Vladimir Putin Signs Legislation on VEB.RF’s New Functions and New Name, on Callable Capital
Russian President Vladimir Putin signed legislation to change the name of Vnesheconombank to State Development Corporation VEB.RF, clarify its functions and provide it with callable capital. The new name reflects the role of VEB in carrying out the tasks assigned by the Russian President and the Russian Government.
An article was introduced into the law on the development bank to assign new functions to VEB.RF to organise and coordinate development institutions’ activities ensuring Russia’s long-term socio-economic development. The federal law mandates VEB.RF to provide specific development institutions with financing and guarantees and use other methods to guarantee the performance of their obligations, including paying indemnities or insured amounts.
The amendments to the Budget Code allow the Government to allocate public budget funds to VEB.RF, Federal Corporation for the Development of Small and Medium Enterprises (SME Corporation) and Russian Export Center for their callable capital.
Additionally, the legislation clarifies a mechanism for issuing the authorised capital of VEB.RF, Russian Export Center and SME Corporation.
A session of the Federation Council passed legislation to change the name of State Corporation Vnesheconombank to VEB.RF, introducing several new functions, such as its role as a development institution coordinator.
The amendments are to be made to the Federal Law On the Bank for Development and certain legislative acts of the Russian Federation.
The law changes the name of State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” to State Development Corporation VEB.RF.
The law also assigns new functions to VEB.RF to coordinate the development institutions’ activities as resolved by the Russian Government.
Another law amends the Budget Code. The Government will approve resolutions concerning the authorised capital of VEB.RF in the form of paid-in capital and the amount of its authorised capital that should subsequently additionally be contributed by the Russian Government (callable capital).
Vnesheconombank issued short-term bonds in an additional placement to companies and corporations on 22 November 2018.
The Bank raised 20 billion roubles from bonds with a maturity of 21 days and a coupon of 7.24% p.a.
The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.
The arrangers of the bond issue are Gazprombank and Svyaz-Bank.
The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.
VEB-Leasing and Ulyanovsk Region Government Sign Cooperation Agreement
VEB-Leasing and the Ulyanovsk Region Government signed a cooperation agreement during Transport Week 2018.
The parties intend to implement joint projects of regional and interregional significance and lay the groundwork for investment and competition in the region.
“VEB-Leasing and VEB as a development institution give priority to infrastructure development in Russian regions and municipalities, state-of-the-art technology, and a wide range of financial instruments to support the most important projects affecting regional economic growth,” said Artem Dovlatov, Director General of VEB-Leasing.
VEB.RF Proposes Partnership to Russian Railways for Development of Modern Urban Transport
VEB.RF Chairman Igor Shuvalov spoke at a business breakfast of Minister of Transport Yevgeny Dietrich with government officials and business leaders. The event, part of the Transport Week, one of the largest international sectoral events, focused on the development of the country’s transport infrastructure.
Igor Shuvalov spoke about how VEB.RF was realigning its operations to carry out the tasks assigned by the Russian President and the Russian Government. They include transport infrastructure modernisation. “Our lending portfolio had previously been on a sole lender basis. We are now realigning our operations and we will enter projects in syndicates with partner banks within the Project Financing Factory,” Igor Shuvalov emphasised. “Our major partners are Sberbank, VTB, Gazprombank. As regards municipal economy development projects, we will also make wide use of cooperation with regional banks with basic licences. If the model is generally a success, then we will have a portfolio of at least 3 trillion roubles by 2024. In partnership with other banks, it would be good to reach 9 or 10 trillion roubles.”
The priorities include renewing suburban and urban passenger transport. The VEB.RF Chairman said: “We have a proposal for Russian Railways: let’s offer your competencies in urban transport management to the regions. In this case, we undertake to provide modern urban transport. This will enable us to ensure a comprehensive approach and a sufficient scope for transport renewal in the country’s regions.”
Minister of Transport Yevgeny Dietrich drew attention to the initiative and emphasised: “We need to think it over and enable VEB.RF to easily cooperate with the regions. In the same way as Russian Railways is able to make use of suburban passenger transport companies and consolidate its infrastructure. We should consider the same for river transport, which is also important for many regions. We should consider urban passenger transport; moreover, the Safe and High-Quality Roads project enables us to support the renewal of gas-fuelled buses and other projects.”
Infrastructure is a priority for almost all development banks in the world. Infrastructure construction generates the demand for allied sectors’ products, creates new jobs and helps to remedy regional disparities in development. VEB.RF has extensive experience in investing in almost all transport segments: roads, watercraft, aircraft, railways, ports, airports. In this year, VEB.RF provided financing for projects to rehabilitate a section of the M-4 Don motorway and build a new terminal of Khabarovsk International Airport.
“The coordination of development institutions will contribute to developing and supporting small and medium-sized businesses,” Sergey Neverov, head of the of the United Russia faction in the State Duma, said at a meeting of the Board of Trustees of Russia’s Business Success Award Ceremony.
He also mentioned the relevant legislative amendments relating to the new functions and name of VEB.RF that received second reading approval from the State Duma today.
“It is necessary to show that the work expected to be done by development institutions is the right way that will contribute to developing and supporting small and medium-sized businesses,” Neverov said.
Alexander Braverman, General Director of Russian Small and Medium Business Corporation, said: “The joint efforts of VEB.RF, RSMB Corporation and other development institutions will help to produce a multiplying effect on the development of small and medium-sized businesses, their involvement in urban economy development, the better use of export opportunities. In other words, we will provide a stepping stone to the accelerated growth of businesses in this country.”
According to Russian Export Center’s Director General Andrey Slepnev, who also participated in the meeting of the Board of Trustees, Russian Export Center support the new legislation on development institutions because such measures are vital to develop Russian export. VEB.RF Chairman Igor Shuvalov told the meeting of the Board of Trustees that the development institutions coordinated by VEB.RF would create an effective system to achieve the goals contained in the May presidential decree.
“The Government, together with the State Duma are now deciding on so-called ‘approved capital’ for development institutions. This will allow us to immediately begin work in the market, providing lending resources, issuing guarantee instruments. I would like to say once again: everything related to new production, modernised old production and new potential for export in the market is our joint task. The amendments received second reading approval today,” Shuvalov said and thanked the deputies voting for the amendments.
He emphasised that development institutions had the same goals specified in the May presidential decree, and their achievement needed close coordination.
“We have the same goals, specified in the 7 May presidential decree; their attainment needs absolute involvement; we should consolidate our team skills and financial resources to reach these goals. As for VEB.RF, I and my colleagues will do this work,” Shuvalov said in conclusion.