Vnesheconombank is actively involved in developing forms of assisting Russian high-technology exports

11 august 2014 года
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Interest rate support programs for export credits are being applied now in a number of foreign countries, specifically, in France, Italy, Spain, Japan, Germany, Finland, the Czech Republic, Belgium, Brazil, South Korea and Belarus. As a rule, this subsidy is allocated through a major state-run bank extending export credits on preferential (non-commercial) terms.

In this respect, they started a process of developing regulatory and methodological framework for operating a similar mechanism to compensate interest rates for export credits from late 2012 to 2013.

Taking into account Vnesheconombank’s considerable experience in organizing export financing and its special importance as a basic institution responsible for supporting exports in the Russian Federation, VEB was appointed as the sole recipient of subsidies to compensate for interest rates for export credits.

A full text (rus) of the article is published in “Industrial Weekly” as of 11.08.2014

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Vladimir Dmitriev: “Creation of such production facilities guarantees food security and food independence for Russians”.

7 august 2014 года
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HOST: My colleague Sergei Batischev is going to tell us about import substitution with domestic products, he is now on the direct communications link from the Yaroslavl region. Good afternoon Sergei, we‘re listening to you.

CORR.: Hullo Olga. In fact, the decisions taken by the Russian Government won’t make it possible to keep Russian citizens on a starvation diet. We are now at one of the largest milk production complexes in Europe. It was built here from scratch in the open field for a period of 4 yearspartially with the money provided partially by Vnesheconombank.And Vnesheconombank Chairman Vladimir Dmitriev is now with us on the direct communications link. Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Vnesheconombank Chairman: Good afternoon.

CORR.: Vladimir Alexandrovich, would you tell us about what has been built here with the money provided by your Bank?

Vladimir DMITRIEV: Now we are at the first milk production complex. In total, we have funded two such complexes, with their total value being about 6 billion rubles. Two more complexes were laid down. All in all, there will be 8 complexes. Besides milk production facilities, there will be a feed-processing plant and a milk-processing factory. We are happy that here milk production per cow indicators are in line with the world’s standards – here an average daily milk production per cow is about 32 liters and some top-performing cows produce more than 60 liters per day. Basically, it is a unique milk production facility. The director of this complex said that in 2008, when they started to build the complex there was an old farm with 120 cows and the daily milk production per cow were at most 6-7 liters. It is important that this is a vertically integrated production facility. There are many complexes of this kind across the country including those funded by Vnesheconombank. So,creation of such production facilities guarantees food security and food independence for Russians”.

CORR.: Vladimir Alexandrovichlet’s talk about financial security because this security is very important especially for those who invest in such complexes. To what extent is it easy to invest in such complexes in Russia using among other things Vnesheconombank’s funds?

Vladimir DMITRIEV: This task remains as difficult now as it was in the past. First, the task is above all is to analyze a project’s economics and develop a sustainable financial model together with the project’s initiators. Second, an important task is that such projects require long-term money and favorable terms and conditions so that a product’s value at the time of production could compete with that of a similar product imported from abroad. There is no doubt that in the current situation, when Western countries have imposed embargo on long-term lending to key Russian banks with state participation we have to raise domestic loan facilities. And in this respect, we are working with the Government,the Finance Ministry, the Economic Development Ministry and with the Central Bank, they can understand our problems and are ready to provide us and other banks with state participation with long-term ruble facilities.

CORR.: Have any decisions been made in this respect?

Vladimir DMITRIEV: It’s important for us that a decision has been made to additionally capitalize Vnesheconombank. We hope that basic technical tasks will be addressed in the near future. This will enable us to ensure further sustainable development and maintain required capital adequacy ratio. Now we are also discussing with the Government other measures of the state’s support.So, we don’t have to worry about Vnesheconombank’s finances and its readiness to fund this kind of projects as well as about the stability of the financial system as a whole. Although there is a certain tension, we’ll be able to defuse it.

CORR.: Vladimir Alexandrovich, Could you be more specific about an additional capitalization because the question was raised last autumn and there were plans to use monetary resources of the National Wealth Fund. Was a decision made to go ahead in this way?

