VEB and the Export-Import Bank of China Sign Framework Credit Agreement

13 october 2014 года
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In the presence of Russian Prime Minister Dmitry Medvedev and Premier of the State Council of the People’s Republic of China Li Keqiang, Vnesheconombank and the Export-Import Bank of China signed a framework credit agreements for an amount of 2 billion US dollars.

On behalf of Vnesheconombank the agreement was signed by Chairman Vladimir Dmitriev and on behalf of the Export-Import Bank of China – by Vice President Yuan Xingyong.

The agreement provides for extending long-term loan facilities to fund projects to be implemented on the territory of the Russian Federation including in the Far East and Siberia. In the parties’ opinion, this will make it possible to expand trade and economic cooperation between the two countries.

 

Press Office of Vnesheconombank
Phone: +7 (495) 608-46-93, Fax: +7 (499) 975-21-34
E-mail: press@veb.ru

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Information Message on the Results of Investing Funds of the Reserve Fund and the National Wealth Fund

2 october 2014 года
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Russia’s Finance Ministry hereby informs about the results of investing funds of the Reserve Fund and the National WealthFund from January 1 to September 30, 2014.

The Reserve Fund

As of October 1, 2014 the aggregate amount of the Reserve Fund was 3 544.83billion rubles which is equivalent to 90.00 billion US dollars. The amounts of balances in separate accounts to record funds of the Reserve Fund were:

  • 40.82 billion US dollars
  • 31.39 billion euros;
  • 5.75 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 September 30, 2014 was0.42 billion US dollars, which is equivalent to 16.38 billion rubles. The exchange rate difference from recalculating balances of funds in the said accounts for a period from January 1 to September 30, 2014 was 468.04 billion rubles.

The National Wealth Fund

In September of 2014, Vnesheconombank early returned financial resources of the Fund in the amount of 6.254 billion US dollars placed on its deposits under Resolution of the Russian Government dated January 19, 2008, № 18 “On the Procedure for Managing Funds of the National Wealth Fund”.

In accordance with the said Resolution and Instruction of the Russian Government dated September 6, 2014, №1749-r, the funds of the Fund returned early were placed on new deposits with Vnesheconombank:

1) in the amount of 5.966 billion US dollars for a tenure of 15 years with annual accrued interest payments that allow to include accrued interest upon calculating Vnesheconombank’s own funds (capital), out ofthe said funds:

3.504 billion dollarswith accrual of interest every six months at a rate of 3 percentage points higher than LIBOR in US dollars for a tenure of six months;

2.462 billion dollarswith accrual of interest every six months at a rate of 2.75 percentage points higher than LIBOR in US dollars for a tenure of six months;

2) in the amount of 0.238 billion US dollars with accrual of interest very six months at a rate of 3.8 percentage point higher than LIBOR rate in US dollars for a tenure of six months with annual accrued interest payments.

Moreover, in September of 2014, Vnesheconombank early returned financial resources of the Fund placed on deposits in the amount of 214.04 billion rubles in accordance with Federal Law dated October 13, 2008, № 173-FZ “On Additional Measures for Supporting the Financial System of the Russian Federation”. In accordance with Resolutions of the Russian Government dated January 19, 2008, № 18 “On the Procedure for Managing Financial Resources of the National Wealth Fund”, and dated August 22 2014, № 839 “On Using Financial Resources of the National Wealth Fund to Purchase Preferred Shares of Credit Institutions” the Funds of the Fund in the said amount were used by the Russian Finance Ministry to purchase by private subscription OJSC Bank VTB’s preferred shares innumber of 21 403 797 025 000 at a par value of 0.01 ruble for one share which accounts for 62.3% of OJSC Bank VTB’s charter capital.

As of October 1, 2014, the aggregate amount of the National Wealth Fund was 3 276.79 billion rubles which is equivalent to 83.20 billion US dollars including:

1) In separate accounts to record funds of the National Wealth Fund with the Bank of Russia:

  • 24.42 billion US dollars;
  • 23.97 billion euros;
  • 4.35 billion pounds sterlings;

2) 474.02 billion rubles and 6.25 billion US dollars were deposited with Vnesheconombank.

