VNESHECONOMBANK CHAIRMAN VLADIMIR DMITRIEV’S INTERVIEW TO TV CHANNEL RUSSIA 24

2 october 2015 года
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TV Channel Russia 24
Live Broadcast
02.10.2015, 14:56

Host Nailya Asker-Zade

HOST: The International Investment Forum Sochi-2015 keeps on going and now a guest in our studio is Vnesheconombank Bank Chairman Vladimir Dmitriev. Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV: Good afternoon.

HOST: In his address, Prime Minister Dmitry Medvedev talked a lot about steps that would contribute to our economy’s growth, with one of them being import substitution. Does Vnesheconombank participate in processes that encourage import substitution in our country?

Vladimir DMITRIEV: I think that most projects funded with Vnesheconombank’s assistance deal directly or indirectly with import substitution. As import substitution is not an end in itself, we are not going to isolate Russia and act in accordance with the Juche principles, that is, self-reliance. We are developing import substitution keeping in mind that Russia has a sufficient intellectual and industrial potential to provide ourselves with products which we unfortunately still purchase abroad. Vnesheconombank funded such large-scale projects as Tobolsk-Polymer. Vnesheconombank provided about 2 billion dollars for the construction of a major integrated plant to process and utilize associated petroleum gas which is used to manufacture polypropylene, which has been up to now purchased abroad. Vnesheconombank invested significant financial funds in the domestic automotive industry, which manufactures now competitive products with the assistance and cooperation links of such large automakers as Ford, Fiat and Japanese automakers. Such projects include “Ford Sollers”, AvtoVAZ, KamAZ. Vnesheconombank invested in these projects more than 100 billion rubles. There are also other projects but I’d like to stress that as far as import substitution is concerned we should try to find out where small and medium-sized enterprises might want to operate. Providing support for small and medium-sized enterprises is also one of pour top-priority lines of activity. We should support SMEs in such a way that they could get involved in import-substitution projects, in manufacturing high-tech competitive products.

HOST: Vnesheconombank extended guarantees to Transaero and we discussed this issue with you in the Far East, you said that there was no threat of default for Transaero. Now the situation has changed and the company will be declared as bankrupt. Did you expect this to happen?

Vladimir DMITRIEV: There was no threat of bankruptcy when we talked with you but I’d like to stress that efforts made by the state, business, companies and banks with state participation were aimed at changing the situation for the better. As early as last year, Vnesheconombank warned on the basis of information received from its subsidiary VEB-Leasing that the situation with Transaero was unfavorable. Now we know that the situation was unfavorable in many respects for example reporting accounts and financial documents that were submitted to banks and financial institutions, mildly speaking, were not in line with reality. We proved to be victims of such actions. Now we can see that the company is not capable of fulfilling its obligations to passengers and most importantly to banks and leasing companies that extended credits to it. Unfortunately, they failed to implement a project that provided for Aeroflot to receive a 75-percent stake and start to rehabilitate the company through assuming some of Transaero’s obligations. But this scenario also fell through. Now the company’s bankruptcy is one of most likely scenarios. But we should take it easy, at least we shouldn’t overdramatize the situation as bankruptcy does not mean mass layoffs and closing down business activity. We are considering an option of “soft landing” in this complicated situation, an option of managed bankruptcy but I’d like to stress it once more that bankruptcy is one of probable scenarios. We are also considering other scenarios…Our leasing company VEB-Leasing and VTB leasing company have to work very hard. We hold talks with our partners and friends from VTB almost on a daily basis in order to consider an option of establishing a company on the basis of the existing aircraft fleet. And this company could assume additional obligations using mechanisms of state support to transport passengers and service passengers flows. This is an option to be considered in a serious way as we have human resources and managerial potential.

HOST: Let’s hope that the situation will be resolved after all. Thank you very much.

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Total value of VEB’s projects in the Krasnodar Territory is 3.5 trillion rubles

30 september 2015 года
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RIA Novosti

Moscow, September 30, 2015

MOSCOW, Sept. 30- RIA Novosti/Prime. The cost of funding projects in the Krasnodar Territory by VEB is 3.5 trillion rubles, RIA Novosti reported at the State Corporation’s press office in connection with the Sochi International Investment Forum to open on October 2, 2015.

