Cross-border projects require comprehensive quality assessment

13 may 2021 года
WRITTEN BY Svetlana Yachevskaya, Deputy Chairman, Member of the Board, VEB.RF and Roberto Cialone, Managing Director, AECOM

In this blog, Svetlana and Roberto discuss the major cross-border projects currently being planned and delivered with Russia’s involvement, and the importance of comprehensive quality assessment in delivering these projects. Their discussion practically illustrates several elements of successful cross-border project delivery that are detailed in the GI Hub’s cross-border reference guide, Connectivity Across Borders:

Cross-border projects are increasingly essential for global and regional development, both socially and economically. As more countries have become regional transit hubs and begun to rely on an uninterrupted flow of commodities, the demand for and use of connectivity infrastructure has increased. European and Asian countries in particular are developing their overland and maritime trade routes and trying to make them faster and more reliable by implementing cross-border projects. These projects have significant potential to create jobs, provide new business opportunities, foster mobility and improve quality of life throughout the regions they serve. 

Russia’s transit capacity and main cross-border projects 

Being the largest country in Eurasia, Russia has vast transit capacity. It shares a land border with 14 countries in Asia and Europe and considerably impacts Eurasia's economic development. It is participating in various ongoing and planned cross-border projects and has intergovernmental agreements to develop infrastructure with several neighboring countries, including China, Kazakhstan, Poland, Lithuania, Finland and Belarus. Such intergovernmental agreements help translate the political vision and project idea into a sustainable and durable governance model for the project. While the binding power of the agreement varies based on what it includes and specifies, it provides the foundations for project development and delivery. 

One of the most significant railway projects Russia is currently participating in is the Eurasia High-Speed Railway (HSR), part of the Belt Road Initiative (BRI). In 2018, the countries signed a memorandum on the management of high-speed freight rail transportation between China, Russia and Europe through implementation of HSR Eurasia. It involves constructing a 7,200 km cargo-passenger high-speed railway crossing the territory of six countries: China, Kazakhstan, Russia, Belarus, Poland and Germany. The project is expected to consolidate two of the world’s largest high-speed rail networks in China and Europe and increase Eurasian transport mobility. It is estimated that by 2050, passenger traffic will grow by 60% and freight traffic by 92%. The socioeconomic impact on Eurasia will be substantial, with the project expected to improve traffic safety, increase transport mobility of the population, create jobs (370,000 jobs on the Moscow-Kazan section alone) and develop supply chains by competing with air and sea transport and delivering goods in less than 3 days. The unified transit system will also provide economic benefits by developing and transforming remote areas into transport hubs. 

Russia has also signed an intergovernmental agreement with China to construct and operate the Tongjiang-Nizhneleninskoye Railway Bridge over the Amur River (also known as the Heilong Jiang River) between Tongjiang in China’s northeast Heilongjiang Province and Nizhneleninskoye in Russia’s eastern Jewish Autonomous Oblast. It is the first cross-border railway bridge between Russia and China. The total length is 2.21 km and construction is slated to finish in 2021, for an estimated capacity of 21 million tonnes of cargo annually.

This follows completion of the first highway bridge between China and Russia in 2019. Located 450 kilometres northwest of the Tongjiang-Nizhneleninskoye bridge and also over the Amur River, the bridge connects Heihe and Blagoveshchensk. It was initiated in 1995 following the signing of a joint agreement under which the governments of Heilongjiang Province and Amur Region agreed to share the cost of the bridge construction and set up a joint venture to construct and operate the bridge. However, in subsequent years the organisational and financial model of the bridge changed and construction did not commence until 2016. The project involves toll collection, two lanes for passenger vehicles and two lanes for cargo trucks. A temporary border checkpoint has been built on the Russian territory to receive up to 200 cargo trucks per day until a permanent checkpoint is built. As of May 2021, organisational work is ongoing, the toll collection system has been tested and the bridge is ready for operation. However, the bridge will be allowed to open only after COVID-19 restrictions lift. The launch date will be announced by joint decision of Russia and China. The project's transport capacity is expected to be over 300,000 cargo and passenger vehicles per year, offering unique export opportunities for both countries.  

Two more cross-border initiatives involve constructing transport transit corridors that will link the Chinese and European markets. One of them is the Western Europe-Western China (WE-WC) Highway, named the New Silk Highway. It is a transcontinental expressway with a total length of 8,445 km that will pass through China, Russia and Kazakhstan, thus linking China’s port of Lianyungang with St. Petersburg in Russia. It’s estimated that once complete, the WE-WC Highway will allow products to travel between China and Europe in 10 days, instead of the current 30 to 50 days by sea.

