VEB reports consolidated financial statements of the VEB Group for the nine-month period as prepared in compliance with IFRS

29 November 2018 year
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VEB published interim condensed consolidated financial statements of the VEB Group as at and for the nine-month period ended September 30, 2018, as prepared in accordance with IFRS.

“Today we have released the IFRS financial statements of the VEB Group for the nine months 2018 and we favourably view the results. We recognized a profit of RUB 6.0 bn in Q3 2018. In these nine months there was a reversal of provisions for expected loss in the amount of RUB 1.2 bn, which was also stipulated by the fact that VEB, having accomplished its function as a development institution, exited the projects upon investment stage completion.

   Currently the VEB team together with the Russian government is elaborating necessary conditions for the implementation of the VEB’s new unique role of a coordinator of development institutions activities. VEB’s financial model is being improved now, various financing and guarantee support mechanisms of other development institutions are enabled.   

With regard to its lending activity, VEB aims to more actively cooperate with commercial financial institutions, providing beneficial environment for co-financing. This will help boost financing of projects, crucial for the Russian economy, and create a multiplier effect for the funds invested by VEB.

The rendered state support, including callable capital mechanism will allow to realize the potential of a development institution and efficiently use the available resources, said Mikhail Poluboyarinov, First Deputy Chairman and Member of the Management Board.

The VEB Group’s key performance indicators are as follows:

  • The VEB’s Group assets as at September 30, 2018 amounted to RUB 3,385.2 bn. The amount and structure of the assets remained largely unchanged as compared to 2017 year end (+0.3%).
  • Loans to customers account for 52.2% of the Group’s total assets. As compared to 2017 year end loan portfolio after allowance for expected credit loss decreased slightly by RUB 16.9 bn (-0.9%) reaching RUB 1,767.1 bn. Major contributing factors were assignment of certain loans to other lenders due to VEB’s fulfilment of its task of a development institution, as well as negative revaluation of loans to customers at fair value.
  • The amount of loans granted by VEB in the nine-month period 2018 reached RUB 62.2 bn.
  • In the reporting period net investment in leases went up by 14.2% to reach RUB 197.6 bn.
  • Total liabilities of the Group as at September 30, 2018 increased by 1.9% (RUB +55.5 bn) as compared to 2017 year end, reaching RUB 3,035.8 bn. Liabilities structure remained unchanged.
  • The amount of debt securities issued went down in the nine-month period 2018 by RUB 39.1 bn (-3.6%) due to the redemption in February 2018 of Eurobond issue for the nominal value of EUR 1.0 bn. Also in November 2018 VEB timely redeemed its Eurobond issue for the nominal value of USD 850.0 mn, which is reported in the statements as a subsequent event.
  • There is a positive dynamics of the financial result. In Q3 2018 the Group recognized a profit of RUB 6 bn, as compared to the negative financial result of RUB 61.9 bn in Q3 2017. At 9M end a loss shrank by 36.4% as compared to the corresponding period of 2017 and amounted to RUB 69,6 bn. The major factor contributing to the negative result was a recognition of non-interest expense from NWF foreign currency-denominated deposits conversion to rubles, as well as revaluation of loans to customers at fair value at transition to IFRS 9.
  • The Group’s equity in the nine months 2018 decreased by RUB 46.3 bn (-11.7%) to reach RUB 349.4 bn as at September 30, 2018. It was negatively affected by the 9M 2018 financial result and IFRS 9 introduction (RUB -31.2bn).     
  • The said impact was partly offset by the state support measures. In the reporting period VEB received two federal budget subsidies in the amount of RUB 100.0 bn, as a compensation of costs related to servicing foreign capital market borrowings.
  • VEB’s capital adequacy ratio as at September 30, 2018 was 12.1% (RAS).

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Vladimir Putin Signs Legislation on VEB.RF’s New Functions and New Name, on Callable Capital

29 November 2018 year
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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.

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Federation Council Approves New Legislation on VEB.RF Functions

23 November 2018 year
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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).

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Short-Term Exchange-Traded Bonds Issued by Vnesheconombank

23 November 2018 year
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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.

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VEB-Leasing and Ulyanovsk Region Government Sign Cooperation Agreement

22 November 2018 year
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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.

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VEB.RF Proposes Partnership to Russian Railways for Development of Modern Urban Transport

21 November 2018 year
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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.

