Vnesheconombank Chairman Vladimir Dmitriev’s Briefing on the Results of Vnesheconombank Supervisory Board Meeting
Vladimir DMITRIEV, Vnesheconombank Chairman:
In the context of the Bank’s current activity as a development institution I would like, above all, to say that this is the third Supervisory Board meeting where we consider issues of refinancing foreign debts of Russian companies and banks.
Summing up our recent activity we can say that the Supervisory Board made decisions on refinancing in the amount about 10 billion dollars, to be more precise, 9 billion 800 million dollars, out of which 7.5 billion dollars have been already allocated for refinancing Russian companies’ foreign debt obligations.
In the near future, we expect funds to be transferred to finance a number of approved transactions. All in all, we have received applications for refinancing in the amount exceeding 76 billion dollars, to be more specific, even 78 billion dollars. Out of them, 28 billion are requested by banks and 50 billion dollars — by companies.
Decisions offered for consideration by the Supervisory Board are based on the procedure and accords approved by the Supervisory Board and specified in the Procedure for Refinancing Russian Organizations’ Foreign Debts. These decisions and proposals go through appropriate corporate
Moreover, the Supervisory Board refused to accept some applications because they were not formally in line with the procedure for consideration of applications. Here I mean those companies that borrowed from foreign banks’ Russian subsidiaries or the companies that borrowed without security or with security the loss of which does not entail serious risks associated with national economic security, regional security, loss of strategic assets by the Russian Federation.
The current Supervisory Board and its decisions are important in a sense that an issue of refinancing foreign debt obligations of one of the largest Russian banks, namely,
The same approach was recognized as the only correct and justified one upon considering extending subordinated loans. This theme was also discussed at today’s Supervisory Board meeting. The Supervisory Board approved applications submitted by Alfa -Bank,
At its latest meeting, the Supervisory Board also considered an issue of Vnesheconombank’s participation in rescuing Bank Globex and
We agreed with the Supervisory Board that by mid next year we’d formulate and submit a comprehensive operational concept of all Vnesheconombank’s subsidiary banks activity. These banks are the Russian Development Bank, Russian
The prospect for consolidation is obvious; at least, for a part of these banks and here I mean consolidation of their businesses and establishment of a single major banking structure with due regard to the Post of Russia’s core activities. Bank Globex,
Thus, summing up the decisions taken I would like to emphasize the fact Vnesheconombank’s proposals were approved.
And finally, I would like to say that we submitted for consideration an issue of increasing Vnesheconombank’s charter capital with no decision on this issue having been taken. This is a very important issue because the Bank’s activity on extending subordinated loans, refinancing foreign debt obligations of Russian companies and banks, rescuing banks, diversifying the management of the National Wealth Fund, using part of resources, here I mean 175 billion rubles allocated to the Bank for operating on the Russian stock market automatically reduces Vnesheconombank’s capital base both in case of extending subordinated loans and revaluating securities and funds allocated by the Finance Ministry from the National Wealth Fund are recorded on the Bank’s balance sheet and therefore negative revaluation decreases the Bank’s capital. Building up reserves for refinancing foreign debt obligations also narrows Vnesheconombank’s capital base. And if we are to speed up Vnesheconombank’s activity as a development institution, Vnesheconombank’s capital is bound to be increased. It’s a matter of capital size. It should be adequate. In this respect, the government may take a different decision — in particular, a decision on guarantees. For example, in KfW, a German Development Bank, our peer, part of its obligations is secured by state guarantees.
— What amount of funds is expected to be allocated to refinance Bank VTB’s debt and on what terms? Could you specify the amounts of subordinated credits approved by the Bank’s Supervisory Board to be extended to
Vladimir DMITRIEV: The Supervisory Board approved a proposal for allocating 950 million US dollars to Bank VTB but VTB is ready to
The Supervisory Board also approved extending credits to banks that are among the largest thirty banks: to
— One more point on the Bank’s capital increase. What amount do you expect to receive?
