On signing a Memorandum of understanding between Vnesheconombank and BNP Paribas
Today, in the course of the first French-Russian Financial Forum in Moscow, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and Banking Group BNP Paribas, concluded a Memorandum of understanding. On behalf of Vnesheconombank the Memorandum was signed by its Chairman Mr. Vladimir Dmitriev, on behalf of BNP Paribas – by Advisor to the Chairman Mr. Jean Lemierre.
The document stipulates that Parties aim at cooperation in financing of the two projects implemented by OJSC “Evraziyskiy” together with French Company Degremont S.A., for construction of a sludge incineration plants on the territory of the sewage treatment facilities in the city of Sochi and in the city of Rostov-on-Don.
The project implemented in the city of Rostov-on-Don (within the “Clean Don Project”) provides for the construction and reconstruction of the Rostov-on-Don water disposal system’s elements to connect new consumers to the central water disposal system in the city and to improve the level and quality of waste water treatment.
The project implemented in the city of Sochi provides for the construction of a sludge incineration plant on the territory of the sewage treatment facilities in Adler’s district with a capacity needed for servicing the existing sewage treatment facilities in the city of Sochi. This project would give to new consumers on the territory of Sochi an access to the centralized water disposal system and enhance sewage water treatment quality by incinerating the sludge.
The Memorandum was signed due to the Export Credit Framework Agreement concluded earlier between Vnesheconombank and BNP Paribas in view of investment project financing in the Russian Federation.
BNP Paribas is a European leader in global banking and financial services, and one of the six strongest banks in the world according to Standard & Poors. Present across Europe through all its business lines, the Group has four domestic retail banking markets in France, Italy, Belgium and Luxembourg. It has one of the largest international networks with operations in 84 countries and more than 202.500 employees, of which 159.600 works in Europe, 15.000 in North America, and 11.100 in Asia. The BNP Paribas Group has key positions in its 3 core businesses which are Retail Banking, Corporate & Investment Banking, Investment Solutions.
Press Office of Vnesheconombank
Contact person: Ekaterina Karasina
Phone: +7 (495) 608-46-93, Fax: +7 (499) 975-21-34
V.V. Putin’s opening address:
Some of you attended the United Russia’s conference in Khabarovsk yesterday, where we discussed plans for the Far East. Specifically, we discussed Vnesheconombank’s and other development institutions’ involvement in implementing investment projects in the region.
There are many interesting business ideas for the Far East, in particular for its fuel and energy sector, steelmaking, forestry and fishing industries. As I have already said, we plan to establish a Direct Investments Fund in the Far Eastern Federal District and the Baikal Region.
VEB’s participation in this Fund will make it possible to engage major financial institutions, funds and investment companies in cooperation. Today, we’ll discuss the Fund’s concept and proposals for its organizational structure. I would also like to note that yesterday Vnesheconombank signed an agreement on extending a three billion ruble loan to Dallesprom for building a deep timber-processing integrated plant in the city of Amursk in the Khabarovsk Territory.
We’ll also consider another project that is critical for the Far East, the reconstruction of the Knevichi airport. This project will be implemented as part of preparations for the APEC summit and the program to remake the image of Vladivostok.
A new modern passenger terminal’s commissioning would increase the airport’s capacity to four million people per year. After reconstruction, the airport’s runway will be able to operate almost all types of aircraft, both Russian and international. Vnesheconombank’s investment in the project will total four billion rubles, of which it has already provided 2.3 billion rubles in loans.
Today we’ll also hear out a report on the progress the Bank has made on its mortgage lending program. I’d like to emphasize that the program began nearly a year ago, and Vnesheconombank has already extended more than 4,000 mortgage credits worth some seven billion rubles, which account for about 30% of the credits received by Russian citizens to buy new housing.
I’d like to stress that as we expected the average interest rate – stands at 11% per annum. Moreover, the banks that obtained VEB’s credits have cancelled commissions for issuing credits. There are mortgage credits extended at lower interest rates. For example, Sberbank extends mortgage credits for several categories of employees at 9.5% per annum. There are also higher interest rates of 11%, 12% and even a bit higher. But the average interest rate stands between 11% and 11.5% per annum across the country. These are the target figures we set for this year. Not bad for a start. We can expect the amount of loans to increase significantly in 2011.
There are also proposals to expand Vnesheconombank’s involvement in housing program for the Bank to encourages not only mortgage lending but also accomplish a task of increasing housing construction.
To this end, Vnesheconombank could lend to commercial banks for them to fund projects aimed at building affordable economy-class housing. As we agreed before, this investment is to amount to 50 billion rubles, and the funding source is to be Vnesheconombank’s profits from transactions in financial markets. I’d like to remind you that the Bank generated significant profits from the increased value of Russian companies’ shares, which it bought during the crisis. And it makes sense to invest these profits in implementing housing programs. Credits will be extended at only 3%, which will allow banks to reduce interest rates for end borrowers, that is, natural persons. VEB will soon begin to finance regional and municipal projects to upgrade utilities infrastructure. The Bank will use public-private partnership mechanisms to modernize water and heat supply systems, municipal transport and other facilities. The Bank will commit two billion rubles for these purposes annually. And one more point: this year Vnesheconombank has raised more than $5 billion for a period of up to 15 years in the international market. It is the first time that a Russian lending institution has raised funds on such favorable terms. The Bank has also successfully placed ruble-denominated bonds worth 25 billion rubles. This testifies to the increased trust in Russian banks and shows that Vnesheconombank’s team is comprised of real professionals.
Let’s start our discussion.
Origin: Internal Portal of the Government of the Russian Federation