Today Italy is one of our most important trade partners in Europe – Vladimir Dmitriev
ITAR-TASS (itar-tass.com),
Moscow,
December 2 2013 14:37
Various events organized by the Russian-Italian Forum-Dialogue within the Framework of Civil Societies took place on November 26, in the course of the Russian-Italian interstate consultations headed by Russian President Vladimir Putin and Italian Prime Minister Enrico Letta. Established in 2004, the Russian-Italian long-term project has become an important instrument of bilateral cooperation. Vnesheconombank Chairman Vladimir Dmitriev told ITAR-TASS about results achieved and prospects for future cooperation. He is the Co-Chairman of the Russian-Italian Forum-Dialogue for the Russian side.
-Vladimir Alexandrovich, Russia and Italy are tied by long-time trade and diplomatic relations. How would you assess the level of cooperation between our countries?
-Today, Italy is one of our most important partners in Europe. In terms of its trade turnover with Russia which amounted to 45.8 billion dollars last year it ranks third after the Netherlands and Germany. Almost 45 years ago Italy was the first country to have concluded a long-term agreement on gas supplies from the USSR. And now Italy is the second largest consumer of Russian gas. The Italian Concern Eni is working closely with Gazprom on the Southern Stream Gas Transport project and it is also cooperating with Rosneft company on the shelves of the Barents and Black seas. Enel concern owns almost 70% stake in OGK-5 company. Finmeccanica concern is a leading partner of Russian companies in the high-technology sector. It implements projects in the aerospace sector, aircraft construction as well as in modernizing railway transport, postal and telecommunications. CJSC HeliVert is operating efficiently. HeliVert is a joint venture of Helicopters of Russia and AgustaWestland. They have already assembled the first six helicopters. JSC Sukhoi Civil Aircraft is cooperating with Alenia Aermacchi in manufacturing the Superjet-100 regional aircraft. The backlog of orders is more than 200 airliners. Today, about 500 Italian companies are operating in Russia and cooperation is expanding actively.
-Could you tell us about Vnesheconombank’s cooperation with its Italian partners?
-I’m happy to note that the Bank participates in many projects I’ve listed. Our partners in these projects are Italy’s financing institutions. We signed an agreement on cooperation with Italy’s credit agency SACE and France’s agency Coface to form an integrated system of funding international sales of Superjet-100 aircraft. The agreement provides for using a credit-leasing scheme for funding export supplies of the Superjet-100 to foreign customers against insurance coverage of SACE and Coface.
“Cooperation between Russia and Italy is advancing in all directions”, said Russian President Vladimir Putin. In my opinion one of the most successful projects in which Vnesheconombank participated is the construction of the Tobolsk-Polymer gas-chemical complex which is the largest one in Europe. The project was implemented with the participation of Intesa Sanpaolo SpA and SACE.
We also entered into agreement with Intesa Sanpaolo SpA and UBI Banca ScpA on providing financial support for small and medium-sized enterprises for an amount of 150 million euros.
Today, VEB Group is comprised of about twenty subsidiaries, namely, banks, investment, leasing, engineering and project companies - the Direct Investment Fund, the Export Credit Agency of Russia, regional development corporations and consulting representative offices in the regions.
This set of institutions allows us to create investment-financing platforms to implement not only individual projects but also programs of comprehensive development of territories and research production clusters.
-What agreements did you sign within the framework of the Russian-Italian Forum-Dialogue?
-In Trieste we signed several agreements with such Italian financing institutions as Mediobanca and export insurance agency SACE as well as a Letter of Intent with company CO.MO.I. GROUP SA on developing a new mechanism for funding Vnesheconombank customers under contracts with Italian suppliers.
-These are not the first agreements between VEB and Italian banks?
-In fact, I’d like to recollect one of them - an agreement on cooperation with Italian banking group UBI Banca on the development of small and medium-sized enterprises. It provided for UBI Banca to extend credit facilities worth up to 50 million euros. For a number of reasons this agreement’s implementation was suspended.