Vladimir DMITRIEV: I am not ready to give exact figures because they are to be agreed upon with the Finance Ministry, the Ministry of Economic Development and the Central Bank as well. But I mentioned the factors that worsen our Bank’s balance sheet indicators. I became increasingly confident that our approach had been heard and Vnesheconombank really needs the stated amounts to address the tasks it is currently fulfilling. Problems are piling up, become more complicated and comprehensive and require tremendous efforts. It’s clear to everybody. Nevertheless, we believe that the Bank must and can continue its core activity as a development institution. By the way, an increase in the Bank’s capital is required not only for major projects which were announced but also for working with small and
— Vladimir Alexandrovich, you outlined a program of rehabilitating the two banks, namely, Bank Globex and
Vladimir DMITRIEV: In our opinion, the financial resources we received from the Central Bank are sufficient to rehabilitate the banks and get them to operate normally.
— Don’t you need any additional funds?
Vladimir DMITRIEV: This issue is under consideration, but today’s decisions were based on the amount of resources, which has already been allocated to Vnesheconombank.
— You’ve said that these additional resources will be somehow used to render assistance to the Post of Russia. Could you explain in more detail how you are going to use them?
Vladimir DMITRIEV: So far I can’t say anything because today’s decision states Vnesheconombank’s readiness to prepare a comprehensive Plan of Business Consolidation and a program to develop our subsidiary banks by mid next year. And here I mean not only Bank Globex and
— So, you haven’t made up your mind yet which banks will be incorporated into this new post holding or a post bank?
Vladimir DMITRIEV: From our point of view, Roseximbank is a specialized financial institution responsible for implementing a system of guarantees to promote Russian industrial exports. But as far as three other banks — the Russian Development Bank, Bank Globex and
— Is this going to be Vnesheconombank’s subsidiary?
Vladimir DMITRIEV: If we decide to establish this sort of financial structure, it’s going to be Vnesheconombank’s subsidiary for a certain period of time. Then it’s up to the Supervisory Board to decide whether we should attract strategic investor or transform them into joint stock companies. These are possible options. But above all should secure sustainable development and operation of
— Thus, their main line of activity would the Post of Russia and small business.
Vladimir DMITRIEV: There is no doubt about it.
— Thank you. And one more thing. You said that you would reconsider some of investment projects you had already approved?
Vladimir DMITRIEV: Among other things we may…
— You’ll quit some projects?
Vladimir DMITRIEV: I do not rule out the possibility of reconsidering decisions on those projects, which have been approved but not accepted for financing. So, in the most immediate future, actually, in the coming two weeks (our experts have already agreed upon many things with line ministries) we have to examine our loan portfolio in the most serious way for making final decisions and for the Supervisory Board to approve them with regard to projects already approved and, more so, accepted for financing but with regard to which no corporate decisions have made.
— This applies to projects, which were approved by your Bank as a Bank for Development rather than a «Rescuer Bank».
Vladimir DMITRIEV: You are quite right. And as to our rescue efforts, there is no other way out — we have to rescue.
-Thank you. It is too early to say what projects you are going to quit, isn’t it?
Vladimir DMITRIEV: Yes, it is.
— Thank you.
On Agreement between Vnesheconombank and Export Guarantee and Insurance Corporation (EGAP)
State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ and Export Guarantee and Insurance Corporation/ EGAP (Czechia) signed an Agreement on Cooperation.
The Agreement was signed by Management Board Member – Vnesheconombank Deputy Chairman Petr Fradkov and EGAP Board Director, Managing Director Pavol Parizek.
The Agreement aims to establish strategic partnership and promote long-term effective and mutually beneficial cooperation in insuring export credits against commercial and political risks as well as in insuring investments.
The Document is a framework agreement and would help to support and boost trade and investments between Russia and Czechia by way of joint insurance and reinsurance of export credits and investments.
The two sides intend to share business experience in insuring export credits against commercial and political risks, help promote the said activity and personnel development, as well as implement joint projects and exchange information on export credits insurance.
EGAP was established in 1992 as a state-run insurance company, which specializes in insuring export credits against territorial and commercial risks as well as investments upon exporting products and services from the Czech Republic. The state is liable for the Corporation’s obligations that emerge on the basis of agreements on insuring export credits. In 1998, EGAP became the first member of the Bern Union among countries of Central and East Europe as an institution of this type.
EGAP is an active member of the Organization for Economic Cooperation and Development Working Group on Export Credits and Guarantees and it cooperates with the largest export credit agencies and export-import banks.
Origin: Press Office of Vnesheconombank
Contact person: Ekaterina Karasina
Phones: +7 (495) 608-46-93, Fax: +7 (499) 975-21-34