The Meridian Tall Highway would be one of the shortest East-West overland connectivity routes. The circa USD9.3 billion highway is planned to span 2,023 km from the Russia-Kazakhstan border to an existing road that connects Minsk in Belarus with Moscow. Plans are for the highway to be built through private investment only. Both projects aim to improve regional connectivity and increase transportation efficiency and availability.

These initiatives have significant socioeconomic potential but face multiple challenges, including: social and environmental risks; dependence on private investment; increased reliance on environmental, social, and corporate governance (ESG) performance; and technical complexity. One of the solutions to respond to these challenges is following a holistic approach for infrastructure quality assessment.

Comprehensive tool for cross-border project assessment and development

Assessment of costs and benefits is a prerequisite to understand the viability of any project, but even more so for cross-border projects, given the commonly low visibility countries often have of their neighbor’s internal plans, processes and markets. Low viability might be a barrier to project development, implementation and completion – particularly for projects seeking commercial financing. 

Cross-border projects therefore require innovative assessment approaches based on best global practices and standards, as recognised by stakeholders from investors and financial institutions to government authorities and citizens. The assessment approach should serve as a rating tool based on the principles of transparency, versatility and comprehensiveness and should give investors a holistic understanding of a project's benefits, financial efficiency and lifecycle risks – including ESG. 

Russia is developing an infrastructure project assessment and certification tool called IRIIS (Impact and Responsible Investing for Infrastructure Sustainability). IRIIS considers the economic, governance, social and environmental aspects of project implementation, including their cross-border effects. The G20 Quality Infrastructure Investment (QII) principles and UN Sustainable Development Goals are the basis of IRIIS. It is also being developed in line with leading international rating schemes like Envision (USA), CEEQUAL (Great Britain) and Infrastructure Sustainability (Australia). It applies to most infrastructure categories: transport, social, utility, power generation and telecommunications. 

IRIIS allows assessment at different stages of the project lifecycle and offers practical solutions for the main challenges faced by cross-border projects. It:

  • Embodies best international standards and practices of infrastructure quality and sustainability 
  • Provides comprehensive assessment, covering economic, social, and environmental aspects
  • Facilitates quality and sustainable infrastructure practices in countries involved
  • Sets modern standards for infrastructure construction, design, engineering, operation and decommissioning
  • Provides transparency and evidence of a project’s ESG performance, including as required for informed investment decisionmaking.

IRIIS is currently being used to assess the Russia-Scandinavia Link highway. The road is the only transport link between the Russian north-west and Northern Europe and is part of the route through Finland, Sweden and Norway. The highway construction length is 43.4 km, with four traffic lanes that will increase the region’s transit capacity and improve the accident record. The Asian Infrastructure Investment Bank is participating in project financing and implementation. IRIIS assessment will help the project mitigate risks, avoid possible negative impact on the territories involved and improve quality.

There are plans to scale up the IRIIS system to Russia’s neighboring partner countries of the EAEU (Eastern Europe and Asia), to allow consistent assessment of cross-border projects and foster their effective and successful implementation, including the ability to attract necessary financing. 

About the authors 

Svetlana Yachevskaya is a Deputy Chairman, Member of the Board at VEB.RF with more than 20 years' experience in the legal sphere. Prior, Svetlana was a Director of the Legal Department in the Russian Ministry of Finance and received gratitude for merits in financial and economic activities. At VEB.RF Svetlana is responsible for public debt and sovereign guarantees management, IFIs’ projects monitoring and implementing best practices related to infrastructure investment and PPPs. 

Roberto Cialone has 25 years of experience in Construction Management in high profile, high investments, critical and technical complex industrial, high-rise, commercial office buildings, mixed-use developments and other infrastructure projects. He joined AECOM in 2006 and has covered different leading roles in Continental Europe. Roberto is currently leading the operations in East Europe as Managing Director, based in the Russian Federation. 



Nikolay Tsekhomsky: Islamic Banking to become Source of Investment in Russia

16 february 2017 года

RIA Novosti,
16.02.2017 13:00

While a phrase such as “Islamic banking” sounds quite foreign to the majority of Russians, this concept is well-known in the East. It implies a closer relationship between banks financing projects and companies that implement them. In Russia, there are no regulatory standards enabling the development of this kind of business, but the Bank of Russia and the market players are working on filling this void.

What benefit does Islamic financing bring to the Russian economy, and how can VEB use this tool to help exporters? Moreover, what is the difference between “murabahah” and “ijarah”? The First Deputy Chairman of Vnesheconombank Nikolay Tsekhomsky sat down with RIA Novosti to answer these and other burning questions.

— How does VEB view the potential for Islamic banking to develop in Russia? Does VEB consider the development of this type of banking important and necessary, and if so, why? How can this influence the development of the Russian financial system?

— During the 2008-2009 crisis, Islamic partnership banking received the close attention of investors from all over the world, making clear the advantages of this model against the traditional one, with the former being more resistant to external shocks.