“The total value of projects in the Krasnodar Territory as of September 1, 2015, is 6.7 trillion ruble, with VEDB’s approved participation share being 3.5 billion rubles. A total of 1.9 trillion rubles were committed to projects with VEB’s participation in the Krasnodar Territory”, according to the State Corporation’s press office.

Out of them VEB fully funded the construction of 20 Olympic facilities in Sochi for an amount of 251.1 billion rubles, with their total value being 334.4 billion rubles.“Since the establishment of the Bank for Development, VEB’s governance bodies approved the Bank’s participation in 331 projects. Out of them VEB completed funding of 77 projects, at present, 198 projects are being funded”, they said at VEB’s press office.

Among projects funded are the construction and operation of Alpine Ski resort Rosa Khutor valued at 85.4 billion rubles, with VED’s participation share being 72.8 billion rubles, as well as the construction of Olympic facilities at GornayaKarusel sports and tourist complex in Krasnaya Polyana valued at 93.7 billion rubles, with VEB’s participation share being 59.7 billion rubles. The cost of VEB’s participation in the project on the construction of the main Olympic Village to accommodate 3000 athletes is 24.8 billion rubles out of 28.5 billion rubles.

The construction of a five-star hotel in Immertinskaya lowland wasin the Krasnodar Territorybillion rubles out of which VEB committed 4.9 billion rubles. The construction of an office building in this district was worth 4.99 billion rubles, with VEB accounting for 4.3 billion rubles. The construction

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RUSSIAN BANKS START TO BORROW IN YUANS

4 september 2015 года
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Lenta.Ru
Moscow,
September 4, 2015 14:30
Author: Interviewed by AlexandrVolobuev


Photo: Maxim Blinov/ RIA Novosti

Vnesheconombank Chairman VladimirDmitrievtalks about China, mutual payments and Transaero

The first Russian East Economic Forum underway in Vladivostok is designed to expand cooperation with countries of the Asia-Pacific region including the world’s second economy – China. On the sidelines of the Vladivostok Forum Vnesheconombank Chairman Vladimir Dmitriev told Lenta.ru about the results of the recent visit to PRC, prospects for transferring to payments in national currencies and commented on the situation with Transaero.

Lenta.ru: How do you size up the results of your visit to China?

Dmitriev: Vnesheconombank is satisfied with the results of its delegation stay in China during the celebration of the 70th anniversary of victory in the Second World War and with the outcome of President Putin’s formal visit to PRC and his talks with PRC President Xi-Jinping.

In our opinion our main result in the signing of the memorandum on the development of the Bystrinsky ore deposit. The project is to be implementedby Nornikel. This project is attractive for the Chinese side because it is funded in Yuansand because it’s a project of finished products. Copper concentrateand noble metals will be supplied to China in full for processing. Irrespectively of this project, the central banks should expand practice of funding in national currencies spreading it to funding for such mid- and long-term projects. Now this practice applies to trade transactions. Together with the Russian Export Centerwe signed an agreement with the head ofGuangdong province (one of the largest provinces in the South of China). The project provides for constructing a large logistics hub for Russian products among other things with high added valueto further supply them to China and Southeast Asian countries. This is a pilot project. We haven’t had such a thing on the Chinese territory before - a facility intended for exporting only Russian products.

What are the chances of the project being successful?

The project has a great future because the administration of Guangdong province is quite experienced in creating technoparks and special economic zones and it intends to give it special status to provide it with significant administrative and tax privileges like those existing in special economic zones.

So far, we have tried to receive funding against supplies of Chinese equipment and products to Russia but now we can see that one of the largest provinces is interested in supplying sawn timber, processed timber products with high added value, farm products and other types of goods from Russia through this logistics center.

We also have other capabilities for raising Chinese financial resources. We’ll give high priority to expanding the format of investment cooperation both on our own and through our subsidiary – the Direct Investment Fund and the Russian-Chinese Investment Fund.

