State corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and a pool of Chinese commercial banks signed a cooperation agreement at INNOPROM-2016 International Industrial Trade Fair in the course of the third Russia-China EXPO in Yekaterinburg.
In accordance with the Agreement, Vnesheconombank may raise a 3-year syndicated loanfrom a pool of Chinese commercial banks with a 3-year extension option. The Harbin Bank will act as the Coordinator of the syndicated loan.
The funds can be used to finance Vnesheconombank’s ongoing investment projects irrespective of their Chinese factor (content).
Vnesheconombank’s completing the deal may become a significant milestone in the strategy aimed at building up relationships with Chinese agency banks, primarily, the private ones. Furthermore, it will open up new opportunities for raising mid-term funding abroad in one of the reserve currencies with a view to increasing amounts and extending maturities of such transactions under sanctions.
Vnesheconombank and Russia’s Ministry of Industry and Trade agreed on cooperation in industrial development
State corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and the Ministry of Industry and Trade of the Russian Federation (Minpromtorg) signed a cooperation agreement at INNOPROM-2016 International Industrial Trade Fair.
The Agreement was signed by Chairman Sergey Gorkov on behalf of Vnesheconombank and Minister Denis Manturov on behalf of Minpromtorg.
The parties have agreed to cooperate with a view to increasing the volume and quality of lending to businesses engaged in industry and high-tech exports.
Minpromtorg and Vnesheconombank intend to step up their concerted efforts to select investment projects on industrial construction and industrial infrastructure development, in particular, those aiming to boost exports and import substitution. In accordance with the Agreement, such projects may be delivered using a variety of mechanisms and financial instruments of both Vnesheconombank proper and its subsidiaries.
The parties have identified major areas of cooperation, which include creating a favourable environment for investment project finance and lending, attracting long-term financial resources into industry by means of the credit mechanism, etc.
The VEB Group’s equity under IFRS increased by RUB 30.7 billion in Q1 2016
Vnesheconombank published consolidated financial statements of the VEB Group for Q1 2016 as prepared in compliance with IFRS.
The VEB Group’s key performance indicators:
- In Q1 2016, the VEB Group’s equity increased by RUB 30.7 billion (6%) to reach RUB 511.5 billion as at 31.03.2016. The upward trend is primarily attributable to a capital contribution by the state in the amount of RUB 73.8 billion to partially compensate for the losses incurred in 2016 in discharging obligations under foreign loans raised in capital markets. This came as the first tranche of the RUB 150 billion designated for VEB’s support in 2016. The subsidy received by VEB from the federal budget in the amount mentioned above caused the equity to increase to RUB 519.4 billion, with the capital adequacy ratio reaching 12.1%.
- Net interest income increased by 35% to RUB 25.7 billion as compared to the same period of the previous yearbillion. The increase is accounted for by higher growth rates of net interest income and a reduction in funding costs.
- In Q1 2016, the VEB Group recognized a RUB 58.3 billion loss caused by provisioning. The negative impact was mitigated by the net gain recognition of the governmentgrant in the amount of RUB 135.9 billion, as part of the state support measures. As Nikolay Tsekhomsky, First Deputy Chairman of Vnesheconombank – Member of the Board put it “the funding extended by the State was another measure designed to promote transformation efforts made by the Bank’s management to boost the operational efficiency”.
- When auditing the VEB Group’s assets, the Bank took a conservative approach to the provisioning policy. Thus, provisions for impairment of assets increased to RUB 176.3 billion. The provisions growth affected both the net loan portfolio of the Group, which decreased by 13.4% against the beginning of the year, and the financial results of the Group for Q1 2016.
- The VEB Group’s assets decreased by RUB 433.4 billion (-9.9%) to RUB 3.949 trillion. It was mainly caused by a RUB 344.1 billion (-13.3%) decrease in the customer loan portfolio to RUB 2.236 trillion. The total loan portfolio share in the Group’s assets decreased from 59% to 57% as compared to early 2016. The trend is attributed to a significant decline in the currency rates against ruble, as well as provisioning for impairment of loans.
- Total liabilities went down by RUB 464.1 billion to RUB 3.4 trillion due to a decline in the amounts due to credit institutions and debt securities issued. The total amount of debt securities issued and due to banks decreased by RUB 275 billion. Such a decrease was caused by a timely repayment of the maturing debt and the already mentioned growth of the ruble against US dollar and euro, which led to a decline in book value of the foreign currency denominated liabilities. It should be noted, that in Q1 2016, Vnesheconombank redeemed its 500 million Swiss franc - denominated Eurobonds issue, successfully refinanced the RUB 15 billion issue on the Russian market and placed a new issue of RUB 19.6 billion.
Vnesheconombank has elaborated a new Development Strategy for up to 2021 that provides for the development institution to entirely focus on the sectors that are of top priority for the economy, i.e. support for high value - added industries and non-commodity exports, as well as integrated infrastructure development. The Strategy has in principle been approved by the Supervisory Board of Vnesheconombank. Furthermore, the Bank has established a division for problem loans management, as well as a customer service designed to foster VEB’s relations with its customers.
Nikolay Tsekhpmsky, Vnesheconombank’s First Deputy Chairman and Member of the Management Board, has joined the Board of Directors of Concern Kalashnikov (Rostec Corporation) as an independent director.
The decision was approved by the Concern Kalashnikov’s General Meeting of Shareholders. An invitation to join the company’s board of directors was issued on behalf of TransKomplektHolding LLC and a group of the Concern’s private shareholders.
Vnesheconombank’s Expert Council held its regular meeting on Investment Trends in the Russian Economy and Vnesheconombank’s Investment Patterns for 2017-2018.
The meeting was attended by Vnesheconombank’s Chairman, Members of the Management Board, Deputy Chairmen and Advisers to Chairman of Vnesheconombank, government officials, figures from academia and non-commercial associations.
In his opening statement, Evgeny Yasin, Chief Scientific Officer at National Research University Higher School of Economics, stressed the urgency of the topic for the Bank’s new business model.
Among the speakers at the meeting were Sergey Gorkov, Chairman of Vnesheconombank; Andrey Klepach, Deputy Chairman (Chief Economist) of Vnesheconombank; Tatyana Sakharova, Adviser to Chairman of Vnesheconombank; Oleg Ivanov, Vice President of the Association of Regional Banks of Russia; Oleg Solntsev, Section Head at the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF); and Vladimir Salnikov, Head of Real Sector Development Analysis and Forecast and Deputy Director General of CMASF.
The speakers addressed the issues of investment trends, development of economic sectors, Vnesheconombank’s investment priorities, and syndicated lending. Furthermore, the attendees came up with recommendations and proposals as to the optimal choice of investment patterns to ensure multiplicative effect and long-term social and economic development.