3) under an individual decision by the Russian Government 3.00 billion US dollars were placed in debt instruments of foreign states without placing demands on long-term credit ratings;

4) 214.04 billion rubles were placed in preferred shares of credit institutions.

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 September 30, 2014, was 0.31 billion US dollars, which is equivalent to 12.35 billion rubles. The exchange rate difference from recalculating monetary resources of the Fundfrom January 1 to September 30, 2014 was388.57 billion rubles including:

  • balances in foreign exchange accounts with the Bank of Russia – 326.96 billion rubles;
  • funds deposited with Vnesheconombank in US dollars – 41.64 billion rubles;
  • funds placed in debt instruments of foreign states under a separate decision of the Russian Government without placing demands on long-term credit ratings – 19.97 billion rubles.

In September of 2014, incomes from deposits that were early returned by Vnesheconombank in the amount of 18.79 billion rubles which is equivalent to 0.49 billion US dollars were transferred to the federal budget.

The aggregate income from placing financial resources of the Fund on Vnesheconombank’s deposits from January to September of 2014 was 40.80 billion rubles, which is equivalent to 1.13 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

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Vnesheconombank’s Regular Supervisory Board Meeting Held

25 september 2014 года
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D.Medvedev: “We have to adapt to new challenges and look for sources of development and this remains to be one of the Bank’s priorities”.

Dmitry Medvedev’s opening address:

We have already met recently with some of those present today at a meeting devoted to prospects for Vnesheconombank’s development and of course to the current situation. The Government made a decision to support the Bank for Development by additionally capitalizing it with funds from the budget for the Bank to maintain the amount of its participation in developing the national economy and moreover to secure a required volume of funding and liquidity with the support of the Finance Ministry and the Central Bank in the total amount of up to 240 billion rubles as well as implement a major program of state guarantees. I am talking about it on purpose because according to some, the state refused to commit funds to the Bank. This is not the case – on the contrary, a decision was made to additionally capitalize the Bank in order to ensure its sustainability as a development institution.

D.Medvedev: “The Government made a decision to support the Bank for Development by additionally capitalizing it with funds from the budget for the Bank to maintain the amount of its participation in developing the national economy and moreover to secure a required volume of funding and liquidity with the support of the Finance Ministry and the Central Bank in the total amount of up to 240 billion rubles as well as implement a major program of state guarantees”.

Nevertheless, foreign economic conditions are changingand that is why we need to adapt to new challenges, look for sources of development and this remains to be one of the Bank’s priorities. Based on these considerations, we’ll discuss the creation of a fund to support the development of mono-cities. This is a very difficult task but we must make efforts even in the current difficult situation to address mono-cities’ problems. Our task is to ensure the development of economy and social sectors there and to this end, such a fund is being established. It will fund transport and housing and utilities infrastructure and will be instrumental in launching investment projects.

Another line of activity is providing support for ourdomestic aviation industry. Today we’lldiscuss the possibility to fund purchases of SukhoiSuperjet 100 by a number of our airlines. The fact that our airline companies purchase domestic aircraft shows prospects for enhancing our aviation industry, the more so, until recently our air carriers have preferred to buy foreign made aircraft and the reason for it was the number of airliners on the market and price/quality ratio. So, transactions that we are discussing today are very important for the development of our economy. It’s not that sanctions have been imposed against a whole number of our companies and economic sectors. We should simply rely on our advanced technologies, resources, high-technology industries and that is why these purchases (here I mean 16 aircraft) should make their contribution to the development of the Russian aviation industry. There is a number of other issueswe’ll discuss in the course of VEB’s Supervisory Board meeting.

Origin: Internet-Site of the Government of the Russian Federation

 

After Vnesheconombank’s Supervisory Board Meeting VEB Chairman Vladimir Dmitriev answeredjournalists’ questions

V.Dmitriev: Good afternoon dear colleagues!

A regular meeting of VEB’s Supervisory Board was held today. It was above all devoted to funding certain transactions. We also made decisions on a number of Vnesheconombank’s key lines of business related to its subsidiary companies’ activities, here I mean the creation of a fund to support mono-cities, approval of its charter and appointment of its director general. As far as major projects were concerned, we discussed an issue of supporting our aviation industry in so far as it relates to supplyingSukhoiSuperjet aircraft to the Russian market for Russian airlines as well as to promoting our aviation industry products such SukhoiSuperjet aircraft to foreign markets.