“Cooperation with Russia is a guarantee for success for Italy’s economy”, said Italian Prime Minister Enrico Letta. In order to give a new impetus for cooperation Vnesheconombank offers to discuss the possibility for UBI Banca to enter into capital of an International Fund to Support Entrepreneurship that is being established now. The Fund is being established together with Germany’s KfW Banking Group with the participation of the European Investment Bank. It is designed to support Russian medium-sized enterprises that demonstrate good growth dynamics. Business is to be funded primarily through debt instruments.
The Fund’s is to be comprised of several tranches with different risk and profitability levels. Vnesheconombank is to invest funds in the most risky tranche thus making it possible to protect investors of senior tranches in case of losses. Taking into account the Fund’s conservative policy and strict requirements for investees, it is safe to say that investments in a senior tranche will be almost risk-free.
-In 2014, Italy is to assume the EU presidency. And in this respect does VEB have plans to expand cooperation with its Italian partners?
-We intend to step up our efforts to fill the Forum-Dialogue with real business content.
In particular, we can resume the activity of a regular Russian-Italian Business-Dialogue. It could be held as part of the already functioning conference “The Russian Economic and Financial Forum in Italy”.
Representatives of big business participate actively in a dialogue devoted to issues of economic cooperation between Russia and Italy but representatives of small and medium-sized enterprises are less active. An International Forum devoted to supporting small and medium-sized enterprises is to be held in Moscow on April 23-24, 2014. I think that in the course of this Forum we’ll be able hold a round-table discussion on Russian-Italian efforts to support small and medium-sized enterprises.
Interviewed by Alxei Bukalov, Vera Shcherbakova.
/Corr. ITAR-TASS, Rome/
Vnesheconombank Deputy Chairman – Member of the Board Sergei Lykov’s Interview to Prime News Agency
Vnesheconombank Deputy Chairman Sergei Lykov told in his interview to Prime Agency how the dynamic growth of the Bank’s loan portfolio influenced Vnesheconombank Group’s indicators in the first half of 2013, as well as in which sectors companies received the largest volume of credits and if VEB’s main borrowers are state corporations.
-How would you assess VEB’s performance for the 1st half of 2013?
-As a whole, I should say that despite the extremely negative situation abroad and known problems in the Russian economy Vnesheconombank Group was able to maintain stable development rates. Its consolidated financial statements, that is, statements with due regard to its subsidiary and affiliated institutions including foreign ones show that assets increased by 204 billion rubles from the start of 2013 or almost by 7%. This is higher than the growth in assets of the entire Russian banking sector that amounted to 6.5% for the same period of time. In our capacity of development institution we’re very happy that our loan portfolio increased by 230 billion rubles or by 15.4% (including in project financing where the growth amounted to 148 billion rubles, almost 24%) while in the banking sector as a whole these indicators in non-finance enterprises and institutions amounted to 5.3% and 13.7% - for natural entities. The proportion of credits to customers in Vnesheconombank Group’s assets increased from 51% to 55% for the first half of 2013.
-What economic sectors does Vnesheconombank regard as the most important in terms of extending credits?
-It’s well-known that the Bank’s main principles and lines of activity are set forth in the federal law “On the Bank for Development” and the Memorandum on its Financial Policies. Vnesheconombank’s subsidiaries are commercial institutions but their activities are closely related to addressing tasks that are set before Vnesheconombank. These tasks include overcoming infrastructure constraints, modernizing and developing non-raw materials economy, stimulating innovations, exports and implementing other projects.
In the first half of this year the Bank for Development played a major role in Vnesheconombank Group’s loan portfolio growth. Its proportion in the total volume of growth was almost 76% but I’d also like to underline excellent performance of such members of the Group as OJSC VEB-Leasing, its portfolio increased by almost 21.53% to 214 billion rubles as well as OJSC Belvnesheconombank, its portfolio increased by 23.3% to 47 billion rubles.