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State Duma Gives Third Reading Approval to New Legislation on VEB Transformation

21 November 2018 year
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The State Duma passed a third reading of amendments to the federal law on the development bank and to the Budget Code, introducing the role of VEB.RF as a coordinator of development institutions.

Additionally, the new legislation changed the name of Vnesheconombank to State Development Corporation VEB.RF. The new name reflects the role of VEB in carrying out the tasks assigned by the Russian President and the Russian Government. An important part of the amendments approved by the lower house of the Russian parliament is also the allocation of public budget funds to VEB.RF, Russian Small and Medium Business Corporation and Russian Export Center for their subscribed capital, which will enable the development institutions to provide financing for major national projects in a timely manner.

According to Nadezhda Maksimova, a deputy of the United Russia faction, the State Duma passed the amendments to the federal law on the development bank and to the Budget Code at the right time, which will make it possible to attract as much as 3 trillion roubles to implement national innovation and investment projects without using public budget funds.

“The fact that the development bank will be supported with three functions—first, the accumulation of these resources; second, the coordination of all development institutions, including Russian Export Center, RSMB Corporation and other institutions—will make it possible to finance national projects so as to prevent them being abandoned but to complete them and in order to efficiently use the resources intended for such projects,” Nadezhda Maksimova said at a plenary session of the State Duma.

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Short-Term Exchange-Traded Bonds Issued by Vnesheconombank

16 November 2018 year
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Vnesheconombank issued short-term bonds in an additional placement to companies and corporations on 14, 15 and 16 November 2018.

The Bank raised 20.2 billion roubles, including 0.1 billion roubles from bonds with a maturity of 14 days and a coupon of 7.27% p.a., 20 billion roubles from bonds with a maturity of 15 days and a coupon of 7.27% p.a., and 0.1 billion roubles from bonds with a maturity of 28 days and a coupon of 7.27% 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.

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State Duma Gives First Reading Approval to New Legislation on Subscribed Capital for VEB.RF and Other Development Institutions

13 November 2018 year
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A plenary session of the State Duma passed new legislation to allocate public budget funds to VEB.RF, Russian Small and Medium Business Corporation and Russian Export Center for their subscribed capital.

The relevant amendments to the federal law on the development bank and to the Budget Code had previously been approved by the specialist committees of the lower house of the Russian parliament on 8 November 2018. In addition, the changes to legislation introduce the role of VEB.RF as a coordinator of development institutions. For this purpose, VEB will participate in managing development institutions and formulate procedures for joint work on projects in order to ensure that instruments of support will be used in an integrated manner.

The draft legislation also concerns the name of Vnesheconombank; the renamed institution will become State Development Corporation VEB.RF. The new name reflects the role of VEB in carrying out the tasks assigned by the Russian President and the Russian Government.

Earlier today, the State Duma gave first reading approval to amendments to the 2018 federal budget, allocating an additional 20.45 billion roubles to VEB.RF for the settlement of its external debt.

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Dubai Summit Discusses Cities’ Global Economic Role

12 November 2018 year
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VEB.RF Chairman Igor Shuvalov took part in discussions at the Dubai summit of the Global Future Council on Russia. The participants discussed various aspects of global economic development, including the role of cities as centres of international cooperation and technological partnership.

Igor Shuvalov said: “Municipal economy projects produce many positive effects. The service sector is growing, while small and medium-sized businesses have an increasing share of the market. Cultural and social trends are changing. A more successful city attracts better professionals. Cities today make a substantial contribution to the country’s GDP. They help to create a competitive advantage for people.”

According to Igor Shuvalov, urban policy should be formulated and implemented at national level. This makes it necessary to understand which cities are growing, how and why. VEB.RF should ensure the coordination of development institutions’ involvement in the implementation of national projects, including aspects of city development.

VEB, DOM.RF and Russian Small and Medium Business Corporation are working in partnership with Strelka KB and Moscow School of Management SKOLKOVO to develop tools for supporting municipal economy projects. There are 1,114 towns and cities in Russia. Urban dwellers make up 74% of the country’s population.

Igor Shuvalov also attended a joint meeting of the Global Future Councils on Russia and Europe.

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Short-Term Exchange-Traded Bonds Issued by Vnesheconombank

9 November 2018 year
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Vnesheconombank issued short-term bonds in additional placements to companies and corporations on 7 and 8 November 2018.

The Bank raised 28 billion roubles, including 20 billion roubles from bonds with a maturity of 14 days and a coupon of 7.22% p.a. and 8 billion roubles from bonds with a maturity of 21 days and a coupon of 7.27% 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.

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