We are also working with private investment funds in PRC in order to raise their funds for our projects, above all, on the territory of the Far East – they include projects on mineral production, mineral production, farm production, industrial business as well as investment project, aquaculture, infrastructure and electric power industry.

Why is VEB so active in negotiations with its Chinese partners?

We believe that our Bank along with other banks affected by sanctions, made great progress in their cooperation with their Chinese partners, they raise credit facilities in yuans. Tied financing makes it possible to raise funds in hard currency.

Our Chinese partners are aware that the amount of mutual trade is falling due to reduced energy prices and we have to compensate for it through diversifying our foreign trade relations among other things by way of increasing the volume of Russian products not related to energy resources.

Payments in national currencies

Does the ruble high volatility in your opinion pose a risk to large-scale projects?

Of course it does, especially if payments are made in national currencies. But a mechanism for such payments provides for central banks to take most of the risks. Although either banks that assume intermediary functions, haveto hedge risks or companies themselves. So, it’s evident that the ruble volatility pose additional risks in trade relations.

What do you need to do to enter the borrowings market of continental China?

We have been discussing this issue with the Chinese authoritiesand regulatory authorities for about two-three years and we can see that our partners from the Chinese banking community are ready to help us by lobbying VEB’s interests. Talking with my colleagues from other Russian banks including those with state participation I can see that that they are following the same path. I don’t think that this will happen tomorrow, till the year end or at the beginning of the next year. Somehow we are in advanced dialogue with China’s regulatory authorities. We can see that serious headway was made in China itself, but volatility on the Chinese stock market would to a certain extent change our plans. Nevertheless, we are on the right wayand the Chinese regulatory authorities are doing their bestto help us.

Position on Transaero

At what stage is the discussion on a Transaero general agreement?

Vnesheconombank is not a major creditor of Transaero Airline compared to other banks with state participation. We’re worried by the situation because our subsidiary – the largest Russian leasing company VEB-Leasing extended financial leasing to the air carrier for an amount of 55 billion rubles (Transaero’s total debt is about 250 billion rubles).

And there is no doubt that measures for state support for this air carrier, repurchase of majority stake by Aeroflot and subsequent talks should take into account not only interests of our leasing company but also interests of other lasing companies that extended financial leasing to Transaero.

It’s clear that this concerns us too both interms of consolidated balances of international financial statements and due to the fact that VEB-Leasing used VEB’s credit facilities to purchase aircraft.That is, we are indirect participants inmultilateral talks but the situation with Transaero concerns above all VEB-Leasing directly.

We informed the Government about serious risks posed to Vnesheconombank’s interests.

Why are these risks occurring if Transaero’s financial liabilities are to be transferred to Aeroflot after a transaction (the air carrier acquires a 75-percent stake in Transaero)?

Now it’s a matter of formulating a consolidated position on settling debts to creditors among things by leasing companies. And here I mean not only restructuring of the debt but also a possible writing off a part of the debt.

Are you ready to agree on writing off a part of the debt if other creditors take such position?

The state provides support for Vnesheconombank but it also takes into account consolidated financial statements. We’re a sole and principal shareholder of our subsidiary institutions and we must maintain their financial stability. But as the state is our owner, it must ensure VEB’s financial stability through addressing problems of our subsidiaries that came into being through no fault of ours.

This implies the state’s additional support?

Writing off a part of the debt will mean a direct loss for VEB-Leasing and therefore for Vnesheconombankthus violating the covenant (credit terms) and this mightexacerbate VEB’s other problems. So, the state must be aware that this problem as well as the air carrier’s problem should be in the focus of its attention.

Vladimir Dmitriev

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Vladimir Dmitriev: The Far East becomes attractive for investors

4 september 2015 года
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TV CNANNEL RUSSIA 24,
INTERVIEW,
04.09.2015

HOST: And now we’re returning to the Island Russky where the First East Economic Forum is under way. Nailya Asker-Zade is working in our studio there, her guest today Vnesheconombank Chairman Vladimir Dmitriev. Good morning Nailya, go ahead.

HOST Nailya Asker-Zade

HOST: Roman, good morning. The Far East Economic Forum keeps on going and now we’ll talk about the most topical questions under discussion at plenary sessions with Vnesheconombank Chairman Vladimir Dmitriev. Vladimir Alexandrovich, good morning.