Vladimir DMITRIEV: Yes, it was. They enacted appropriate amendments to the law. Certain decisions are to be made now by the Government. We hope that in autumn deposits of the National Wealth Fund will be converted into tier 2 capital.

CORR.: Very well. Thank you very much Vladimir Alexandrovich.

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

16 july 2014 года
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Russia 24
INTERVIEW
16.07.2013, 13:37

Host Marat Kashin

HOST: Vnesheconombank Chairman Vladimir Dmitriev is convinced that in order to transfer to full-scale payments in national currencies they should be stable. In his interview to our channel, he also voiced the Bank’s position on Mechel and Inter RAO.

-If anything, the main events at the Forum and here at the BRICS Summit are to create a New Bank for Development and a pool of reserve currencies. Do you believe that this will change in general the balance of forces in the world’s financial arena?

Vladimir DMITRIEV, Chairman of State Corporation ‘Bank for Development and Foreign Economics Affairs (Vnesheconombank)’: If we mean the Bank I think it would be wrong to talk about the global change in the balance of forces in the world’s arena because our Bank is designed to address localbut at the same time large-scale objectives. The Bank was assigned to fund infrastructure as its priority. The needs for infrastructure are overwhelming. According to the World Bank, developing countries will need 15 trillion dollars to fund infrastructure until 2030. So, an idea to create a bank for development was put on the agenda of the BRICS Summit several years ago and the bank is designed to fund infrastructure.

It’s a good thing that the banks have agreed upon volumes and technical issues related to a location of headquarters as well as upon a composition of the Board of Directors. In my opinion, there is every reason to believe thatexecutives of finance ministries responsible for creating this bank would favor a proposal made by BRICS countries national development banks to form key personnel of a New Bank through engaging employees from BRICS countries banks for development. The New Bank is also to be provided with technical equipment and its employees are to undergo training courses in national development banks. These are rational proposals and I think they will be backed.

Who is going to be responsible for making decisions on extending credits and their terms and conditions?

Vladimir DMITRIEV:Decisions are to be made by a Board of Governors and a Board of Directors. The bank is to adopt the world’s best practices, which are common in such international financing development institutions as the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Asian Development Bank. Therefore, corporate governance bodies will make relevant decisions based on the best practices.

The most important thing is that the countries have agreed upon volumes of funds, which each of them is to contribute to charter capital on a parity basis. Stated capital is to amount to 100 billion dollars to be paid in tranches of 50 billion dollars.

At least, this fund would provide support for both national currencies and national budgets. There is no doubt that transactions to be conducted within the fund would to a certain extent help national currencies to become settlement currencies in trade and investments of BRICS member countries.

-Nevertheless, as far as the idea of creating a new bank is concerned, a number of experts say that it is necessary to stop using the dollar and try to make payments in national currencies. But contributions to the bank’s capital are made in dollars.

Vladimir DMITRIEV: We have to do a lot in order to transfer to full-scale payments in national currencies. First, currencies should be stable. Second, we have to develop a scheme for swapping national currencies. But there are enough examples that national currencies are already used in mutual trade and in international payments. We have to recall China’s recent initiative on creating a major Asian bankto use yuan as a settlement currency at least in investments.

As far as our relations with China are concerned, the ruble and the yuanare already used in making payments inthe cross-border trade. The yuan is trading on the Moscow Interbank Currency Exchange. So, we are making a steady headway. It goes without saying that we have to overcome a lot technical, systemic difficulties to stop using the dollar.

-There is another important question. Experts say that the International Monetary extends credits on rather hard terms. In the sense that it requires countries to make changes in their economies. Will the two new financial institutions require BRICS countries to do the similar thing? Do you think that it should be done?

