Vnesheconombank Chairman V.A. Dmitriev’s Interview to the TV Channel Russia 24

22 april 2013 года
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TV Channel Russia 24,
INTERVIEW
22.04.2013, 16:37

HOST: Vladimir Alexandrovich, good afternoon.

Vladimir DMITRIEV, Vnesheconombank Chairman: Good afternoon.

HOST: We are seeing each other in Washington in the course of the G20 meeting. Russia is a chairman of the G20 and one of its main tasks is to fund investments. I know that now VEB is opening its subdivision in Hong-Kong to raise Asian investments to fund Russian projects. Could you tell about your Asian subsidiary’s functions, are there any preliminary agreements, projects, key lines of activity?

Vladimir DMITRIEV: In fact, Vnesheconombank’s Supervisory Board made a decision to open a financial and investment company in Hong-Kong. This Vnesheconombank’s company is designed to both raise investments and safeguard Russian companies’ interests on the Hon-Kong stock exchange, provide consulting services, help Russian companies to tap international financial markets and raise foreign investments for Russia. This is one of its main missions.  We also have other priorities related to a growing trade turnover between Russia and China and using Hong-Kong as a sort of bridge for raising investments for Russia. But this is not the only institution designed to raise investments as part of Vnesheconombank. And we talked about it with our colleagues from national development finance institutions as well as with the leadership of such international development finance institutions as the World Bank, international finance corporations, the European Investment Bank and others. They of course want investments for Russia to be channeled through institutions controlled by the state and they regard these institutions as an instrument for guaranteeing and sharing risks with them and securing success of their investment transactions in Russia. I would also like to highlight the Russian Direct Investment Fund’s successful activity as an institution included in Vnesheconombank Group and responsible for raising investments. My high opinion about this Fund is shared by our county’s leadership.

HOST: What projects were implemented successfully?

Vladimir Dmitriev: The Fund’s financial resources in the amount of 500 million dollars made it possible to raise foreign investments worth 2 billion dollars. Sectors that are most attractive for foreign investors are those associated with our country’s dynamically developing middle class. Here I mean our financial sector, the Moscow Interbank Currency Exchange, public health services, medical industry, pharmaceutical industry, timber processing industry and a number of other sectors which are attractive for foreign investors who wouldn’t invest in Russia in the absence of a reliable mechanism represented by the Russian Direct Investment Fund. The Fund’s objective is to identify projects that could be of interest for foreign investors.

I’d like also to mention regional funds and corporations established specially for raising investments, for example the Kaluga Development Corporation. Just seven years ago the suburbs of Kaluga were nothing more than marshy lands no one wanted. Nowadays a unique industrial cluster was set up on these territories due to developing infrastructure by this corporation whose shareholders are Vnesheconombank and the Government of the Kaluga region. In this industrial cluster they manufacture Volkswagen cars, localized spare parts production, develop small and medium-sized enterprises and cooperate with other giants of automotive industry and electronics. This is an example showing that through infrastructure development and support provided by the regional authorities and the national bank for development Russia’s economy and regions became attractive for investors. Similar activities are undertaken by the North Caucasus Development Corporation implementing a whole number of interesting projects in the Caucasus as well as by the Far East and the Baikal Region Development Corporation whose mission is likely to be expanded and it will be able to participate in structuring projects based on concessions and principles of public private partnership. As far as raising investments for Russia is concerned, our contacts with national development institutions and international development institutions showed that Russia is attractive in terms of investments. Statements by Elvira Nabiulina and the current head of the Central Bank suggest that the state is obviously interested in looking for opportunities to co-invest in projects which are of interest for foreigners.

HOST: You’ve mentioned Elvira Nabiulina’s initiatives, do you mean her latest statement that we can invest revenues from oil and gas exports, that is, from the National Wealth Fund in projects with the participation of the Russian Direct Investment Fund?

Vladimir DMITRIEV: We should talk about projects that could be attractive for foreign investors. It’s not a matter above all of investing financial resources of the National Wealth Fund at a good profit rate, although it’s an important goal in itself. Our objective above all is to broaden Russia’s investment appeal, for foreign investors to believe in the state’s readiness to co-invest in projects that are of interest for foreign investors in the context of activities undertaken by the Finance Ministry, G20 financial institutions and our presidency in this prestigious international association. Vnesheconombank put forward an initiative to hold a conference or a meeting of national and international development institutions’ on the sidelines of G20 countries finance ministers’ meeting in July of this year. Here I mean above all such our partners as the China State Development Bank, Germany’s Development Bank – KfW, development banks of BRICS countries and a number of European development institutions. Moreover, international financing institutions and international finance corporation showed interest in participating in this forum, for example the European Investment Bank and the European Bank of Reconstruction and Development. They are interested in discussing how national and international development institutions can achieve an objective on the agenda of a G20 meeting to be held in Saint Petersburg in autumn – this objective is to secure economic growth to create new jobs and increase employment.

HOST: How in general VEB and the Russian Direct Investment Fund cooperate with other international financing institutions and foreign national development banks?

Vladimir DMITRIEV: So far the Russian Direct Investment Fund has been working with private and sovereign direct investment funds rather than banks. And in this respect, the Fund has achieved a lot: it set up a joint fund with the China Investment Corporation, engaged Kuwait’s sovereign fund in the amount of half a billion dollars for co-financing projects proposed by the Russian Direct Investment Fund. Today we can see that both European national banks and international financing institutions such as for example the European Investment Bank are interested in discussing their potential participation in projects to be co-financed with the use of the Russian Direct Investment Fund’s financial resources. Our foreign partners trust Russia and are ready to invest in it and this is confirmed by the fact that Vnesheconombank together with Germany’s development bank established a major fund to provide support for small and medium-sized enterprises in Russia. The Fund is designed to enter into capital of companies operating in the high-technology sector. We have preliminary arrangements with other international financing organizations and private investors, private investment funds for them to enter the Fund or to co-invest projects to be identified by us with our German partners. This Fund is already functioning. It was created jointly by Vnesheconombank, the International Finance Corporation and the Russian Finance Ministry – the Fund to Support Regional Banks. It has already conducted two transactions where the Fund entered into capital of regional banks thus increasing their capitalization and ensuring that these banks’ loan portfolio is in the first place used to support small and medium-sized enterprises in the high-technology sector.

HOST: If we talk about BRICS, this subject is also being discussed and recently they have been voicing an opinion that the abbreviation itself has become outdated. Do you think that BRICS has a potential in particular with regard to a BRICS Development Bank project which has been hindered lately.