Vladimir DMITRIEV, Vnesheconombank Chairman: Good morning.

HOST: We have just listened to Vladimir Putin’s address and he said that the Far East had a great potential for development and could compete with the world’s economic centers. What should be done to make this happen?

Vladimir DMITRIEV: The state has approved a program to develop the Far East and the Baikal region to make this region attractive both for Russian and foreign investors. And for it to compete on equal terms with global players, major economic centers of the Asian-Pacific region countries it needs above all infrastructure. And in this sense, creating a territory of outrunning development is a right step in this direction because the state undertakes to form an appropriate infrastructure for investors, drastically reduce administrative barriers and create required mechanisms for providing economic support to investors by reducing taxes and insurance payments. All these measures play a key role when investors decide where to invest their capital. And we can see that many agreements have already been signed as part of the East Economic Forum, now we can see an interest of investors from the Asian-Pacific region countries, above all, our close neighbors – China, Japan, South Korea and a number of other states. I am sure that the Far East is a very promising region in terms of its economic appeal. Some days ago, we held talks with our Chinese partners and could see that they are increasingly interested in cooperating with us on the territory of the Russian Far East.

HOST: Let’s talk about the Far East Development Fund’s operation. What important projects have been already funded from this source?

Vladimir DMITRIEV: As far as the Far East Development Fund is concerned, I’d like in the first place stress a significant change in its investment declaration which allows the Fund to enter into capital, be engaged in pre-project activity, fund pre-project work, train personnel and extend financial resources at below-market interest rates. Naturally, this creates conditions for raising foreign capital to fund projects that are important for the Far East and the Baikal Region Development Fund. Of the projects nearing completion I would like above all single out such major infrastructure projects as the development of the Khabarovsk airport as a regional hub and the construction of a bridge crossing over the Amur river between Russia and China. The Chinese side has already done a lot of work and we hope that in the near future work will start at a quickened pace on the Russian territory and we’ll be able to launch this major infrastructure project. The Far East and the Baikal Region Development Fund focuses also on agricultural complex, aquaculture and a number of industrial facilities. And we’re glad that Russian President Vladimir Putin stressed the importance of the Far East and the Baikal Region Development Fund as well as the Direct Investment Fund – subsidiaries of Vnesheconombank - when he was speaking about this region’s development. He also expressed the hope that the Far East Development Fund would be additionally capitalized to carry out tasks set by the President. The Direct Investment Fund will be also additionally capitalized to be able to get down to implementing projects that are of primary importance for the region’s development and for raising more and more foreign funds with the assistance of our Fund.

HOST: In the course of Vladimir Putin’s visit to China an agreement was signed in your presence. Could you tell about it in more detail.

Vladimir DMITRIEV: We signed two agreements in China: the first one - with the Eximbank of China. It provides for funding a major industrial project "the Bystrinsky mining and processing complex". It will manufacture copper concentrate and a number of other products intended above all for exports to China. This project is attractive because it will be funded in yuans. There are some problems here related to currency swaps but we are working with our central bank and our Chinese partners are working with the Bank of China in order to create acceptable terms with regard to currency swaps - the ruble and the yuan. Another agreement that we signed is a quadruple agreement between our subsidiary – the Russian Export Center, Vnesheconombank, one of the largest Chinese province and Sinotrans & CSC Group. The agreement provides for supporting Russian exports and building a logistics hub, which will offer preferential terms for products being imported from Russia to be further distributed on the Chinese market and the Asian-Pacific region countries’ markets. And in this sense, this agreement fits fully into the Russian Export Center’s strategy. The Center comprises The Russian-Export-Import Bank and the Export Insurance Agency of Russia. And with Vnesheconombank’s assistance we’ll create appropriate infrastructure for increasing freight traffic from Russia to China to reexport these products to the Asian-Pacific region countries.

HOST: You’ve already mentioned that there are some obstacles to using national currencies in mutual payments between Russia and China. And what should be done to remove them?