Vladimir DMITRIEV: I don‘t think a BRICS Bank for Development will deal with such issues. Credits extended to fund infrastructure, support private business as well as support the banking system above all medium-sized banks are not granted on such tough terms as is the case in the World Bank and the European Bank for Reconstruction and Development. On the contrary, these credits are designed to support private business, developing private enterprise and freeing private initiative. In this case,I’m talking about Russia because I know how it happens. As far as the new bank is concerned I have no grounds to believe that it will be involved in supporting macroeconomic stability in these countries although by supporting infrastructure we create conditions for macroeconomic stability. But high priority is to be given to funding infrastructure because it is our common goal. This goal will be to overcome economic growth restrictions as well as create new jobs and develop industrial sector. This is a common interest of all BRICS countries. In addressing infrastructure objectives on the basis of mutual interest nobody is going to set tough terms.

-The need for investments in infrastructure is great in all BRICS countries. How are they going to prioritize and select projects upon considering applications?

Vladimir DMITRIEV: I wouldn’t like to assume the role of oracle who knows answers to all questions related to this bank’s activity. I think that even the bank’s founders – finance ministries do not have a clear idea of how various decisions will be made and what objectives in a country plan will be given top priority.

These objectives will be addressed in the course of creating a new bank itself. We should above all create a bank, employ personnel, provide it with equipment, we should also adopt appropriate corporate procedures,regulations. This is sure to take some time. But we should immediately start to analyze projects that could be funded jointly and make final decisions on the basis of common interests and priorities of various countries. These decisions will require a lot of time, certain efforts and expertiseThese countries’ territories and population account for a significant part of the global world. In my opinion, this bank won’t come up against big problems because leaders of our countries made strenuous efforts to make a decision on creating this bank.

Do you think that the creation of this Bank and a pool of conventional reserve currencies would somehow prompt to carry out a reform of the International Monetary Fund, which ground to a haltbecause of the US Congress decision to impose a veto.

Vladimir DMITRIEV:If there was no veto, we could expect certain changes. But as it is in place we have to adapt to the current situation. But the creation of this pool of reserve currencies would prompt to reconsider the realities we used to live in beforeand think over the need to create a more flexible system based not on one or two currencies but on the interests of global players.

-I have another several questions, which are a lot closer to the situation in Russia. There is much talking now aboutMechel. And the latest news is that the company was able to arrange for a rollover of credits with VTB Bank for an amount of almost 15 billion rubles. Are you ready to consider possible options or compromise in this situation?

Vladimir DMITRIEV:After I made a public statement,it was followed by the industry minister’s statement relating to Mechel’s future and the need to decide it in a different format rather than giving it a hand without thinking about consequences for Vnesheconombank, Mechel’s officials started to talk about a potential debt restructuring and a sale of non-core assets. Somehow, they started to think in a different way. In fact, I like this approach. Our position remains unchanged. This is not only my position, Our Board formed a consolidated opinion and I voiced it. We haven’t considered any other options. They are moving in a different direction now – commercial banks seem to be ready to discuss potential ways of debt restructuring with Mechel. We, of course welcome such steps.

-Are you going to discuss this situation at the next meeting of your Supervisory Board?

Vladimir DMITRIEV: It isn’t on the agenda.

-There is another Russian story. VEB calls Inter RAO to exercise redemption option for bonds. If my memory serves me right, the price is about 31 billion rubles. The market price now is about five billion. They say in Inter RAO that they don’t have money. What are you going to do?

Vladimir DMITRIEV:I think that legal wrangling with Inter RAO is the worst thing to do. But in the current situation we have no right to write off debts as a loss because the option provided for quite a definite price which differs significantly from the current market price.I’d like to remind you that we entered into Inter RAO’s capital only in order not to increase Inter RAO’s debt burden but to enable it to build its core facilities, specifically, power plants. We are going to talk with Inter Rao. So far we have made our first steps towards exercising our right. But if the situation develops in a different way rather than it was stipulated in our agreement, we are ready to compromise. But I’d like to stress it once more that we won’t accept any price that is different from the one specified in the option agreement.

-Some experts believe that VEB calls Inter RAO to exercise redemption option because it is pressed for available funds.

Vladimir DMITRIEV: You mean VEB?

-Yes, I do.