Vladimir DMITRIEV: To tell you the truth, I’m among those financiers who have a conservative approach to this idea. Neither Vnesheconombank nor BRICS countries’ development banks have been engaged for this project. An association of BRICS countries’ development banks has been set up in our country. This activity is being undertaken at a political level, at a level of finance ministries. But the states could instruct their national financial development institutions to participate in this sort of activity and instead of contributing 50 billion to capital of a BRICS Development Bank it would be better to contribute 2 billion to each of national development banks and each bank would be able to raise at least 15 and may be 20 billion on the market taking into capital adequacy ratio thus forming a significant capital base that would make it possible to fund appropriate infrastructure projects. The most important thing is to identify these projects but this is not our responsibility. If we mean projects that are of interest for all BRICS member countries, appropriate ministries of transportation, economics and industry should be involved in identifying these projects, set a task for us and we’ll be responsible for structuring these projects financially, searching for financial resources to fund them and for financing them. Nobody has answered this question so far. So, I don’t think that this bank will be established in the near future.

HOST: Vladimir Alexandrovich, thank you very much for answering our questions.

Vladimir DMITRIEV: Thank you for interesting questions.

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Chief of Finance

15 april 2013 года
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ITOGI №15 (879)
April 15, 2013
Andrei Vandenko

 

Vladimir Dmitriev about a gloomy parting with his motherland and a bright encounter with capitalism, about pink salmons he exchanged for dried Caspian roaches, sleepless nights spent in an embassy garage and about oligarchs queuing in a reception office as well as about how such words as VEB coupon bonds ceased to be dirty ones

Chairman of State Corporation ‘Bank for Development and Foreign Economic Affairs’ commonly known by force of habit as Vnesheconombank, Vladimir Dmitriev, is a rare guest in the mass media. And his interview on subjects not dealing with his professional core activity is an out of the ordinary event. For this sort of event to happen we had to take patience as you need time for a detailed talk, and time is traditionally in short supply. Nevertheless, we were able to talk and we talked for more than four hours.

- We are supposed to talk with Vladimir Dmitriev about money – someone else’s and his own money as he is a banker. Could you tell us where you made your first money?

- In a student construction team, after the third year of studies we worked on Sakhalin and returned to Moscow overloaded with red salmon. Now my Alma Mater – the Moscow Finance University- occupies a lot of buildings but in the past everything was housed in a typical five-storied school building on Kibalchich street. On the first of September after classes we went to a pub near the exhibition of economic achievements (VDNKh) and exchanged pink salmons which were in short supply for dried Caspian roaches. We ate too much salmon on Sakhalin. In the film the White Sun of the Desert Vereshchagin said, “You again give me this caviar. I cannot have this damn stuff every day.” We were in the similar situation. During the fishing period you could see barrels of salted red salmon everywhere – you could eat until you bust. I spent the whole summer on Sakhalin. I passed exams ahead of schedule and participated in preparing living quarters for members of our construction team. As a member of a student construction team I worked in three places – in the Moscow region, Abakan and finally in the Far East. The current generation of students does not have a chance to go through this sort of experience but we gained invaluable experience and it proved to be very useful for us later on. After the ninth grade I worked as a turner at a plant. And when I was a fifth year student, I worked from September to June as a loader at a machine-building plant “Znamya Truda” which is now incorporated in RSK Mig. We worked nights loading repaired aircraft on auto-platforms. And then we transported them to Lukhovitsy and handed over planes to the military. I made good money. That was the year 1975 and at that time an engineer earned about 130 rubles a month and I was paid two hundred…

- But you earned a lot less than Prokhorov. In his student years he organized cargo-handling operations, created work teams and made loads of money.

- To my best knowledge, Prokhorov accumulated significant capital in a jeans cooperative business. But he did it later, in 1975 that I am now talking about they were cracking down on cooperative businesses and shady businessmen. There were some who competed with Zarya firm that provided household services. Some accumulated fortunes in gambling business. They could win a million rubles a month playing cards and the Volga car cost ten thousand… They did not deposit such huge money in savings banks. They hid it in the earth in cellophane sacks.

- Did you happen to know this sort of people?

- They have been doing fine so far although they had to work hard to become successful and wealthy.

- But you haven’t told us yet about when you earned on your own a significant sum of money?

- During that summer on Sakhalin. I was paid a thousand and a half rubles. I bought a tape recorder “Mayak” and carried it through the whole country. I also bought ten kilos of pink salmon. On our way to Moscow we changed planes and because of bad weather we had to spend 24 hours in Khabarovsk. Our student construction team coats bore the following abbreviation - MFI – the Moscow Finance Institute. When asked, “Where are you from guys?” We answered, “The Magadan Faience Institute.” We were just kidding. Surprisingly, but many believed us.

- Why did you decide to become a financier?

- I’ve been trying to answer this question myself so far. My parents didn’t have anything to do with this line of business. They were 14 years old when they started to work at “Znamya Truda” plant, where I worked being a fifth year student. My father worked there sixty years and graduated from an aviation institute while working. He retired from the post of deputy technical director of the plant. He died two years ago…My mother didn’t work as long as my father although she devoted all her life to the plant. I was supposed to follow my parents’ path but I turned out to be good at humanities and foreign languages. And I had made a choice by the tenth grade. I tried to get enrolled in MGIMO (the Moscow State Institute of International Relations) but I failed to pass a maths exam, submitted my document to the Finance Institute, passed exams and became a student. Everything proved to be for the better. Today I am head of the Department of the Finance University and I’m a member of MGIMO’s Board of Trustees , I worked for ten years as a diplomat abroad, I worked several years in the Foreign Ministry and the State Committee of the USSR Council of Ministers for Foreign Economic Ties…

- You started to work for the Foreign Ministry in 1979.

- Yes, I did, due to relatives’ ties. But before that I had gained some experience working for the State Committee and I earned a good reputation there.

- Could you tell us a bit more about your relatives’ ties?

- That man is not alive and let’s not take his name in vain but it was he who helped me to move from foreign economic activity to foreign political one. I became an attaché in the Foreign Ministry’s Department of Scandinavian Countries. I worked for two years in the high-rise building on Smolensk square, on the 16th floor and I left for Sweden in 1981. My weeping relatives were seeing my wife, my little son and me off at the Belorussian railway station on January 31, at seven p.m. It was snowing and raining. And to tell you the truth, we found it hard to imagine what we would see when we reached our destination. Our train traveled to Stockholm through Germany. To be more exact, it was loaded on a ferry in Germany’s Sassnitz and taken to Sweden’s Trelleborg and then to the capital. It was a wonderful voyage for us as we had never been abroad before. While we were traveling through Poland the landscape was rather gloomy - the same patches of snow in the fields and low clouds. We saw Polish people walking in the carriages and offered us to exchange Stolichnaya vodka for chewing gums and blades for safety razors. Our train arrived in Germany in the evening and was being loaded on a ferry in the dark. After waking up the next morning we went up to the deck. The contrast was striking. The ferry was sailing in the skerries moving between small islands. After two days of winter gloomy weather we suddenly saw a cloudless blue sky and the bright sun, well-tended green lawns on the coast, yellow and blue flags over roofs. That was a country that had not seen a war on its territory for a hundred and seventy years and had been ruled but social democrats in the recent decades. Comparisons rushed into my mind… Then I started to work and the first emotions became less acute.