In particular, from 2008 the key segment of the Islamic financing market, the “sukuk” (Islamic bonds) market demonstrated high growth rates. By 2013, the sukuk market value increased more than fivefold.

In Russia, a keen interest in using partnership banking tools arose in 2014 in the light of the sectoral sanctions imposed by Western countries, which limited the access to the capital market for many Russian companies, including Vnesheconombank. Due to this, the strengthening of ties with Islamic countries in the trade, economy and investment sectors has become one of the more important directions for the development of our country, home to more than 20 million Muslims.

For Vnesheconombank, Islamic banking opens up new opportunities both for the funding of investment activities and for the support of Russian industrial exports.

We believe that the development of ethical finance practices will contribute to better development of the Russian economy and financial system. A new source of investment will give rise to the emergence of new financial institutions specializing in Islamic banking, which will promote the competition and rehabilitation of the banking sphere while offering new financial instruments to the market actors.

— Is VEB working on any Islamic banking projects? What are they and with which financial institutions is VEB cooperating?

— Our evaluation of funding certain projects depends on the requests we receive from our clients and are looking for investors in the Islamic financial market. We rapidly develop our contacts with financial institutions in the Organization of Islamic Cooperation (OIC) member countries and are in constant search for mutually beneficial cooperation.

This not only means the use of traditional Islamic financing instruments but also the solicitation of investors for collective investment funds, development of educational programs and sharing experience in the partnership finance sphere.

This is the path that we follow in the development of our liaisons with the key international financial institution in the Islamic world - the Islamic Development Bank group. Last May we signed a memorandum with this bank and agreed to further promote cooperation in the areas of consolidated financing of investment projects, support of export and import operations between our countries and the exchange of best practices.

One of our priority tasks now is to form a product matrix meeting the needs of our clients and investors from the OIC countries. In the near future we plan to use it to attract funding upon guarantee of Vnesheconombank and to explore the options for investor participation and co-investment of VEB projects.

— Does VEB intend to raise funds for new investment projects through Islamic banking?

— Certainly, that is one of our goals. We are making efforts to secure funds for new investment projects from financial institutions and OIC country investors using both traditional instruments and instruments of Islamic banking. VEB has numerous contacts with sovereign wealth funding and the largest banks of the UAE, Bahrain, Saudi Arabia, Malaysia and other countries.

— In the opinion of VEB, what has prevented the development of Islamic banking in Russia?

— The development of Islamic banking in Russia is to a large extent hindered by law and the absence of the necessary infrastructure and trained personnel. The Parliament and the Bank of Russia are already engaged in the improvement of the legal aspects.

We hope that all together we will be able to galvanize the developmental process. It is important that the laws (banking laws, tax laws and the Civil Code) make it possible to use the instruments of Islamic banking to the full measure. The present-day regulatory and legal framework is effective enough only for certain elements of sharia-compliant transactions.

Certainly, fund raising from investors based in the OIC countries is complicated by the imposed sectoral sanctions and the currently low level of the trade and economic cooperation between Russia and the OIC countries.

— Does VEB take part in the Bank of Russia's workgroup for the development of Islamic banking in Russia? What results can VEB expect from the establishment of this workgroup in 2017? Are there any consultations between VEB and the Central Bank regarding the development of such banking?

— VEB’s experts are included in the CB workgroup for partnership banking and the workgroup of the Federation Council. For example, Vnesheconombank took part in designing the road map for the development of Islamic finance in Russia.

The main result that is expected from the workgroup is bringing forward specific proposals and recommendations for the required legal changes. The idea is not to adopt new laws or regulations but to adjust the existing ones in such a way that the partnership banking instruments are, in essence, established as equal to traditional banking instruments, from the point of view of taxation as well.

— Earlier, VEB Chairman Sergey Gorkov said that the Islamic banking products related to the financing of investment projects have yet to be tested in Russia. What Islamic banking projects could be realized in partnership with VEB in 2017? Will VEB have any common projects with Sberbank in this area?

— We coordinate our work with Sberbank. We have a lot of common goals, including those connected with our legislative improvement efforts. In December 2016 in Bahrain, Sberbank and Vnesheconombank, together with its subsidiary VEB Leasing, represented Russia at the 23d World Islamic Banking Conference. The partnership of such high-profile financial institutions underscores the importance of the development of Islamic banking in Russia for our partners from the OIC countries.

Nevertheless, Vnesheconombank and Sberbank, as financial institutions, have different strategic goals, which helps explain our lack of competition in this area of business. Our goals imply, first of all, raising funds for the development of the bank’s investment activities and support of Russian industrial exports.

— Which Islamic banking products may find demand in Russia?

— Vnesheconombank, as a development institution, is focused primarily on the support of the Russian export industry and promotes the implementation of investment projects in Russia.