Vladimir DMITRIEV: Now, the mechanism for currency swaps applies only to short-term operations related for the most part to trade business, with a period of operations being no more than one year. But in case of funding long-term projects there is a need for an arrangement between the national banks of China and Russia for swaps for a longer period of time. Our talks and contacts with our Central Bank and our Chinese partners’ contacts with their regulator show that there is a will to set up a reliable swapping mechanism for investment transactions funded in national currencies (yuans and rubles).

HOST:You met President Putin not long ago and discussed export credits. Now the portfolio of loans extended by Vnesheconombank for funding, for supporting exports is already about 350 billion rubles and you are working over issues of loans for an amount of 550 billion rubles. What kind of projects could they be?

Vladimir DMITRIEV: These are projects related above all to supporting industrial exports. The geography of these exports are wide and we are restoring former ties, which our enterprises used to have in the Soviet times with their foreign partners rendering assistance in building large-scale energy facilities supplying industrial products and high value-added products. Now we are focusing on aviation industry, energy mechanical engineering, and transport mechanical engineering, nuclear power industry as well as agriculture. It should be stressed that the geography is expanding and includes Latin America, CIS countries China, of course, the South-East Asia countries. Besides providing support for the export of Sukhoi Superjet 100 to Mexico we also support the sale of the rolling stock to Azerbaijan by UralVagonZavod, we also support Silovye Mashiny in their exports of products to Latin American counties. Here I mean energy mechanical engineering. for example we participate in funding a project on the construction of the Chiuido Hydropower station in Argentina and Sylovye Mashiny Company is expected to supply its equipment there. I’d like also to mention our cooperation with Mongolia in the construction of a thermal power station. We are glad that a single window system has been put in operation as part of which the Russian Export Center, I’ve already mentioned about, offers a range of services to Russian exporters including mechanisms for guarantee support, insurance support and assistance rendered to small and medium-sized enterprises in finding foreign partners through the Russian Export Center and exporting their products through this Center. It should be noted that such mechanisms of the state support as subsidizing interest rates are in full compliance with the rules applied in the member countries of the Organization for Economic Cooperation. We are not backing down on best international practices and now we can compete with foreign companies that enter the same markets on equal terms.

HOST: Vnesheconombank also operates through a mechanism of state guarantees and its first guarantee was issued through a simplified procedure VEB extended under Transaero’s credits in the amount of 9 billion rubles. How do you assess risks associated with this guarantee?

In its capacity of the agent for the Government in issuing state guarantees, Vnesheconombank is obliged to see to economic status of a principal company. In this case, a guarantee was issued in favor of VTB, it acted as a beneficiary. The situation with Transaero is familiar to everybody but it is rather complicated. We can see that it was Aeroflot that lent its shoulder. In this case, default is out of question and we are monitoring the situation although it’s clear that without the state’s assistance one of our largest air carrier won’t be able to overcome the difficulties that have emerged lately. We welcome the steps that have been taken by the state to get the company out of the pre-default situation. As Vnesheconombank provided financial support for Transaero through its subsidiary VEB-Leasing in the amount of 55 billion rubles we care about how Transaero’s problems will dealt with. Naturally, we want the state not to overlook potential problems of leasing companies that provided significant financial support for the air carrier while addressing Transaero’s problems. I think we’ll be resolving these problems together with the government institutions and now with Aeroflot. But the situation is rather complicated and we should look for a way out of it on the basis of a compromise between the air carrier, banks that extended credits and leasing companies that provided the air carrier with airliners.

HOST: Do you think that Aeroflot lent a strong shoulder and the company is going to survive or only Aeroflot will benefit from the situation and the company will be…?

Vladimir DMITRIEV: Of course, we hope that Aeroflot with its competence, serious financial resources, partner ties with the largest Russian banks and leasing companies without detriment to its own commercial and financial activity will be able to resolve the situation and we intend to help our leasing companies to address their problems.

HOST: How long will the ruble go on falling?

Vladimir DMITRIEV: If I knew an exact answer, I might be given a Nobel Prize or at least a prize for the best prediction.

HOST: Could we expect an exchange rate to be 100 rubles to the dollar?