As to domestic supplies, we agreed upon extending two credits to our subsidiary – VEB-Leasing to fund the supplies of 16 SukhoiSuperjet aircraft for Russian air carriers including Aeroflot, which accounts for the most part of these supplies. As to the export of Russian aircraft, we made a decision to increase a limit of a credit line to be opened for promoting them to foreign importers to 2.5 billion dollars. The reason for it is that the previous decision taken by our Supervisory Board on supplying 11 aircraft became invalid in late 2013. Now the SukhoiSuperjet Company has about 80 aircraft in its backlog of orders and the geography is pretty wide, it includes above all Mexico where our planes are already flying successfully as well as Indonesia and Laos.I’d like to stress that upon supplying these aircraftwe employ a mechanism for comprehensive support for Russian non-raw materials exports. This mechanism includes subsidizing interest rates with funds from the budget making it possible for our products and financial terms to be competitive with similar offers of other countries and suppliers. In order to promote our aircraft to foreign markets we engage not only Vnesheconombank but also the Export Insurance Agency of Russia (EXIAR) and our subsidiary – VEDB-Leasing.

Today we have made decisions to fund AvtoVAZ and United Auto Group, whichis linked to the Izhevsk Automobile Plant. The funds are to be used to modernize AvtoVAZ production facilities and create a new generation of engines to be supplied to AvtoVAZ.I’d like also to mention new AvtoVAZ Renault-Nissan models. The credit facilities worth about 30 billion rubles are to be used to fund all these three projects. These projects are included in the total limit with regard to which a decision was made in 2012 that Vnesheconombank would provide funds in the amount of up to 60 billion rubles to finance AvtoVAZ’s investment program.

As I have already said, we have made a decision today to establish a fund to support mono-cities. We have agreed upon the Fund’s Charter with the key ministries and VEB’s Supervisory Board approved it. We also agreed upon a candidature of the Fund’s director general. Relying on financial resources to be committed from the budget this year and in the next two years the Fund will be responsible for funding - on the basis of co- financing with local and regional authorities – engineering and other infrastructure projects as well as other projects to be implemented in mono-cities.

The Fund’s another substantial line of activity (in terms of human factor) is to train specialists - both representatives of regional and municipal authorities responsible for developing mono-cities and representatives of business who are ready to implement various projects in mono-cities.

Today we have agreed upon a candidature of the Far East and Baikal Region Development Fund’s Director General. We hope the Fund’s new director general who is despite his young age quite experienced and competent in investment activity as he worked for major investment companies, banks and in our subsidiary institution – the Russian Direct Investment Fund will ensure the Fund’s operation along its key lines of activity. Under the Finance Ministry’s order 15 billion rubles were transferred to the Fund’s capital. We have also discussed a number of other issues of less importance.

Question: Who will be in charge of the Fund in the Far East?

V.Dmitriev: Alexei Chikunkov will be in charge of the Fund in the Far East.

Question: Maxim Tovkailo, Vedomosti newspaper. To tell you the truth I have a lot of questions but could start with 240 billion rubles mentioned by the Prime Minister in his opening address. What sort of sum is this? Is this new money or the deposit that was converted into you capital?

V.Dmitriev: The only thing that I can comment on is the figure. This figure is related to projects that we undertook to fund. Here I mean credit agreements, which we must comply with unconditionally. But you know quite well that there is no open market as such, foreign borrowings are closed both in terms of interbank credits and in terms of placing bonds. Nevertheless, we count on the domestic market because we do not intend to refinance our debts on domestic loans and creditsthrough using government sources and they amount to no less than 107 billion rubles, which we are to pay next year. And here we are telling the Government that we count on the domestic market to refinance these funds.

