Vnesheconombank Chairman Vladimir Dmitriev’s Interview to the TV Channel Russia 24

3 december 2013 года
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TV Channel Russia 24
INTERVIEW
02.12.2013, 10:39

HOST: You’ll hear an interview with Vnesheconombank Chairman Vladimir Dmitriev on our channel. My colleague Maria Bondareva asked him about cooperation between Russia and Ukraine in the banking sector on implementing investment projects and about the future of these lines of activity.

Interview

CORR: Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Vnesheconombank Chairman: Good afternoon.

CORR: Vladimir Alexandrovich, Vladimir Putin has said recently that the amount of Russia’s investments in the Ukrainian economy is about 30 billion dollars. What’s VEB’s share in this sum?

Vladimir DMITRIEV: VEB invested about 500 million dollars in Ukraine’s banking sector. In 2008, we factually rescued one of system-forming banks preventing it from going bankrupt and helped Ukraine to avoid serious implications for its banking business and for banking sector as whole. Now the bank is one of the largest banks in Ukraine. And if we talk about Russia’s presence in Ukraine’s banking sector we should mention Sberbank, Bank VTB, Alfa Bank and of course Vnesheconombank’s Ukrainian subsidiary bank. These banks form the basis of the Ukrainian banking system, at least if we mean non-government banks. Moreover, Vnesheconombank helped a number of Russian investors to purchase one of the largest metals company in Ukraine, namely, the Industrial Union of Donbass. In this case we made an investment of about 8 billion dollars. And it was not only a matter of purchase. Vnesheconombank supported this large metals company and it provided support not only for its products but also for about 40 thousand workers. And here I mean not only the Industrial Union of Donbass but also Zaporozhstal where we are responsible for managing this integrated iron & steel works together with one of the biggest Ukrainian businessmen Renat Akhmetov.

CORR: You’ve told us about your subsidiary bank in Ukraine which is one of the largest banks in the country. Generally speaking, how is the bank doing? What are your plans to upgrade it?

Vladimir DMITRIEV: When we purchased the bank by way of investing pretty large funds we didn’t expect that we would come up against a lot of problems from the previous management and previous owners. We acted on the assumption that the bank’s credit history was favorable and it had a solid loan portfolio. But as credit repayment dates came due we could see that borrowers failed to meet Prominvestbank’s requirements. In fact, we inherited bad loans worth up to a billion dollars. But we have to state that most borrowers are in a position to repay credits but use various mechanisms for evading their obligations. And now we face the need to additionally capitalize the bank and take tough legal action against mala fide borrowers. Nevertheless, the bank is actively operating in various sectors of Ukraine’s economy. And it seeks to bring the amount of credits to enterprises which are tied by integration relations with Russian enterprises to 20%. I believe that this is a realistic target figure.

CORR: What can you tell us about the amount of Ukrainian residents’ enterprises’ and banks’ credits to Russian banks?

Vladimir DMITRIEV: I can say that Russian banks and our Bank are actively involved in retail lending. It is safe to say that the amount of retail credits is constantly on the rise. I know that Sberbank is now implementing a serious program aimed at developing a branch network and retail lending in Ukraine catching up with the largest Ukrainian non-government banks in terms of its scale and potential nearing other Russian banks that have been operating on the Ukrainian market for a long time. I’ve already said about a task we are setting before our Bank as our Bank is a shareholder after all and a state corporation whose mission is to strengthen integration ties with adjoining states and CIS countries. For this reason, other banks also seek to seriously influence various sectors of the Ukrainian economy and above all those that are tied by cooperation relations with Russian enterprises. And it is quite natural because big business has been cooperating traditionally with Russian partners in various sectors and here I mean nuclear power engineering, mechanical engineering, transport and space industries and the military industrial complex. We have partner relations with Russian enterprises in the sectors that are of great importance for Ukraine’s economy.

CORR: This means that VEB is actively involved in funding the Ukrainian economy.

Vladimir DMITRIEV: Yes, it is. We fund Russian enterprises working with their Ukrainian partners and we also fund various sectors of Ukraine’s economy through our subsidiary bank.

CORR: You’ve also said that you maintain contacts with representatives of Ukrainian business. How do they size up heir integration partnership with Russia and friendly relations with it?

Vladimir DMITRIEV: As Russia is Ukraine’s main trade partner it goes without saying that Ukrainian business is interested in enhancing trade and economic ties with Russia. And it is also interested in investing in the Russian economy, so we have a two-way street – on the one hand Russian business invests in the Ukrainian economy and on the other hand a lot of Ukrainian businessmen work actively in Russia. Moreover, given the current situation in Ukraine, a difficult budget and income situations, Russian business hopes that in the course of forthcoming privatization of large-scale Ukrainian enterprises with a serious state participation it will be actively involved in privatization deals building up its investment presence and in fact strengthening integration ties that I have already mentioned.