- How long did you stay in ABBA’s motherland?

- My first duty station lasted four and a half years, from 1985 to 1987 I was in Russia and then I returned to Stockholm to work there for another five and a half years. During the time I was in Moscow I became a post graduate student but I defended my thesis only in 1998 while working for Vnesheconombank.

- Did you happen to meet legendary diplomat Andrei Gromyko?

- Once Andrei Gromyko arrived in Stockholm to participate in a disarmament conference and held talks with US Secretary of State George Shultz. The talks lasted for about five or six hours and Andrei Gromyko didn’t leave a negotiating table, not even once. I also remember that he brought a cook with him and entertained Americans with pies. And one more thing: after the lengthy and rather tiring talks that ended at about midnight Gromyko’s interpreter Viktor Sukhodrev transcribed his notes and dictated them to typists who worked interchangeably till five o’clock in the morning. These people are known for their great capacity to work tirelessly and high professionalism. Only such people were employed in the Foreign Ministry, selection was rigorous.

- Did you meet Sergei Ivanov in Stockholm?

- During my duty station, he didn’t work there. I met him at the Foreign Ministry. In Stockholm I worked with Konstantin Kosachev who is now Head of the Federal Agency for CIS Affairs, Compatriots Living Abroad and Humanitarian Cooperation, Vladimir Titov, Deputy Foreign Minister. I can also cite Grigory Rapotu – State Secretary of the Union State of Russia and Belarus. Putin’s assistant Yury Ushakov worked in the eighties at the disarmament conference in Stockholm. I‘m still on friendly terms with many people I met in those years. We share our past experiences both serious and comical ones.

For example, many Soviet citizens who worked abroad became enthusiastic about going fishing and picking up mushrooms. In 1982, our submarine went aground in the skerries, spy scare rose dramatically, we were being spied on openly, our every step was monitored. At dawn we went fishing in inflatable boats in the gulf, we used to catch codfish, roaches and with luck eels and salmons. Swedish journalists took pictures of us from the coast and then published articles saying that in fact Russians measured the depth of skerries for Soviet mini-submarines passage. But who could have believed that we used our catch to cook home delicacies?  For example, we salted fish in baths and dried it in vent air inlets. The smell of dried fish spread all over the embassy. And would you like me to tell you what we tended to do at night in the embassy’s garage? We acquired car mechanic skills repairing used cars before taking them home. We used to buy shabby cars on the cheap, riveted, welded, puttied and painted them until they looked like new foreign–made cars. In the late eighties you could buy a ten-year-old Mercedes on the cheap, repair it and exchange it in Moscow for a three-room flat. A three-room flat!

- Did you do so?

- What for? And I did not have a Mercedes. In 1993, I brought home 1979 Volvo 244. I used the car for some time and in 1995 I had a power of attorney to transfer the car issued. Paradoxically, the car is still registered in my name and is entered in a tax return although I think that the car does not exist anymore and was utilized long ago.

- Who else did you work with in Stockholm? Did you have a chance to meet Gorbachev?

- Mikhail Gorbachev visited Sweden in 1990 after he had been awarded the Noble Prize for Peace. Despite his triumph he looked tired and answered questions in an absent-minded way. I even thought that he felt that his active political career was coming to an end. He was accompanied by interpreter Pavel Palazhchenko who several years later translated Victor Chernomyrdin’s saying from Russian into English brilliantly. The saying runs: “We wanted the best, you know the rest.”

I happened to see various patterns of behavior. When I started working in Stockholm, Mikhail Yakovlev was the Soviet ambassador to Sweden and had spent about eleven years in Sweden by that time. He addressed the local audience in one and the same way: he used to say hello in Swedish and gave his place to an interpreter who read out his speech without stopping from the beginning to the end. At the end he used to say in Swedish Tack sa mycket - thank you very much and left. Thus, he saved time of those present as they didn’t have to listen to his speech in Russian. Under Boris Pankin they made it a rule to read out the latest Swedish newspapers. He made all members of our diplomatic mission to attend those newspaper readings. We got together in the morning at 9 o’clock and listened to a review of leading publications. I was responsible for a conservative newspaper Sveska Dagbladet. But Boris Pankin was the first to speak. The latest copy of newspaper Pravda was delivered by the first morning flight of Aeroflot and he read out a leading article to us.

- But in August 1991, he denounced GKChP (The State Committee on the State of Emergency) and Gorbachev appointed him as Foreign Minister of the USSR without delay.

- He served as Foreign Minister for a short period of time - about a hundred days. Then he served as ambassador to Great Britain.  Now he lives in Sweden. Such interesting twists of fate…

- You returned from your second Stockholm duty station in 1993 but decided against working in the Foreign Ministry. Why?

- When I came back to Moscow I could see that people working at the Foreign Ministry were also involved in selling containers of American cigarettes and Dutch spirit and accumulated fortunes. Not all people were involved in such business but the atmosphere was rather unfavorable. The best experts started to leave the Ministry. A colleague I worked with in Stockholm decided to go into politics and joined the Party of Russian Unity and Accord which was preparing for State Duma elections. He was offered a job in the Finance Ministry but the prospect for becoming a deputy seemed to be more attractive to him. He got involved in the election campaign and recommended me to the Finance Ministry as we were friends. I accepted an offer and worked as deputy head of currency department where I was involved in issuing VEB currency-denominated coupon bonds. In 1995, I moved to the foreign debt department and was responsible for exercising control over Russia’s first sovereign placement of bonds on the Eurobonds market. At that time I could not imagine that I would work as VEB first deputy chairman…

- Did Andrei Kostin offer you this job?

- We first met in 1993 in the company of former Foreign Ministry employees. And in 1997, Andrei who at that time was already Chairman of Vnesheconombank insisted that I should become his deputy and secured my appointment. To tell you the truth, first deputy finance minister Andrei Vavilov did not want to allow me to leave the Ministry for a long time. We travelled with him all over the world staging road shows devoted to placing Russian eurobonds in various countries and cities. Once I made around the world business tip during a week: I flew to Tokyo and talked with Japanese bankers, in the evening I made a presentation in Seoul, I arrived in Hong-Kong in the morning and from there I flew to Los-Angeles, in the course of three days I visited San-Francisco, Boston, Chicago, Minneapolis, New-York and came back to Moscow. Last eurobonds with my participation were placed in 1997 and I believed that I had fulfilled all obligations and had the right to start working for Vnesheconombank. And so I did. This line of business was familiar to me as Vnesheconombank was at that time responsible for managing Russia’s foreign debt. VEB retains this function now but to a much lesser degree. The former debt agency transformed into a full-fledged Bank for Development.