But as far as projects are concerned, it’s a different story, given the current economic situation and funding sources. The Prime Minister and the Chairman of our Supervisory Boardmeant various forms of state support through using funds at the disposal of the Government by way of using funds that the Central Bankis ready to pump into the economy through banks. Now different options of expanding functional capabilities of measures that are already being taken are under consideration. I’m talking about increasing limits upon issuing banks’ resources under their mutual sureties. Now it’s 50% of capital, we are considering increasing this indicator with the Central Bank. Here I mean refinancing of banks through using financial resources of the Central Bank and above all banks affected by sanctions to fund investment projects based on project finance principles where a part of risk is covered by state guarantees and a substantial amount of financial resources is provided by the Central Bank. As far as Vnesheconombank is concerned other forms of support are also being considered including those we used in the period of crisis when we absorbed excessive liquidity from the system by issuing as you remember foreign –currency-denominated bonds. These were bonds with a duration of one year. Nevertheless, the Central Bank and commercial banks bought them. The state is ready to resort to this well-known range of measures.

We do not pretend to be a unique bank as we are aware that other banks with state participation affected by sanctions count on similar forms of state support. At the same time, I rule out any measures applicable only to Vnesheconombank because we do not see any reasons to encroach on anybody’s interests in this unhealthy global situation.

As far as the Bank’s capital is concerned, a decision was made that the Bank’s capital would be maintained and replenished on a sustainable and permanent basis to the extent the Bank needs to meet key financial sustainability standards and above all capital adequacy ratio at a level of no less than 10% because it is this key covenant that is specified in our issue prospectuses (here I mean our bond issues on foreign markets) and in agreements with Russian and foreign creditors.

As a first step, our capital is to be replenished by 30 billion rubles.

Question: This sum is to be committed only in 2015 or the same sum will be committed in the future?

V.Dmitriev: I’d like to stress it once more that a decision was made to support the Bank on a sustainable basis, I mean not for a period of one yearand to the extent needed to maintain the Bank’s financial sustainability. For example, if we need 15 billion rubles in 2016, 15 billion rubles will be committed. If we find it necessary to increase this sum, we’ll apply to our Supervisory Board and the Government.

Question: Until which year is the sum of 240 billion rubles to be committed?

V.Dmitriev: This is the sum of our obligations we are to fulfil next year, in 2015.

Question: Given thatVEB needs funds, does VEB plan to sell its stake for example in Gazprom and its other assets: Svyaz-Bank, Globexbank?

V.Dmitriev: In this respect, a decision was also taken. It provides for the Bank to submit its considerations and a strategyfor withdrawing from these assets until 2020.Naturally, nobody wants the Bank to sell the assets and put losses on its balance sheet. It is out of the question be- cause as of today these assets’ balance sheet value is significantly higher than their market value. You’ve mentioned Svyaz-Bank and Globexbank. We should keep it in mind that in order to rehabilitate the banks we took a deposit in the amount 230 billion rubles from the Central Bank and have already paid the Central Bank an interest of 40 billion rubles for using the deposit. So, to sell Svyaz-Bank andGlobex at the price of their capital… I think that now the market is even worse and nobody is likely to purchase these financing institutions in the current situation although they are financially stable dynamically developing banks. So, our understanding is that non-core assets should be sold at market prices in such a condition that would allow the Bank to pursue its policy on a break-even basis.

Question: Vladimir Alexandrovich, are you still planning to participate in project financing of the Yamal LNG Project? If you are, where are going to get significant money from?

V.Dmitriev: I would address this question toNovatek but I can also say that our Bank is not the only one that is going to participate in this project. We know that Novatek’s Chinese partners show great interest and readiness to participate in this project on a large scale. We know that European companies are still involved in this project despite sanctions. Several Russian banks including Vnesheconombank are also interested in participating in the project. The state showed its interest in the project by taking a decision to commit financial resources for this project from the National Wealth Fund. And this gives additional guarantees for reducing risks. I am not going to tell you about the amount of our participation share because it is being agreed on. However,I’m convinced that all participants in this project both shareholders and creditors are sure to provide required financial resources for the project.

Question: May I ask you a final question? It deals with Mechel. You said repeatedly that VEB was not interested in saving this company. As of today, are you as Chairman and your deputies participating in any consultations on supporting this company. A rumor gets around that VEB might participate in some sort of scheme for buying out a railway from Mechel on the part of RZhD (Russian Railways).