Vladimir DMITRIEV: The reason was quite different. We were guided by our right and the fact that the option had expired. I can assure you that we do not need money desperately and unconditionally to take such tough and unfriendly measuresagainst our partner Inter RAO. We have our representatives in Inter RAO’s Board of Directors, so we value our relations and we are not going to press then using all possible means to exercise our right. In fact, it’s a commercial dispute and we are going to settle it as it is standard in a civilized world.

-And now my last question. I can’t help asking you about VEB’s additional capitalization. A decision was made. The State Duma passed a draft law in the third reading. Have you received enough money?

Vladimir DMITRIEV: We have received enough money to ensure sustainable financial development and sustainable financial position. I mean above all capital adequacy ratio. This money is enough to form required reserves. Now we are in a difficult situation because with the liquidation of Olmpstroi, we are left on our own as we didn’t form reserves for Olympic credits relying on Olympstroi’s surety. And even if some corporate decisions are made rather than forming reserves both our auditors and our creditors that have Vnesheconombank’s bonds are well-informed about the current situation and will ask us questions we’ll have to answer in a proper way. We were capitalized with Tier 2 capital and now we have enough resources to form required reserves and ensure stability

We have a strategy and we are updating it now. The strategy provides for increased loan portfolio, increased volume of active transactions and a certain package of investment obligations. Given limited capabilities to raise funds on foreign markets to finance our operations, we should look for other alternative measures for providing government support. We do not mean now additional capitalization alone, we mean other measures of government support that would enable the Bank to carry out its mission of a Bank for Development and support Russian industrial exports without doing things we are not supposed to do.

-Thank you very much for your interview.

Vladimir DMITRIEV: Thank you.

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

5 july 2014 года
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HOST: A meeting of G20 countries development banks, the so-called D20, was held in Rome. Vnesheconombank Chairman Vladimir Dmitriev in his interview to our channel told about themes of discussionб Olympic facilities as well as prospects for Russian aircraft exports.

Maria BONDAREVA: Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Chairman of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’: Good afternoon.

Maria BONDAREVA: We can see here new aircraft - a sort of joint venture between Russia and Italy. VEB also participates in this project. Are you happy about cooperation with Italians?

Vladimir DMITRIEV: I can’t help being happy about cooperation with Italians because a part of my working and sometimes personal time is devoted to performing my functions as a Co-Chairman of the Russian-Italian Forum-Dialogue within the Framework of Civil Societies which is designed to enhance contacts and cooperation in various sectors including economy. This of course expands my mission as the Chairman of Vnesheconombank whose objectives include providing support for Russian industrial exports as well as enhancing international investment cooperation. In this respect, I am happy about the way our relations are developing with our Italian partners.

Maria BONDAREVA: Let’s get back to the aircraft as we are standing against the backdrop of them. Vnesheconombank lends to Mexican Interjet for it to purchase our Superjets and engages to this end other foreign creditors. To what extent is it difficult to do itunder the conditions when economic sanctions against Russia might be expanded?

Vladimir DMITRIEV: It is always difficult to maintain effective financial and banking cooperation because we should offer our customers the most favorable terms and conditions. Competition is fierce. But in terms of promoting SukhoiSuperjet 100 to international markets we are glad that we are cooperating with foreign banks and above all with Italian and French banks. The SukhoiSuperjet 100 is a product of cooperation between three countries: Russia, France and Italy. And we also happy about the relations we are developing with such state insurance agencies as Italian SACE and French COFACE.

I would also like to thank our Russian partners, which are involved in the scheme for promoting SukhoiSuperjet 100 to international markets. They include such members of Vnesheconombank Group as the Export Insurance Agency of Russia (EXIAR) and VEB-Leasing – a company that offers leasing services to foreign buyers of these planes.And as of today, three aircraft are ready to be supplied – the first two aircraft are practically complete and the third one is being completed.

Maria BONDAREVA: Eight are already flying.

Vladimir DMITRIEV: Eight are already flying in Mexico. It is here where the whole aircraft’s interior is completed. About 200 job were created in the facilities that had been used earlier for other purposes but as a result of the phase-out people lost jobs.And by means of our SukhoiSuperjet 100 we create additional jobs both here and in Russia as well because some production facilities are located in Russia.