- The country saw a default soon after which you were by a strange coincidence awarded the Medal of the Order “For the Merits and Dedicated Service to the Country”.

- As you can guess the award does not have anything to do with the sad events in August. I was awarded in connection with VEB’s anniversary. And in the summer of 1998, we of course understood what might happen.

- You mean that such words as VEB coupon bonds became dirty ones.

- Naturally, for the reason that the bonds depreciated. Russia not only announced default but the Government resigned, there was a serious confrontation with the State Duma and at some point, a question of where a decision-making center really was, came up. The situation in the political and everyday life was extremely volatile.

I remember a funny episode. My colleagues and I decided to have lunch and discuss the current situation. We went to Shanghai restaurant which was housed in the now demolished Rossiya Hotel. By the way, it was a wonderful restaurant with amazing cuisine. We sat there talking and eating with pleasure for about two hours and when the time came to pay the bill a waiter said, “I’m sorry, we do not accept bank cards.” The reason was the unstable financial situation. We offered ready dollars. A headwaiter came up and said, “I’m sorry we do not accept foreign exchange either. The exchange rate is changing all the time and we would have problems upon cash collection.” The episode was a clear indication of what was happening in the country…

There were unending talks about forward deals. As a matter of fact, foreign market players were involved in purchasing GKOs (government short-term bonds), assumed currency risks which they hedged in Russian banks but later on when they fell upon hard times they rushed to us shouting, “Help us out!” We asked them reasonably, “Are you responsible businessmen?” Their answer was, “We’ve been set up.” Thankfully, we survived both the default and the crisis. We proved to be better prepared for this challenge – we were experienced enough, and it was even more important that the state responded promptly by taking strategic decisions. In 1998, the country was in chaos and its economy was paralyzed. Many reasonable schemes were offered but they were rejected because those who were supposed to take responsibility were frightened and narrow-minded. For example, to say that the value of Russian debts fell at that time means to say nothing. Western banks made the following offer, “Let us hedge our risks through your Central Bank and in return we’ll provide you with financial resources to buy out devalued Russian debts.” It was a good bargain in all respects! This was the only way they could help us, but we announced default and any limits for Russia were cut off. And money was available abroad in any quantity. But proposals were rejected, nobody wanted to run risks and take decisions…

- Nevertheless, at a critical juncture the Central Bank provided Vnesheconombank with fifty billion dollars from its gold and foreign currency reserves to refinance foreign debts of Russian companies and banks.

- A limit was set for us but we spent a bit more than eleven billion. It was an interesting time.

- I hear that oligarchs queued day and night in your reception office. As the story goes, “Don’t join the queue! I’m the last one.”

- To say so would be an exaggeration but there were many who wanted to receive credits. VEB worked in close contact with the inter-departmental commission comprised of representatives from the government, governmental agencies, law enforcement authorities and commercial banks. Upon making decisions in the course of meetings we took into consideration all factors and circumstances, all small details and we also worked out well-defined criteria.

- Nevertheless, Oleg Deripaska received the biggest sum.

- You are right if you mean four and a half billion dollars. Rusal’s structures were provided with the largest financial assistance and it was not that a special favor was done for somebody personally. Nornickel’s blocking stake was pledged against the loans. There was a real threat to lose assets that played a key role for the Russian Federation; these assets could have been alienated by foreign creditors. We did not try to please everybody; we acted on the assumption that for some people financial support was vital while others were driven by the desire to resolve their problems on the sly. If people ran into debts thoughtlessly and didn’t give a damn about how they would repay them, why should the state help them out? There isn’t enough money for all. At that time, we worked without days off – on Saturdays and Sundays, sometimes stayed day and night at the office. We tried to work as fast as possible and managed to sort through a great number of documents for all decisions submitted to the Commission and the Supervisory Board to be well balanced and well motivated. Key decisions were made with the participation of the then Prime Minister Vladimir Putin who headed VEB’s Supervisory Board.

 -How did the idea of establishing a Bank for Development come about?

- I became Chairman of Vnesheconombank in late May of 2004. By that time, they had been talking about Vnesheconombank’s future for several years. Various scenarios were offered. It was clear that the Bank couldn’t perform its old functions any longer. By the way, you know that until the year 2007 its official name was Vnesheconombank of the USSR. The Soviet Union did not exist anymore but the brand remained. We didn’t even have a Central Bank license. The anecdotal situation was a real obstacle to our work. Finance Minister Alexei Kudrin encouraged me with good words when I was appointed as Chairman of Vnesheconombank telling me to prepare for transforming the Bank into a debt agency. We had a long conversion that time because I had a different opinion about VEB’s prospects. I’d like to explain what I mean.

In the early and mid 2000s, commercial banks tended to fund projects with a payback period of 1-1.5 years. And interest rates were very high. Large companies received credits for an acceptable period of time against security of their export earnings. The country’s infrastructure was being modernized slowly on a leftover principle. In actual fact, they hadn’t been building new sea ports, shipyards, airport terminals and nuclear and hydro power engineering facilities since the Soviet times. The economy was in great need of a long-term investment institution. The state needed a bank capable of raising substantial financial resources to extend long-term credits to fund infrastructure and large-scale projects. And such a bank was not supposed to give absolute priority to generating profits.

- Did you suggest this idea to Vladimir Putin? Had you known him for a long time?

- My colleagues and I had formulated a concept for a Bank for Development by 2005. And I suggested this idea to the then Head of the Kremlin Administration Dmitry Medvedev. He supported me and reported to Vladimir Putin. Then I had a meeting with the President who approved the project. Economic Development and Trade Minister German Gref assisted us in establishing a Bank for Development from the very beginning. He had VEB exempted from profit tax. We also put up a united front when taking other decisions vital for the Bank. The then Prime Minister Mikhail Fradkov’s role was exceptional. Nevertheless, we also had serious opponents. We had to come up against the failure to understand us and active opposition. Some believed that there was no need to create another major state bank capable of competing against commercial banks. Some were driven with selfish interests. In the long run, we managed to overcome all the differences.

- Did you take on Mikhail Fradkov’ son to thank him for his support?