CORR: I also know that VEB supported strongly Ukrainian enterprises during the crisis.

Vladimir DMITRIEV: You’re quite right. In a certain sense we rescued some sectors of the Ukrainian economy. I’ve already mentioned the metals industry which employs about 40 thousand workers at the Industrial Union of Donbass and the Zaporozhstal integrated iron & steel works. And our investors are still interested in modernizing these enterprises. Suffice it to say that the Alchevsk integrated iron & steel works is in fact the most advanced metals enterprise on the territory of CIS countries. They modernized the steel-making unit and commissioned an electric power station which is a non-waste production facility. It supplies electricity to the city of Alchevsk. It should be also stressed that having financed Russian investors we helped Ukrainian metals enterprises to come out of a very difficult economic situation that was caused in the past by the fact credits for modernization had been taken abroad. None of foreign creditors funded these enterprises. And Vnesheconombank is the only source of financial resources including current assets. There are some bottle necks in this situation caused by the fact that our enterprises have problems in their relations with the tax authorities – non-refunded VAT to our enterprise is about 400 million dollars and this is a minimum balance.

CORR: Is VEB going to compensate for these funds?

Vladimir DMITRIEV: We extend credits to Russian investors on a constant basis, factually substituting these funds which the state is not able to compensate for to our enterprises due to serious problems.

CORR: Let’s sum up our Ukrainian theme and imagine possible scenarios for Ukraine’s future: integration with the EU, absence of integration, association with the EU.

Vladimir DMITRIEV: I’d like to focus on the current situation. The association agreement was not signed. Future developments would of course depend entirely on the Ukrainian authorities’ actions, on their desire and readiness to join the Customs Union. Recent dynamics of business and political contacts shows that by expanding its trade-economic and investment cooperation with Russia Ukraine will benefit significantly from joining the Customs Union. We are holding an active dialogue about our joint infrastructure projects. Specifically, Vnesheconombank is a serious player in this discussion. We started discussing the construction of the Kerch Strait Bridge. This is a very important infrastructure project which will give powerful impetus for the development of a whole number of Ukrainian and Russian economic sectors. Here I mean large-scale infrastructure projects in transport and power engineering sectors. If Ukraine joins the Customs Union, Ukraine is sure to win in terms of energy prices like Belarus. This is clear to everybody. And in terms of power engineering and other economic sectors it’s a real benefit for Ukraine to strengthen its ties with Russia.

CORR: My last question to you deals with the Russian banking sector. We can see such troubled banks as Bank Pushkino and Master Bank. What do you think about the Central Bank’s tougher financial control over Russian banks and is there a risk of a credibility gap developing between people and banks after such situations?

Vladimir DMITRIEV: I’m convinced that the Central Bank does what it is supposed to do. Dishonest people and swindlers have not disappeared yet, the more so in the banking sector. So, the Bank of Russia’s actions are for the god of the banking sector and people rather than some kind of threats. It’s important to have in mind that sometimes people take irrational decisions putting their money in the banks that promise them high interest rates. As the saying goes there is no such thing as a free lunch. This case is a good lesson for those who put their money in unreliable banks and our people should be well-educated in a financial sense to put their money in reliable banks. I’d like to say it once more that the Central Bank doe what it is supposed to do and acts prudently.

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

Vladimir DMITRIEV: Thank you.

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Today Italy is one of our most important trade partners in Europe – Vladimir Dmitriev

2 december 2013 года
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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/

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Vnesheconombank Deputy Chairman – Member of the Board Sergei Lykov’s Interview to Prime News Agency

16 october 2013 года
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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.

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That’s the Way it is

2 october 2013 года
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As of today the market for sea and river vessel leasing accounts for an insignificant percentage in the Russian leasing services market. Its share in the new business of leasing companies was a little more than 1.5% in 2012. This is a bit less than in 2011. The amount of new transactions in the water transport segment was about 20 billion rubles last year and it fell insignificantly.

The reason for this state of affairs is a rather complicated financial situation faced both by customers of water vessels and their manufacturers. This segment is rather narrow and specialized. State support measures are not so far in line with the current needs. We have the Program of Developing Leasing of Russian-Made Sea and River Vessels but the scale of its implementation is far from sufficient. The United Shipbuilding Corporation (USC) is the operator of this Program. Under the Program USC extends funds to leasing companies participating in vessel leasing transactions at a refinancing rate of the Central Bank for a period of up to ten years. But a unique feature of vessel leasing is that a payback period is about 20-30 years and this exceeds significantly leasing contracts duration. In practice, they address this problem in the following way. Throughout a whole validity period of a leasing agreement monthly payments affordable for the customer are made so that a purchase payment in the long run  amounts to about a half of a vessel’s value. On expiry of a leasing period a leasing agreement might be restructured or a lessee might raise a bank credit from which a purchase payment is made. Theoretically, after making a purchase payment a vessel which becomes the property of a lessee might be sold under a redemption leasing scheme, that is, a leasing company might repurchase this vessel from a customer and lease it out again to the same lessee.