So, we are certainly happy about the way we are cooperating with our Italian and French partners. And I’d like to stress it once more that this is a result not only of Vnesheconombank’s efforts but also of its subsidiaries.

Maria BONDAREVA: Vladimir Alexandrovich, how much money is Vnesheconombank ready now to lend to foreign buyers?

Vladimir DMITRIEV: It’s a matter of hundreds of millions of dollars. In this respect, I’d like to stress that supplies of SukhoiSuperjet 100 for Interjet – the second largest Mexican carrier are being made on the basis of comprehensive support for Russian industrial exports where as I said Vnesheconombank’s subsidiary institutions are involved as well as a mechanism for subsidizing interest rates which made it possible for us to offer the Mexican company terms and conditions that are rather market-oriented and competitive.And as you have said as many as eight aircraft are flying in Mexico.And the daily mileage is about 8 hours. The planes do not stand idle; they are always in the air. Customers are happy. And it is for this reason we hope that besides 20 aircraft that are firmly contracted, another 10 aircraft might be purchased by our Mexican partners.

Maria BONDAREVA: Mexico buys, Italy equips and Russia manufactures and extends credits. And as a whole is this scheme affected by notorious economic sanctions the United States and Western partners are constantly talking about?

Vladimir DMITRIEV: As far as this project is concerned, we are not feeling any pressureor negative attitudes of our foreign partners. Ingeneral, I should say that the sanction regime, more specifically, the reaction by a whole number of foreign banks to the global situation and above all the pressure from the American Administration is tangible. Many Russian banks failed to refinance their credits and had to search for special resources to settle with their creditors. But on the other hand, recent placements in Eurocurrencies by Gazprombank, Alfa-Bank and Sberbank show that the market is open for us. Evidently, Russian banks do not make borrowings in dollars they make placements on European markets and feel rather comfortable.

In this sense, I go along with Economic Development Minister Alexei Ulyukayev who said that we were ready for various turns of fortune. And you know that in the near futurewe’ll launch a new scheme for funding through the Central Bank to extend long-term investment credits for economic development of Russia. In this sense, our domestic resources are being mobilized so that economic development does not stop.

Maria BONDAREVA: Are you somehow getting ready for a further expansion of sanctions? There appeared some information that your Export Insurance Agency might be indirectly hitif a third package of sanctions is imposed.

Vladimir DMITRIEV: You know if sanctions are imposed and Vnesheconombank is among companies to be hit by them, it goes without saying, that all our subsidiary institutions will be influenced by this sanction regime. It remains to be seen… It is important to continue funding the Russian economy. And to this end, as I have said the Central Bank, the Government and ministries are ready to counter the expansion of sanction regime.

Maria BONDAREVA: You are going from here to Rome to participate in D20. What issues are you going to discuss there and what agreement are you going to sign?

Vladimir DMITRIEV: In fact, we’ll hold a regular meeting of Group of Twenty countries’ development institutions. It was Vnesheconombank’s initiative to hold such meetings. We held such a meeting last year in Moscow. The meeting showed that development institutions had a high stake in discussing issues in the G20 format, which are of interest for development institutions. And these are issues of searching for long-term credit facilities, providing support for small and medium-sized enterprises and regulatory rules because development institutions are specialized institutions – they differ from commercial banks. So, we want regulators to treat us in a different way because our objective is to raise long-term credit facilities to extend credits on preferential terms.

Maria BONDAREVA: Are you succeeding with it?

Vladimir DMITRIEV: Yes, we are. And it is important that as part of this dialogue we are moving to discuss joint projects. In the past, our Western partners – development banks of France, Italy and Germany placed main emphasis on searching for joint credit facilities to fund infrastructure projects in Europe. Now they are open for discussing issues associated with long-term funding of various projects in Russia. This is of great interest for us.

So, tomorrow’s meeting is sure to be very interesting. It will be held under the auspices of our partners from Australia.But the European Investment Bank acted as an organizer. We hope that this meeting would be highly instrumental in reaching further agreements.