- Petr Fradkov worked in VEB in the early 2000s, he had done a training course for half a year in Italy long before Mikhail Fradkov was appointed Russia’s Prime Minister and we planned to appoint him as our Bank’s representative in the U.S. He worked for about two years at the Far-East Shipping Company and then returned to VEB. Petr is ours. Alexandr Ivanov – a son of the current Chief of Staff of the Presidential Administration also worked for VEB, then left VEB to work for VTB and returned to our Bank again irrespective of Sergei Ivanov’s career progression. Frankly speaking, there are more attractive financing institutions than VEB whose employees’ salaries are a lot lower than those in banks with the state’s participation and obviously in private commercial banks.

- Did you help your sons to find a job?

- They are sensitive on such matters but they listen to my recommendations. My elder son Pavel is a member of CREDIT AGRICOLE BANK Board here in Moscow, my son Stepan has been working for the second year now in an investment company. They both graduated from the Finance Academy. They are fluent in English and didn’t forget Swedish completely. It’s too early for my little ones to think about their career. My daughter Zhenya is going to school this year, my youngest son Lesha is not five yet.

- How is your Swedish?

- I try to maintain a working knowledge of Swedish. Thanks to Sergei Ivanov I’m the Co-Chairman of the Russian-Swedish Business Council and I have regular meetings with my vis-a-vis Hans Vestberg, the current CEO of Ericsson. We speak Swedish with each other. I like the Swedish language and I like Sweden. Actually, the first love never fades away.

- How did you come to love hockey?

- When I was a boy we played with tin cans in the yard. We had neither pucks nor hockey sticks. We lived in 2nd Khutorskaya street until 1974 next to Dynamo stadium. We occupied a room in a five-storied building. In winter, I went to the stadium with neighbor boys to watch ice hockey matches. There were no indoor sports palaces at the time and all matches were played outdoors. If someone broke a hockey stick we had to repair it and use again. We had skates called “Gagi”, the word might have originated from the Dutch city of the Hague. There were also Canadian skates but we viewed them as an unaffordable luxury. We made leg guards from fruit and vegetable boxes, lined them with plastic foam and used tins as knee pads. I got a scar on my face when I fell on a tin can puck at the age of 13.

- What hockey team do you support?

- I have supported CSKA (the Central Sports Army Club) all my life. I have friendly ties with CSKA hockey veterans. Once we considered providing sponsor assistance to CSKA hockey team. At present, the Bank does not provide financial support for individual teams but we invest significant funds in Russia’s national football, ice-hockey, volleyball, swimming and rowing teams. We also fund the construction of several Olympic facilities in Sochi. When I was in Sweden I fell for tennis. In the early 1980s, Bjorn Borg’s glittering career was coming to an end but Mats Willander and Stephan Edberg were at the height of their success. There was an excellent ground tennis court in our embassy where we played recklessly from April to October. Since I returned to Moscow I have been working out regularly as well as taking part in amateur tournaments. In the past three years VEB has been staging a tournament under the motto “Tennis Legends in Moscow”. Last year Bjorn Borg, Goran Ivanishevich, Marat Safin, Evgeny Kafelnikov, Martina Hingis and Elena Dementieva participated in it. Professionals played with amateurs. It’s cool when you play against great tennis players…

- Can you tolerate defeat?

- Yes I can. But I get angry when rules are broken both in sports and in business. Fortunately, this is not the case at VEB. We have a very strong team in terms of professionalism and human qualities. I enjoy being in charge of such a team very much although it’s a great responsibility.

- Did you have to reshuffle the team significantly?

- I didn’t have to do it at all. First, I have been with VEB since 1997 and I have known all employees for a long time, I invited some of them myself. As a chief executive I believe that for a team to work efficiently it should be stable. As opposed to mathematics in business - changing the order of addends changes the sum. Corporative spirit is not an empty word for me. Strange as it may appear, there is still an atmosphere of the Soviet times at the Bank, in the best sense of the word. Responsibility, efficiency and discipline are our criteria.

- Nevertheless, one of your deputies is under investigation.

- If Anatoly Ballo is a point in case, I’m sure that investigators will look into this case in the most detailed and impartial way. No damage was done to the Bank, the credit was repaid and criminal cases against some suspects are already closed. We are committed to the presumption of innocence and we should not pin labels on anybody. We are going to cooperate with the investigation and support Anatoly. It’s very important for him and for our team as a whole. In any situation we should behave honestly and decently for us to live easily and comfortably. We receive some qualities from our parents. My mother is 84 years old; she has lived the better part of her life but her nicety in the matters of honor keeps on amazing my brother and I. She is very conscientious and pathologically modest. She is a decent role model.

- Are these qualities compatible with a banker profession?

- I for one don’t see any contradictions.

- Are there any real bankers in Russia? In Russia state-run banks rather than private ones enjoy the highest ratings. So, state bankers are in the lead.

- Strange as it may seem but we had an excellent finance training in the USSR even in the sever conditions of centrally planned economy. We had to retrain ourselves later on using our own experience and the experience was unique. And now we have highly qualified specialists in the Central Bank and commercial banks. But the highest ratings are not accidental.

- You’ve mentioned your brother. What does he do?

-Alexandr is ten years my senior and he works for the United Aircraft Construction Corporation.

- I see. You’re the Board Chairman there.

- Yes, I am. My brother already worked for the Corporation when I came there, he continued our family’s dynasty. He did what my parents expected of me. He graduated from an aviation institute and has worked in the aviation industry all his life. I go aboard a plane only as a passenger. I have to fly very often and spend half a year in business trips.

- Have you ever wanted to pilot a plane?

- No, I haven’t. I understand that this is not to be trifled. I’m too pressed for time to do a flying course. You have to learn to fly a plane in the best possible way not to risk your and other people’s lives. Otherwise, it’s not worth starting at all. I prefer to spend two spare hours on a tennis court or play ice hockey. But frankly speaking, most often I tend to work rather than play. I’ve been living this way a long time. I don’t complain. On the contrary I like it. I have a lot of work to do and a great number of plans. And it can’t be the other way round at the Bank for Development.

