of large-scale Ukrainian enterprises with a serious state participation it will be actively involved in privatization deals building up its investment presence and in fact strengthening integration ties that I have already mentioned.
CORR: I also know that VEB supported strongly Ukrainian enterprises during the crisis.
Vladimir DMITRIEV: You’re quite right. In a certain sense we rescued some sectors of the Ukrainian economy. I’ve already mentioned the metals industry which employs about 40 thousand workers at the Industrial Union of Donbass and the Zaporozhstal integrated iron & steel works. And our investors are still interested in modernizing these enterprises. Suffice it to say that the Alchevsk integrated iron & steel works is in fact the most advanced metals enterprise on the territory of CIS countries. They modernized the steel-making unit and commissioned an electric power station which is a non-waste production facility. It supplies electricity to the city of Alchevsk. It should be also stressed that having financed Russian investors we helped Ukrainian metals enterprises to come out of a very difficult economic situation that was caused in the past by the fact credits for modernization had been taken abroad. None of foreign creditors funded these enterprises. And Vnesheconombank is the only source of financial resources including current assets. There are some bottle necks in this situation caused by the fact that our enterprises have problems in their relations with the tax authorities – non-refunded VAT to our enterprise is about 400 million dollars and this is a minimum balance.
CORR: Is VEB going to compensate for these funds?
Vladimir DMITRIEV: We extend credits to Russian investors on a constant basis, factually substituting these funds which the state is not able to compensate for to our enterprises due to serious problems.
CORR: Let’s sum up our Ukrainian theme and imagine possible scenarios for Ukraine’s future: integration with the EU, absence of integration, association with the EU.
Vladimir DMITRIEV: I’d like to focus on the current situation. The association agreement was not signed. Future developments would of course depend entirely on the Ukrainian authorities’ actions, on their desire and readiness to join the Customs Union. Recent dynamics of business and political contacts shows that by expanding its trade-economic and investment cooperation with Russia Ukraine will benefit significantly from joining the Customs Union. We are holding an active dialogue about our joint infrastructure projects. Specifically, Vnesheconombank is a serious player in this discussion. We started discussing the construction of the Kerch Strait Bridge. This is a very important infrastructure project which will give powerful impetus for the development of a whole number of Ukrainian and Russian economic sectors. Here I mean large-scale infrastructure projects in transport and power engineering sectors. If Ukraine joins the Customs Union, Ukraine is sure to win in terms of energy prices like Belarus. This is clear to everybody. And in terms of power engineering and other economic sectors it’s a real benefit for Ukraine to strengthen its ties with Russia.
CORR: My last question to you deals with the Russian banking sector. We can see such troubled banks as Bank Pushkino and Master Bank. What do you think about the Central Bank’s tougher financial control over Russian banks and is there a risk of a credibility gap developing between people and banks after such situations?
Vladimir DMITRIEV: I’m convinced that the Central Bank does what it is supposed to do. Dishonest people and swindlers have not disappeared yet, the more so in the banking sector. So, the Bank of Russia’s actions are for the god of the banking sector and people rather than some kind of threats. It’s important to have in mind that sometimes people take irrational decisions putting their money in the banks that promise them high interest rates. As the saying goes there is no such thing as a free lunch. This case is a good lesson for those who put their money in unreliable banks and our people should be well-educated in a financial sense to put their money in reliable banks. I’d like to say it once more that the Central Bank doe what it is supposed to do and acts prudently.
CORR: Vladimir Alexandrovich thank you very much for your interview.
Vladimir DMITRIEV: Thank you.