As far as economic sectors are concerned most credits were extended to construction and production sectors including mechanical engineering and defense industrial complex – 846.4 billion rubles (taking into account formed reserves) an increase of more than 23% for the first half of the year. Next in terms of growth rates are transport (18.1%), raw materials industry (19.3%), telecommunications (8%) science and education (almost 41.15%) but unfortunately the volume is still small).
Somehow it is believed that Vnesheconombank’s main borrowers are state-controlled companies. Vnesheconombank Group’s financial statements show that this is not the case. Almost 1552.2 billion rubles (taking reserves into account) were extended to private companies, that is, almost 80% of the whole loan portfolio.
-You’ve mentioned reserves formed against extended credits. What are their volumes and dynamics?
-As a whole in the first half of 2013, credit depreciation reserves increased by 21.1 billion rubles from 193.4 billion rubles to 214.5 billion rubles or by 10.9%. We view this increase as more than normal keeping in mind the dynamic growth rate of our loan portfolio as well as the fact that investment projects account for the greater part of this portfolio. Here I mean projects that are not attractive for commercial and financial sectors. During the first half of the year reserves ratio changed insignificantly from 11.4% to 11.1%.
-How did Vnesheconombank Group manage to ensure such a high growth rate of assets and loan portfolio?
-Vnesheconombank Group is making strenuous efforts to diversify its sources of financial resources. There’s no doubt that the state provides a great deal of support. Owing to subsidies received from the Russian Finance Ministry in the total amount of 77 billion rubles (62 billion rubles - for forming the Russian Direct Investment Fund and 15 billion rubles - for implementing top-priority projects in the Far East and in the Baikal region) the Group’s capital was increased to 599.5 billion rubles. I’d like to say that at the start of the 3d quarter the state made another financial contribution to Vnesheconombank’s capital in the amount of 4.068 billion rubles with Rostelecom’s shares.
VEB raised more funds from the Bank of Russia through using REPO transactions with securities in Vnesheconombank’s portfolio. As a result the debt to the Russian Government and the Bank of Russia increased by 33.1 billion rubles (+3.4%) to 1.015 trillion rubles. The Bank made strenuous efforts to expand volumes of financial resources raised on foreign and domestic capital markets. The amount of Vnesheconombank’s and its subsidiary banks’ and companies’ debt securities increased by 100.1 billion rubles (+25.7% from the start of the year) to 489.1 billion rubles. During this period the amount of funds raised from OECD credit institutions increased by 75.02 billion rubles (+28.0%) to 341.5 billion rubles. As a result the total amount of raised financial resources in the 1st half of 2013 increased by 192 billion rubles (+8.4%) and was 2.469 trillion rubles.
Thus, Vnesheconombank managed to raise 3.2 rubles for each ruble invested in its capital. The raised funds were used for modernizing the economy.
-As Vnesheconombank is a state corporation, that is, a nonprofit institution, generating profits is not an end in itself for it. Does Vnesheconombank continue to operate on a break-even principle?
-If we perform an analysis through comparing data for the first half of 2013 and the first half of 2012 on the basis of average chronological balance indicators we can see that profits went down from 21.6 billion rubles to 0.8 billion rubles. The main reasons are pretty objective: this is additional formation of reserves (and the reason for it is quite obvious – a sharp increase in the amount of investment projects in the Bank’s loan portfolio) and negative dynamics in foreign currency revaluation of balance sheets, the amount of balance decreased by 7 billion rubles for a comparable period of the last year.
And I’d like note that net interest income amounted to 46.7 billion rubles - an increase of 8 billion rubles (+20.8%) from the same period in the last year. Net interest margin remained stable at a level of 3.4%. The main reason for it was the growth of interest incomes to117.6 billion rubles due to the increased volume of the loan portfolio. Expenses also increased by 11.6 billion rubles (+19.5%) to 71 billion rubles. The growth in expenses was influenced by increased volume of raised funds and a certain increase in fund-raising rate from 6% in the first half of 2012 to 6.1% in the first half of 2013. In this respecrt it should be noted that Vnesheconombank’s capacity to raise financial resources is limited compared to major commercial banks as they can raise deposits from legal and natural entities and use balances of these accounts to conduct active transactions.