CV

Vladimir A Dmitriev

  • Born August 25, 1953, in Moscow.
  • In 1975, graduated from the Moscow Finance Institute, specialty — “International Economic Relations”.
  • 1975—1979 — State Committee of USSR Council of Ministers for Foreign Economic Relations, engineer.
  • 1979—1986 — Attache, third secretary, USSR Foreign Ministry Department.
  • 1986—1987 — Institute of World Economics and International Relations, USSR Academy of Sciences, research worker.
  • 1987—1993 — USSR Embassy of USSR in Sweden , Second, First Secretary.
  • 1993—1997 — Deputy Chief Executive Officer, Russian Finance Ministry Department.
  • 1997—2002 — Bank for Foreign Economic Affairs of the USSR, First Deputy Chairman.
  • 2002—2004 — Bank for Foreign Trade of the USSR (OJSC), Deputy President — Chairman of the Board
  • 2004—2007 — Bank for Foreign Economic Affairs of the USSR, Chairman.
  • From June 2007 — State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)”, Chairman.
  • Doctor of Economics.
  • Corresponding member, Russian Academy of Natural Sciences.
  • He was awarded orders and medals of the Russian Federation as well as state decorations of a number of foreign countries.
  • Married. Has three sons and a daughter
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Board Member, Vnesheconombank Deputy Chairman Alexandr Ivanov’s Interview to the TV Channel Russia 24

22 march 2013 года
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TV Channel Russia 24
Kurs Dnya
22.03.2013, 20:34

HOST: Our guest today is Alexandr Ivanov. Alexandr, I suggest that we discuss China again as Xi Jinping chose Russia as the first country to visit. Could this stimulate the development of Russia and China and enhance ties in trade and investment sectors?

Alexandr IVANOV, Board Member, Vnesheconombank Deputy Chairman: In my opinion, China is Russia’s neighbor and has a tremendous investment potential. China is known to have the largest gold and foreign currency reserves. Moreover, recently China has made great progress in developing and introducing new technologies. And to my mind, close relations between our two countries are sure to boost trade turnover and increase the number of investment projects to be funded jointly by the two countries. I’d like also to stress a great importance of the program to finance Russia’s Far East where we have a lot projects.

HOST: It is a region which is of interest for both countries, if only for geographical reasons.

Alexandr IVANOV: Absolutely. And there are a lot of opportunities for our further joint cooperation here.

HOST: Could you specify the opportunities?

Alexandr IVANOV: These above all include infrastructure, tourism clusters, construction of industrial facilities which can be oriented to both exports to China and to meeting domestic demand on the Russian territory. These might also be port zones, airports. There are a lot of opportunities here.

HOST: Representatives of the Russian Direct Investment Fund say that the China Investment Corporation, the Russian-Chinese Investment Fund and Vnesheconombank signed a Memorandum of Understanding which allows to increase joint investments by tens of billions of dollars. What about the time periods and amounts of investments?

Alexandr IVANOV: You are quite right. This Memorandum has been signed today in the presence of the two countries’ leaders. It is expected that the China Investment Corporation and its subsidiary the Russian-Chinese Investment Fund on the one hand and Vnesheconombank and its subsidiary the Russian Direct Investment Fund will jointly select, identify, analyze and offer for funding infrastructure projects. Here I mean long-term, meaningful, capital-intensive projects. Investment horizon is from seven years and longer. As a rule it is ten-fifteen years. Naturally, all these projects should be of integrating importance and boost the development of the Russia’s and China’s economy.

HOST: Alexandr, do you have a clear idea of specific projects at Vnesheconombank?

Alexandr IVANOV: Vnesheconombank has the so-called pipeline of projects. We are known to be pretty active in funding projects on supplying Chinese equipment to Russia and on modernizing enterprises. Moreover, we established the Far East and the Baikal Region Development Fund. This Fund is now working on about ten meaningful projects. I wouldn’t like to go into details as an expert examination has not been completed. As is known, a decision can be taken later after all internal procedures have been followed.

HOST: A summit of BRICS countries is getting underway in the Republic of South Africa. What issues are on its agenda?

Alexandr IVANOV: This BRICS summit is the fifth summit to be held in Durban next week under the slogan of “Partnership between BRICS and Africa for Development, for Modernization, for Industrialization”. A wide range of issues are to be discussed ranging from international security, from ecological responsibility to financial cooperation. Key themes are to include funding infrastructure and moving to payments in national currencies. They will also discuss the establishment of a BRICS Development Bank. As is known a decision was taken last year. And we expect some sort of road map to be made public and agreed upon in the course of the summit and this road map will specify main stages of establishing a BRICS Development Bank.

HOST: What functions will this bank perform, when can it start operating?

Alexandr IVANOV:  The bank can start operating when member countries transfer required charter capital. This is the responsibility of relevant countries’ finance ministries. As far as its functions are concerned they include securing payments in national currencies, supporting and promoting national exports and as a whole promoting integration processes on the territories of all five member countries.

HOST: Starting from next month a couple of yuan/ruble trading will start on MICEX in a standard mode of the most liquid couples. Do you think it makes sense to do the similar thing with other currencies of BRICS countries: the Brazilian real, the Indian rupee and maybe even South African rand?

Alexandr IVANOV: There is no doubt about it. The fact that a couple of yuan/ruble trading has started is very important on the way to moving to payments in national currencies. Moreover, I can say that Vnesheconombank is interested in placing its debt instruments that might be denominated in yuans. And this stock exchange mechanism will allow us to convert these earnings into rubles.

HOST: The fact that a yuan trading starts on our stock exchange floor makes it easier for us to gain access to China’s debt market. Did I get it right?

Alexandr Ivanov: Yes, you did. It’s easier for us to access capital market. It’s a broad market with a tremendous growth potential.

HOST: How is this access regulated? To this end there are a lot of various programs in China and there is a potential everywhere. Will Russian investors find their niche?

Alexandr IVANOV: Of course they will. The capital market is still regulated in China but restrictions are being gradually removed. At present, institutional investors can invest in debt obligations of Russian companies and banks. We expect the Chinese monetary authorities to further remove existing restrictions. And in the long run even retail investors will be able to invest in such obligations. In this case the market is sure to receive a huge potential for growth. And Russian companies will be able to raise funds in much greater amounts.

HOST: Alexandr, I can’t help asking you. Are they going to discuss Cyprus next week?

Alexandr IVANOV: At the BRICS summit?

HOST: Surely.

Alexandr IVANOV: I think so. This is a hot theme. The more so, leaders of five countries will attend the summit. And these countries account for about forty percent of the world’s GDP. It is these countries where the wellbeing of the middle class is on the rise, where markets are growing and economies are developing. So, this issue is sure to be discussed at all levels.

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Vnesheconombank Chairman V.A. Dmitriev’s Interview to the TV Channel Russia 24

15 february 2013 года
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TV Channel Russia 24,
INTERVIEW
15.02.2013, 17:45

HOST: The 10th annual Economic Forum is progressing in Krasnoyarsk. My colleague Irina Matyushenko talked about the Forum’s first results and prospects for the Russian economy with Vnesheconombank Chairman Vladimir Dmitriev.

Interview

CORR.: Here in Krasnoyarsk, the Forum is taking place under the slogan “Russia: A Map of Changes.” What changes does Russia need for its economy to advance energetically and for us to achieve growth rates of 5 percent and accomplish objectives set?