Vladimir DMITRIEV: Unfortunately, we have to acknowledge again that the ruble exchange rate depends directly on oil price and oil price depends directly on the general economic situation – on the demand for oil products, on the sustainability of developing countries’ economies, on the dynamics of China’s economic development. Although the Chinese leader said reassuringly yesterday at the Meeting of Russia’s and China’s leaders that an expected economic growth would amount to about 7 percent this year - the best indicator not only among developing economies but also in the world, the latest developments on the Chinese stock markets, deceleration in economic growth as a whole do not make us optimistic about increased oil prices. Getting back to your first question about the Far East, I’d like to say that it is important for Russia to go on making structural transformations in our economy, developing infrastructure. This is the only way to overcome notorious dependence on energy resources, kick the oil curse and create additional synergy for developing major industrial sectors through forming a reliable infrastructure both here, in the Far East region, and in the country as a whole. And the projects being implemented now I mean high-speed motorways, highway junctions, the Central Circular Road, toll motorways are of course the right steps in the right direction. Let’s be optimistic, roll up our sleeves and start implementing structural reforms in our country.

HOST: But China like Kazakhstan devalued their currencies voluntarily. And what countries can follow suit?

Vladimir DMITRIEV: I can’t give you an exact answer to this question – all depends on the current economic conditions. And it would be wrong for me to name specific countries that would ask me harrowing questions through certain channels. As we live in a global world where countries depend on each other seriously and their economies are interrelated, everything will depend on global behavior and we can’t rule out anything.

HOST: And now my last question. Did VEB adapt to operating under conditions of sanctions?

Vladimir DMITRIEV: Firstly, in fact, sanctions proved to be a serious test for us but given the latest decisions and the fact that we rely on the state’s support and we are feeling comfortable. For example, our Bank was additionally capitalized and the capitalization was associated with the need to be in line with capital adequacy ratios because our loan portfolio is increasing and therefore capital should increase for capital adequacy ratios to be in line with the Memorandum on Vnesheconombank’s Financial policies. Only economic growth, forming reliable infrastructure and funding major industrial projects will allow us to diversify our economy and balance its development. We rely on the strategy that remains unchanged. It was approved last year. This strategy provides above all for increasing the loan portfolio, entering into capital, providing support for our subsidiaries, above all companies that are designed to participate on their own in investment projects and raise foreign investments. They include the Far East Development Fund, the Russian Direct Investment Fund, the North Caucasus Development Corporation. Answering your question I can say that we managed to adapt, we are developing, we are developing with our country and as a state development institution, we fully rely on the state’s support.

HOST: Thank you Vladimir Alexandrovich.

Vladimir DMITRIEV: Thank you.

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How the Yuan works for Russia

1 september 2015 года
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Rossiyskaya gazeta,
Moscow, September 1, 2015
Author: Anna Romanova

Russia’s Bank for Development and China’s financing institutions cooperate

In the context of the Russian President’s forthcoming visit to the PRC expected to take place in September off 2015, Head of Staff of the Presidential Executive Office noted: “I can say without exaggeration that at present the Russian-Chinese relations are at the highest level than ever before”.

The same can be said not only about political but also about financial sector. The Russian Bank for Development – Vnesheconombank (VEB) have been working together with Chinese financing institutions for a long time and in the past several years their cooperation has expanded.

Committed to development

VEB’s main partners are the China Development Bank (CDB) and the Export-Import Bank of China (the Eximbank of China). The extent of their cooperation is seen in their stated projects. From 2005 to 2014, VEB raised 10.74 billion dollars and out of them 10.11 billion dollars were provided by the CDB. Due to such significant amounts, VEB remains to be one of the CDB’s largest borrowers among Russian financing institutions. The two banks’ cooperation is based above all on an extensive and solid legal framework. For the past ten years they entered into five agreements and memorandums on cooperation, two framework agreements as well as ten credit agreements. These are the examples of projects where Russian and Chinese financial resources were used.