We are not planning to sign any agreements as part of D20 except for a communique setting forth our common objectives of funding infrastructure, providing support for small and medium-sized enterprises and offering regulators conditions for treating development banks in a special way. But outside of this meeting we hope to sign several agreementswith our Italian partners that are determined to raise credit facilities from Italian banks to implement joint projects in Russia.

Marina BONDAREVA: Vladimir Alexandrovich I wish you a good trip. Finally I’d like to ask you one more question. There appeared information that Vnesheconombank which had extended credits worth 248 billion rubles to fund the construction of Olympic facilitieshoped for government compensation in case of its borrowers’ bankruptcy. Allegedly, VEB requested the Government to allow for a limit in the budgets for 2015 and 2017. Is this true?

Vladimir DMITRIEV:We are not departing from terms and conditions agreed upon with the Government and investors. The moratorium on debt repayment is in force until 2015. So, we do not insist on interest and principal repayment with regard to projects that were funded through using Vnesheconombank’s funds.

With the liquidation of Olympstroy, there arises a question of how we are going to address this problem because Olympstroy’s surety is still valid. Given its liquidation, Vnesheconombank is not capable of compensating for potential losses.

So, we do not require the state to compensate us for something in full right away. Our Bank the state and investors should look for ways of addressing this problem. As it is known that some projects are planned loss-making ones. We took time intentionally and imposed moratorium in order to see how in a period of two years apartments and hotels will be operated and sold and if a cash flow will be sufficient to settle with Vnesheconombank. This work is underway.

Maria BONDAREVA: How do you size up the situation?

Vladimir DMITRIEV: So far, with a cautious optimism, because some private individuals, a number of companies and ministries became interested in purchasing certain facilities. But I’d like to say it once more that our optimism is cautious. The year 2015 is not far off (time flies) and in any case we should be ready for various scenarios. But I’d like to stress it once more that Vnesheconombank, investors and the Government should work together. In my letter to our Prime Minister I proposed to consider various options ranging from providing direct support for Vnesheconombank to subsidizing investors’ interest rates for us to be able to restructure debts to reduce their debt burden. I think that in the long runwe’ll be able to find an optimal solution which is acceptable for the state, investors and Vnesheconombank.

Maria BONDAREVA: Thank you very much for your interview.

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

24 may 2014 года
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HOST: A question of Vnesheconombank’s additional capitalization remains open. Vnesheconombank’s management and the Government have been in talks since last year about providing VEB with 200 billion rubles. Vladimir Dmitriev told our channel about it as well as about other things. Watch an interview of EvelinaZakamskaya with VEB’s Chairman as part of the Saint Petersburg Economic Forum right now.

EvelinaZakamskaya: Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Chairman of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’: Good afternoon, Evelina.

EvelinaZakamskaya: We are happy to welcome you in our pavilion in Saint Petersburg, Vladimir Alexandrovich. What’s the difference between this Petersburg Economic Forum from all the previous ones? Do you feel the international pressure, in which Russia has been living in recent months here at the Forum?

Vladimir DMITRIEV: Your second question is an answer to your first one. It differs this way from all the previous ones. The main thing isthat our partners make no secret that our cooperation is developing in an extremely unfavorable international situation with a constant threat of sanctions and their increased scale. But it is important that our business partners stress that that they are not going to change their plans for continuing cooperation with Russia.As a Chairman of the Russian-Italian Forum-Dialogue within the framework of civil societies,I could clearly see it 15 minutes ago at our business breakfast. All leading top managers of the largest Italian companies stressed the need to further advance cooperation and expand their presence on the Russian market because they view Russia as their strategic partner and their plans are long-term ones.

And in this respect, Italy is not the only exception in the business community. There is no doubt that a strong pressure is being exerted on many companies. Some major representatives of European business failed to come to the Petersburg Economic Forum as opposed to previous years. But our middle-level partners stress that foreign companies’ presence on the Russian market is permanent and here they mean trade-economic and investment cooperation.

EvelinaZakamskaya: You’ve pronounced the word “long-term” several times and it is here on the Forum’s margins that many companies voice their concern that now it’s becoming more difficult to build a long-term dialogue for many years to come because our partners are expecting the third wave of sections, which is likely to be the most powerful one and could affect specific economic sectors.