Vladimir DMITRIEV, Vnesheconombank Chairman: In my opinion, changes that Russia needs result from our Government’s plans and their implementation. By implementing them we’ll be able to achieve economic growth targets, increase labor productivity, build infrastructure and make structural changes that we have been talking about for a long time. I’m sure we are implementing these plans pretty dynamically.

CORR: In what economic sectors is Vnesheconombank going to invest in the first place in 2013?

Vladimir DMITRIEV: We’ll continue to fund economic sectors that are of primary importance for us. These are above all sectors related to manufacturing high technology products: power engineering, transport, aviation, automotive industry. We’ll commit significant financial resources to fund infrastructure, we’ll go on financing Olympic projects, the more so because there is less than one year left before the Sochi Olympics and we’ll go on funding small and medium-sized enterprises. And taking into account successful activities of our subsidiary institutions namely the Export Credit Agency of Russia, the Russian Direct Investment Fund we’ll give high priority to raising foreign investments, creating a positive investment image of Russia and promoting Russian exports.

CORR.: You’ve mentioned infrastructure. Dmitry Medvedev said at the Forum today that one of the most important objectives was to develop infrastructure including transport infrastructure. Ambitious targets have been set. For example, freight transportations are to be increased by 40 percent and passenger transportations - by 1.8 times in five years’ time. These are very serious ambitious tasks. Are they realistic? Will there be enough money for this?

Vladimir DMITRIEV: If you mean budget, we are not likely to have enough money but we should withdraw from this old paradigm and look for extra budgetary financing sources.

CORR.: You mean private investments?

Vladimir DMITRIEV: Private investments. But private investments will be channeled to infrastructure only in the case that we determine and enact rights and liabilities of participants in this process, that is, the state, private investors and financing institutions. Here we have a lot of examples: concession agreements on the construction of toll motorway Moscow Saint-Petersburg, the North-Western High Speed Diameter, the Odintsovo Bypass. We have done a lot in this respect and if we move ahead in this direction everything is sure to work out well.

CORR.: In 2014, VEB’s authority to manage pension funds of the so-called “undecideds” expires. And lately there’s been much talk about the need to withdraw this authority from Vnesheconombank.  What do you think should be done?

Vladimir DMITRIEV: I think we are performing our functions pretty well. Last year, Vnesheconombank produced the best results in managing the funded portion of pension funds. We believe that the first infrastructure bonds funded through pension savings funds will be launched this year. The amount of these bonds might reach 200-300 billion rubles. We have already invested about 100 billion rubles in corporate bonds of highly reliable issuers. So, we are performing this function pretty well. If a new institution comes into being and if this institution is capable of managing pension funds and using them for the needs of real sectors of the Russian economy as efficiently as our Bank, we’ll share all our experience with this new institution. But I think here we have a case when the best is the enemy of the good.

CORR.: There’s a lot of talk at the Forum about the need to improve Russia’s investment climate and investment image. You’re a member of the working group on improving investment climate in Russia. But even here at the Forum foreign participants admit that Russia’s image is negative rather than positive. What should we do in this situation?

Vladimir DMITRIEV: I think that in this situation we must work as hard as the leadership of the Kaluga region, Tatarstan and a number of other Russian regions do. They do not hire foreign consultants but they are open for foreign investments. Having created an attractive investment climate in these regions they demonstrate that they can raise both foreign and Russian investments. So, the most important thing is to work hard. Investors won’t come to a region where its leaders are not interested in engaging foreign investors and do not know how to do it. The example I have given shows that regional leaders are involved in creating an attractive investment climate. Regional leaders know foreign languages, do appropriate training courses, work with investors on a regular basis and their mobile phone numbers are available to all who want to invest in their regions. This is the way we should work with investors. And in this respect, both Vnesheconombank and its subsidiary companies are ready to provide support for those regions which need it.

CORR.: There is a lot of talk at the Forum about the so-called “green economy.” A case in point is the situation in the Baikal pulp-and-paper mill. Vnesheconombank became a controlling creditor by buying out debts from Alfa-Bank. By the way, the Greens and ecologists say that the mill should be closed down as soon as possible because it’s very harmful for environment. Are you going to close it down?

Vladimir DMITRIEV: I think that regional authorities, specialists and federal authorities tend to believe that the life pattern of this mono-city should be radically changed and the mill should be closed. There are no technologies in the world that would ensure closed production cycle without harming environment. We are not talking about closing down the mill immediately because the mill is equipped with slime ponds and treatment facilities. So, we should invest significant funds to close down the mill and realign this zone without harming environment.

CORR.: Are you going to invest?

Vladimir DMITRIEV: Realignment must aim to maximally use Baikal’s cleanest water and the region’s favorable ecological situation. And one of potential projects is to create a tourist-recreational zone and bottle and sell Baikal’s water adding to it appropriate minerals. We should make this area attractive for foreigners through creating a tourist-recreational special zone. So, there are many plans. And we are ready to invest in these projects relying on the state’s support because this line of activity is one of our priorities.

CORR.: Thank you very much for your interview Vladimir Alexandrovich.

Vladimir DMITRIEV: Thank you.

 

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Vnesheconombank Chairman V.A. Dmitriev’s Interview to the TV Channel Russia 24

29 december 2012 года
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TV Channel Russia 24,
29.12.2012, 16:41

HOST: What are the results of managing the funded portion of pensions, how is the investment climate developing in the Far East, how long will the program of stimulating mortgage lending last, how is the program of supporting automotive and other sectors coming along? Vnesheconombank Chairman Vladimir Dmitriev answered these and other questions in his exclusive interview to our TV channel.

Interview

Host Evelina Zakamskaya

HOST: Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Vnesheconombank Chairman: Good afternoon.

HOST: Vnesheconombank’s scope of activities is Russia’s entire economy – almost all its sectors. What did the outgoing year show? What were the top-priority lines of activity? How many projects did you manage to fund?