V.Dmitriev: Neither my deputies nor I are holding such talks with Mechel and RZhD.

Thank you.

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Vladimir Dmitriev’s comments to Interfax Agency following a meeting on measures for state support for Vnesheconombank

24 september 2014 года
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The first stage of VEB’s additional capitalization worth 30 billion rubles will make it possible for the Bank to meet standards – Dmitriev

September 24. INTERFAX-AFI – Vnesheconombank’s additional capitalization that was discussed on Tuesday with Prime Minister Dmitry Medvedev would allow Vnesheconombank to meet financial sustainability standards, said Vnesheconombank Chairman Vladimir Dmitriev.

Two sources familiar with the course of the meeting told Interfax on Tuesday night that a decision had been made to commit 30 billion rubles to VEB to maintain liquidity. V.Dmitriev confirmed this figure.

“The decisions made would allow VEB to rely on a systemic and sustainable state support which would ensure through measures being taken including the first stage in the amount of at least 30 billion rubles the Bank’s dynamic development and would enable it to meet basic financial sustainability standards. These measures are designed to enable the Bank to meet its obligations to Russian and foreign creditors and investors and increase volumes of its credits to fund nationally significant investment projects, support exportsand small and medium-sized enterprises”, said V.Dmitriev.

In response to a request to comment on mass media information about VEB’s potential sale of3.15% of RusAl’s shares:At present, we are not discussing an issue of selling blocks of shares or other non-liquid assets owned by VEB. VEB didn’t announced such initiatives because it is fully aware that their sale at market prices will be lossmaking. Kommersant reported on Tuesday with reference to its sources that VEB could sell its stake in RusAl to increase its capital. Russian depository receipts for shares of the company lost 8.4% at a trading session on fears that VEB’s stake will be sold.

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Russian Prime Minister Dmitry Medvedev conducts a meeting on Vnesheconombank’s additional capitalization

23 september 2014 года
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D.Medvedev: “There is a need for Vnesheconombankto maintain required volumes of support for the national economy in the current situation when the country’s economic policy relies above all on domestic sources of funding”.

Dmitry Medvedev’s opening address:

Today, our meeting is devoted to Vnesheconombankand issues related to its current standing and its potential additional capitalization. Naturally, the reason for it is that Vnesheconombank is a leading and the most important development institution in our country operating under a special law.It commits financial resources for modernizing the Russian economy and stimulating inflow of investments. The Bank plays a special role on the long-term funding market.

In the recent years, Vnesheconombank has been instrumental in implementing quite a few large-scale projects, which are designed to overcome infrastructure restrictions, boost natural resources utilization efficiency, support industrial exports, stimulate the development of territorial clusters and as a whole address serious objectives of the country’s development.

I’d like to mention such important projects as the construction of the Boguchan Hydroelectric Power Plant as well as Sheremetjevo-3 and Pulkovo terminals, the Western High-Speed Diameter, the Khabarovsk oil refinery's modernization, the development and manufacturing of our SukhoiSuperjet 100.

Moreover, Vnesheconombank became a major creditor of a whole number of construction projects including the Olympic construction project. Its efficient financial support helped to successfully implement infrastructure projects in Sochi although in a number of cases we had to make pretty difficult decisions and Vnesheconombank had to make such difficult decisions too.

D.Medvedev: “Vnesheconombank became a major creditor of a whole number of construction projects including the Olympic construction project. Its efficient financial support helped to successfully implement infrastructure projects in Sochi”.

In general, we should admit that the Bank’s participation in this kind of projects was necessary and justified.Until recently, the Bank has succeeded in raising credit facilities on international markets to fund investment projects. Now, as you know, the situation has changed – our partners not only refuse to participate in this kind of projects but limit activities of a number of banks. Nevertheless, Vnesheconombank remains to be a quality borrower and an efficient creditor.There is a need for Vnesheconombankto maintain required volumes of support for the national economy in the current situation when the country’s economic policy relies above all on domestic sources of funding” and on such approaches which should allow us to create advanced, quality products and support exports. All this is of primary importance now, so my proposal is to discuss these issues today at our meeting.

Origin: Internet-Site of the Government of the Russian Federation

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