Vladimir DMITRIEV: It’s not a secret that Russia has established close relations with most western European countries and western European business has been present in our country for decades. And here I mean both foreign companies and joint ventures created in Russia. We are all aware that even a potential threat of sanctions is not able to destroy things that have been formed for decades. Of course, there are threats, andthere are also considerable risks. Nevertheless, we all hope that this turbulent period won’t last for a long time and that in the long runwe’ll start to cooperate againand business will be optimistic about the future.

EvelinaZakamskaya: How do political difficulties with the West influence your relations with eastern partners?On the one hand, they are ready to cooperate and there is a great potential there because of growing markets but on the other hand this enables them to exert additional pressure on Russia and choose more favorable conditions for themselves.

Vladimir DMITRIEV: If you follow formal logic this might be true. But there are also long-term interests here and they have been forming for decadeswhen political events and economic conditions put us to the test.

I came back from China the day before yesterday. We opened financial company VEB Asia in Hong Kong. And at the opening ceremony in the course of formal presentation we could clearly see again that the business community in Hong Kong and this is not only Chinese business but also international business regarded Russia, despite the current situation, as a reliable and long-term partner.

Investments go to Russia. The Far East is a region, in which business of Asian-Pacific region countries is ready to invest. And a clear evidence of it is a great number of epoch-makingagreements signed in the course of President Vladimir Putin’s visit to Shanghai. Our Bank also signed major agreements including China’s Eximbank credit worth 500 million US dollars and its terms and conditions are rather market ones. They are not aimed atgaining additional advantagesin the current situation. This is also the case for major contracts, which were signed by Gazprom, Rosnneftand other Russian companies.

EvelinaZakamskaya: How is the current business situation influencing Vnesheconombank’s performance and forecasts for this year?

Vladimir DMITRIEV: It goes without saying, that we can’t help taking into account the current economic situation. We announced publicly that we had to early repay a syndicated loan without waiting for its refinancing. We raised this loan three years ago. Major east European financing institutions participated in it. The terms of refinancing offered to us proved unfavorable for us. And we found it possibleto repay this syndicated loan. And this did not impact our performance seriously.

As we view borrowings in terms of conducting our active transactions and funding our core activity, the current conditions are sure to influence our relations with our customers. We’ll have to adjust our plans and this will not affect painfully our activity and our relations with Russian borrowers.

EvelinaZakamskaya: We have received the news todaythat the Government has allegedly refused to additionally capitalize Vnesheconombank. I mean the National Wealth Fund’s financial resources worth 200 billion rubles that are placed on Vnesheconombank’s deposits. What does this news mean for you? First, has this news been confirmed? And how will it affect the Bank’s performance in the future?

Vladimir DMITRIEV: Frankly speaking, this news came as a surprise to me. A dialogue and discussions in the Government do not confirm this news. We have submitted all required documents for consideration by the Government. We are expecting relevant budgetary amendments. It is important to stress here that it’s not only a matter of the Bank’s additional capitalization, it’s a matter of the state’s support for the Bank. As opposed to commercial banks and public financing institutions, which can place their shares on the market an raise capital through additional issues, our main and single source of increasing our capital is the state’s monetary contribution because our Bank is a non-profit institution. Andmeasures of the state’s support including conversion of National Wealth Fund deposits in two-tier capital are caused by the need to further step up Vnesheconombank’s operations. They are well aware of it in the Government. Without the state’s support measures, the Bank’s activity will have to be scaled down. Nobody wants this to happen as the Bank was, is, and will be the largest financial development institution, the role of which in the current situation is becoming increasingly important.

EvelinaZakamskaya: When do you think a decision on additional capitalization will be made?

Vladimir DMITRIEV: We hope that in the course of autumn session ((I mean a parliamentary session) all necessary amendments will be passed. And until the end of the year, the Bank is sure to receive the state’s support to step up its business.

EvelinaZakamskaya: I wish you every success. Thank you very much Vladimir Alexandrovich.

Vladimir DMITRIDEV: Thank you Evelina.

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