Vladimir DMITRIEV: Our priorities are specified by law and the Memorandum on Vnesheconombank’s Financial Policies. And the number of top priority lines of activity is constantly on the rise. Quite recently, new changes have been introduced. They deal with lending to medium-sized enterprises and above all projects in multi-profile entities, mono-cities where a lending limit was reduced to half a billion rubles provided that a project is worth no less than one billion rubles, whereas we fund projects that are worth no less than two billion rubles and the Bank’s own participation share is a billion rubles. We still regard infrastructure in all sectors as our top priority; here I mean transport, energy, communal services and social infrastructure. And a whole number of infrastructure projects are already being implemented on the principles of public private partnership. Other top priority sectors are mechanical engineering, transport and aviation industries. We are actively funding such automakers as Ford Sollers, AvtoVAZ and KAMAZ. You know that at one of its recent meetings the Bank’s Supervisory Board approved a program of supporting AvtoVAZ investment activity in the amount of 60 billion rubles. We are also working actively with such aircraft manufacturers as Sukhoi and Irkut and Komsomolsk-on-Amur. It’s important that we provide support for aircraft manufacturers at a R&D stage. This was the case with the Sukhoi-35 advanced military plane. We provide support for Russia’s civil aviation industry. And we started to provide comprehensive support for exports of Russian aircraft abroad. We give top priority to comprehensive development of territories, creating

territorial-production clusters. We also make significant contribution to developing agriculture. These are the key lines of our activity including providing support for small and medium-sized enterprises through our subsidiary SME Bank.

HOST: Infrastructure projects should be advanced with the help of long-term money. And this money is in short supply in the Russian economy and their amount will decrease as the Government made a decision to reduce allocations to the funded portion of pensions. What does this mean for Vnesheconombank?

Vladimir DMITRIEV: Vnesheconombank is also a state managing company responsible for managing the funded portion of pension funds. There are about a trillion and a half rubles under our management. Unfortunately, sixty percent of these funds are invested in government bonds and only 17 percent is invested in the real economy here I mean investments in Russian issuers’ bonds. And these issuers are not numerous. And some funds – about 15 percent are placed on deposits in Russian banks. We can say that this money is also working for the economy although this is short-term money; we extend this money to banks for a period of one year. The fact that most of pension funds are invested in government bonds  and that we can’t sell them at a good profit because of the market volatility and channel them to the real sector of the economy limits our maneuverability. But on the other hand we can invest our liquid resources in Russian issuers’ bonds. We realize that changes in contributions to the funded portion of pensions from six to two percent will significantly influence the amount of resources which Vnesheconombank and also nongovernmental pension funds and managing companies will be able to invest in the real sectors of the economy. We hope that people will make decisions in favor of forming long-term ruble resources which will be invested in the real sector of the economy. Working with nongovernmental pension funds we intend to mould mentality of our people. People should understand that it makes sense to make a decision in favor of six-percent contributions to the funded portion of pensions and that this money will be invested in the real sector of the economy.

HOST: Efficient management of pension funds will help Russians to make the right decision. What results does Vnesheconombank show?

Vladimir DMITRIEV: Vnesheconombank shows stable results above inflation. We are not so volatile as nongovernmental pension funds and managing companies. With our conservative approach to forming our investment portfolio and with most of our investments in government bonds we demonstrate stable yields above inflation. For nine months of this year the yield ratio with regard to the extended investment portfolio was 8.2 percent. And with regard to the portfolio formed from government bonds the yield ratio was also above inflation. This means that in general our yield ratios have been above inflation in the last years.

HOST: In 2012, the state acknowledged it necessary to develop the Far East as fast as possible and Vnesheconombank will take and is already taking an active part in it. You have approved the creation of agro-parks in the Far East and you intend to support infrastructure projects. Can we say that these investments are attractive? Do other investors besides Vnesheconombank show interest in them?

Vladimir DMITRIEV: I can’t tell you about other banks’ performance indicators. I know that they are actively operating in the Far East. We are already implementing projects in the Far East in the amount of about ninety billion rubles, with Vnesheconombank’s participation share in these projects being more than fifty billion rubles. Naturally, the Far East is an attractive region. But in order to ensure this region’s investment appeal for Russian and foreign investors, partners of Russian commercial banks should be convinced that the state shares or reduces their risks. And these risks can be reduced through creating infrastructure and favorable investment conditions including social ones. In this sense, it’s very important to create an appropriate institutional environment for investors. Here I mean the Far East and the Baikal Region Development Fund. We established this Fund at the end of the last year and it has already started operating. I’m also talking about the Russian Direct Investment Fund. When taking a decision to establish the Far East and the Baikal Region Development Fund we assumed that its capital would be formed in the amount of 500 million rubles and that Vnesheconombank would extend subordinated loans in the amount 70 billion rubles through using credit facilities thus engaging Russian commercial banks for investment projects in this region and making available financial resources in the total amount of 900 billion rubles. But the situation has changed fundamentally. A decision was made that the Finance Ministry would provide 15 billion rubles to the Bank’s capital to be used to capitalize the Far East and the Baikal Region Development Fund. We expect to receive these funds today. We are also working with foreign investors. And by the way, focusing on projects in the Far East and the Baikal region the Russian Direct Investment Fund has established jointly with the China Investment Corporation a Fund in the amount of two billion dollars. This Fund is designed to capitalize Russian companies in this region. So, the situation is developing dynamically and favorably.

HOST: There is another Russia trouble – the notorious housing problem. Will the state program of mortgage lending be prolonged? Vnesheconombank supported this program as not all banks can meet Vnesheconombank’s requirements and gain access to preferential financing.

Vladimir DMITRIEV: This is really the case, you are well informed. The program is advancing. We’ll have to prolong  it as there is no other way out. The reason for it is that out of 50 billion rubles allocated to buy out bonds and extend credits to people, 80 % has been extended in the form of credits. But of 11 banks included in this program, only one bank, namely, VTB-24, and the Housing Mortgage Lending Agency managed to issue mortgage bonds thus securitizing the credit extended. What’s the problem? The problem is to register title to new housing.

The problem is to form a pool of homogeneous credits. The problem is to register title to housing which is built under this program and which becomes security of bonds being issued. So, we hope that the year 2013 will be a record one and we’ll have to prolong the program for a year. But the program is working and even if we have funds and do not use them to buy out bonds we extend preferential credits to commercial banks which are included in this program through using Vnesheconombank’s funds. You should remember that in 2009, when Vnesheconombank received 175 billion rubles on deposit from the National Wealth Fund to support the Russian stock market, we received a premium of 100 billion rubles. And sometimes I hear people say why the National Wealth Fund should give money to Vnesheconombank it earned a lot of money. But financial resources of the National Wealth Fund are designed for other purposes. We earned money but of 100 billion rubles we use 50 billion rubles to fund the mortgage lending program by extending credit facilities at a rate of 3% per annum. There are no such low rates on the Russian market. We used 30 billion rubles to capitalize the Export Credit Agency of Russia. We used the remaining money to support the programs aimed at supporting small and medium-sized enterprises. I think that in this sense it is appropriate to say that the state earned money thanks to professionalism of the Bank’s employees who managed to earn a lot of money in the unstable situation on the stock market and used it to achieve top-priority national objectives.

HOST: Thank you. I wish you every success.

Vladimir DMITRIEV: Thank you Evelina. All the best to you.

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