In 2009, VEB and CDB entered into a funding credit agreement the funds from which were used to fund the construction of a cement plant in the city of Slantsy of the Leningrad region. Cement in this city is manufactured in a special way: they use “dry” method of manufacturing this raw material on the basis of natural raw materials and technogenic raw materials received from production wastes of slate processing industry on the territory of Slantsy district municipality. Such a method is not also economical but also eco-friendly. VEB provided funds that cover more than a half of the project’s value – 237.1million euros from the total value of 442.2 million euros. Two years after the construction started (in 2011); the plant began to manufacture trial batches of products. Now the plant’s capacity is 1.86 million tons of cement per year.

In October of 2013, in the course of the 18th regular meeting of Russia’s and China’s Heads of State and in the presence of the Russian Prime Minister Dmitry Medvedev and Premier of the PRG State Council Li Keqiang, VEB and the CDB signed a credit agreement worth 400 million dollars to fund the third unit of the Ekidastuz-2 power station in the Pavlodar region of the Republic of Kazakhstan.

This project launched in 2009 is to meet Kazakhstan’s growing needs for electric power, electric capacity and close the energy gap in the Russian regions of the South Urals, West Siberia and Altai. Now 400 specialists are working there but by a launch of the unit scheduled for 2017, 1200 specialists will work there.

In May of 2014, in the course of Russian President Vladimir Putin’s official visit to China, CDB, VEB, Gazprombank and OJSC Yamal LNG signed a Memorandum on Arranging Financing of the Yamal LNG project. The Yamal LNG project provides for the construction of a liquefied natural gas plant (LNG) with a capacity of 16.5 million tons of LNG per year on the resource base of South-Tambeisk gas field. Credit facilities are to be raised from Chinese banks to fund it. VEB is to extend a banking guarantee in the amount of 3 billion dollars.

Taking into account the fact that China is our close neighbor some construction projects are being implemented in the Far East region. For example, a timber processing complex to manufacture chipboards and sawn materials was built in the Vanino district of the Khabarovsk Territory, with Vnesheconombank’s participation share being 277 million euros. The project’s total value is 415 million euros.

Joint social programs are among VEB’s and the CDB’s projects. In autumn of 2014, VEB and the CDB agreed to jointly fund the following programs “Housing for the Russian Family” and “the Rental Housing”. On the Russian side. a Memorandum of Understanding was signed by VEB and the Housing Mortgage Lending Agency. But the new Housing Development Agency will be responsible implementing it. The Russian and the Chinese sides intend to develop an optimal mechanism for funding the programs including bilateral syndicated interbankbank loans and they also explore the possibility of issuing bonds in Russia and in mainland China. The Housing Development Agency’s need for funding amounts up to 135 billion rubles for a period of 25 years. Chinese companies also intend to participate in housing construction.

From the dollar to the yuan

Until the year 2015, the dollar and the euro played a role of main currencies in bilateral and multilateral projects. In May, an agreement was signed that would be much appreciated in the near future. On May 8, 2015, VEB and CDB signed in the presence of Russia’s and China’s Heads of State a framework credit agreement worth up to 8 billion in the dollar equivalent. This framework agreement provides funding joint projects in various currencies including in Chinese yuans. It’s already known that the money will be used to fund the abovementioned programs “Housing for the Russian Family” and “the Rental Housing” as well as infrastructure projects, agro-industrial complex projects and projects of utilization and development of communications technologies.

As opposed to a framework agreement signed by VEB and CDB, VEB took its first practical step together with the Eximbank of China by signing an agreement on a credit line for an amount of 3.9 billion yuans (an equivalent of 630 million dollars) for a period of 15 years. It was the first time when VEB raised credit facilities in the Chinese national currency to implement an investment project in Russia. It’s a really breakthrough agreement even for such a large-scale financing institution as VEB.

It should be noted that so far it’s not possible to hedge risks with regard to the ruble-yuan currency pair on a long-term basis and this hinders a process of transferring to payments in our national currencies.

One of the first steps in addressing this problem was an agreement the Russian Central Bank and the China People’s Bank signed in 2014 on a swap (a conversion transaction) in national currencies for an amount of 150 billion yuans.

This is only a part of already stated and implemented VEB’s projects with Chinese partners. As part of the already concluded agreements there will be new projects and this means that new production facilities manufacturing new products and creating new jobs will emerge.

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