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Flying Weather

2 october 2013 года
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Kommersant “Leasing”. Annex
№179 (5210)
02.10.2013

The aircraft-leasing market is one of the most capital-intensive and dynamically developing markets. In 2012, the amount of new business in this segment was about 107 billion rubles. It increased by about 22% from a year ago. A specific feature of aviation leasing in Russia is a high concentration of the market. We can name five companies that are systematically involved in aviation leasing: VEB-Leasing, VTB-Leasing, Sberbank Leasing, the State Transport Leasing Company (STLC) and Ilyushin Finance Co. (IFC), with other companies conducting only individual transactions. Competition is developing between the first three companies. As far as STLC and IFC are concerned they occupy more specific niches working with regional aviation. Limitedness of the market is caused by the fact that companies can raise cheap long-term money. For objective reasons a small company can’t raise money more cheaply than a large one, it loses price competition, so, competition is bound to increase between the largest companies. It’s not a secret that now many major banks have excessive liquidity and it’s profitable for them to fund aviation business. Nevertheless, a new major player is unlikely to appear in this market.

A strong tendency in the development of the aviation leasing is the introduction of operating leasing. Even three years ago it was not possible to talk with Russian leasing companies about this sort of leasing. And now leading players are already ready to form a certain share of their portfolio in this segment. Operating leasing as opposed to financial leasing provides for an airline to return aircraft to a leasing company upon expiry of a leasing agreement. The accumulated experience and market realities make it possible for the largest leasing companies to operate using this scheme , the more so, this scheme is in demand by airlines and is suited for selling products of Russia’s aviation industry, the secondary market of which has not been so far established

Changes introduced in Regulation №1212 regulate the practice of extending subsidies for Russian aviation companies to compensate some of their expenses on leasing payments for aircraft leased out to them for domestic regional and local airborne transportation. Due to introduced changes, since early August of 2013, the Regulation has been applicable to domestic aircraft An-148 and Sukhoi SuperJet 100. They received a quota of 30% of funds under the subsidizing program. These changes are expected to increase demand for Russian-made aircraft by Russian airlines and this in its turn will stimulate aircraft makers. Another important change is that unitary state enterprises can also become participants in the leasing subsidizing program and this will increase the number of potential operators of Russian-made aircraft.

But if we assess the changes from a position of a leasing company we can say that not everything is so rosy. First, leasing transactions on aircraft are substantially extended in time that is why financial indicators of a potential lessee and its capacity to fulfill its obligations under a leasing agreement within a whole period of this agreement’s validity period play a key role in taking a decision on leasing out an aircraft. Unfortunately, nowadays there are very few Russian airlines with acceptable indicators. An airline’s readiness to make an advance payment in the amount of 10-20% is sure to have a positive impact on terms and conditions of a leasing transaction but at the same time will not be a decisive factor in making a decision on conducting a transaction with an individual lessee.

As far as foreign-made aircraft are concerned the situation is better because a leasing company can place risk on a leasing subject due to its sufficient liquidity on the secondary market and a possibility to determine its residual value. As far as such new Russian-made aircraft as Sukhoi SuperJet 100 are concerned we can’t apply these mechanisms as they have never been sold on the secondary market due to the small number of manufactured aircraft and the recent launch of their production as this makes it impossible to make projections with regard to their residual value.

Second, subsidies are made available provided that a financial leasing agreement has been concluded and this limits significantly the number of potential customers of SSJ100. As the practice shows airlines prefer to close operating leasing transactions with regard to new Russian-made aircraft. Under operating leasing transactions upon expiry of a leasing period a leasing company retains title to an aircraft and the aircraft is to be returned. In such cases an aircraft manufacturer acts as a guarantor of residual value and can repurchase it upon expiry of a leasing period. This is a negative factor for a manufacturer but as it has to promote its products the manufacturer is ready to take an additional burden. Naturally, in time a secondary market will be put in place and these problems will be resolved but in the current market conditions it would be quite appropriate to make the Regulation applicable to operating leasing too.

Third, both leasing companies and airlines call into question a provision of the Regulation that obliges a company that lays claim to a subsidy to start operating an aircraft no later than six months from the date of leasing agreement. Maybe these terms are acceptable for aircraft that are not new and were in operation before but as far as new aircraft are concerned we should increase this period to at least two years – a period needed to manufacture an aircraft.

Vyacheslav Solovjev, OJSC VEB-Leasing Director General

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