We consider using in our work those Islamic banking instruments that may be effectively integrated in the task structure of project financing (musharakah, mudarabah, istisna), trade financing (murabahah) and hire purchase (ijarah).


China’s best practices will help VEB avoid mistakes in its new strategy – first deputy chairman of state corporation

27 may 2016 года

Prime Novosti

BEIJING, May 27 /PRIME/. In the course of their visit to China, Vnesheconombank’s representatives held a workshop at the China Development Bank. Our Chinese partners’ best practices in terms of risk management, human resources policy and lending could be used upon preparing a development strategy of state corporation, said VEB’s First Deputy Chairman Nikolai Tsekhomsky to RIA Novosti.

VEB’s delegation is in Beijing as part the Group of Twenty countries financial development institutions’ heads – D20 meeting.

“Our main goal here is to participate in the D20 meeting. But in addition to it, we decided to combine the useful with the useful and brought here a team that spent yesterday a whole day at the China Development Bank participating in a workshop. And it’s very interesting for us to listen to about our colleagues’ successes and failures and the ways of overcoming these failures maybe in the late 90s, reasons for these failures and the way they adjusted their strategy.

He reminded that now VEB was forming a new strategy that will be presented in late June.

“So, we are interested in any introductory information from the respected banks and especially from the China Development Bank which is one of the most successful development banks”, said the Deputy Chairman of the state corporation.

“We listened to very attentively about their risk management, their human resources policy and their lending policy. To my mind, we held a very useful workshop yesterday, our team members took a lot of notes. I think we can borrow something from them but in any case it was very useful”, added Mr. Tsekhomsky.


Tsekhomsky: VEB resembles now the China Development Bank of the 1990s

27 may 2016 года

BEIJING, May 27 – RIA Novosti

Vnesheconombank - a development institution which is designed to fund long-term projects - resembles the China Development Bank of the 1990s as it can’t do now without the state’s support said VEB First Deputy Chairman Nikolai Tsekhomsky in his interview to RIA Novosti.

It strikes the eye that the securities market in China is very deep. Despite the fact that Chinese securities are bigger than ours by ten times in terms of a great number of indicators, their security market is bigger than ours by about 200 times”, said Mr. Tsekhomsky.

According to him, one of the Russian banking sector problems is our inability to raise funds with the help of instruments they use in China despite the fact that they also use a whole number of aggregations in order to promote their securities.

“Specifically, upon purchasing their securities by commercial banks, weight on capital equals almost zero. So, in terms of managing liquidity, commercial banks like these instruments very much because their weigh on capital is almost zero. So far, we haven’t had such instruments in Russia”, admitted Tsekhomsky.

Moreover, the China Development Bank (CDB) hasn’t sustained any losses in the past 44 quarters, it has a top quality portfolio and this forms a strong platform for its independent activity, VEB’s First Chairman said.

“In this respect, we are at a different stage, we resemble them in the late 1990’s when they wouldn’t have survived without the state’s support either. There are many similar characteristics here”, he noted.

In particular, CDB was active in funding special transactions – the ones that were somehow offered to it by the state, he explained.

Later on, this development institution changed its policy dramatically – now it is in a very close dialogue with the state but this dialogue must be mutual with a two-way street.

“We are sort of succeeding too. We are of the same opinion with our regulators that at a time when our financial resources are limited we should invest them in the most interesting projects which have the largest multiplication effect and are the most useful for our economy. Here both Chinese and our specialists want to simplify our model for it to be easy to understand for everyone, lest people ask the following question: “What is VEB like?” said Tsekhomsky.

He reaffirmed that VEB was not supposed to compete with commercial banks. “We position ourselves as an instrument for transferring government funds in the economy, above all, to restructure it and change its structure. We are not supposed to compete with commercial banks. In many cases, business model is not what you should do but also what you should not do. We must agree on what we should not do. This is very important and relevant for us”, said Tsekhomsky.


Vnesheconombank Chairman Sergei Gorkov gives press briefing

5 april 2016 года

Mass media materials on Vnesheconombank Chairman Sergei Gorkov’s meeting with journalists

  • Gorkov presents plans for VEB’s future (RIA Novosti)

    It became clear last November that VEB was in a pre-default situation and that 1.3 trillion rubles had to be found to repay its debts until 2020. Then the authorities stepped up their discussions about saving this state corporation.

    MOSCOW, April 5 – RIA Novosti. Sergei Gorkov who came from Sberbank and has been VEB’s Chairman for a little more than a month intends to build a new business model which will take advantage of foreign best practices until late June.

    The authorities’ discussions about saving VEB stepped up in November when it became clear that VEB was in a pre-default situation and that 1.3 trillion rubles had to be found to repay its debts until 2020. In late February, Sergei Gorkov succeeded Vladimir Dmitriev who had been in charge of the state corporation in the past 12 years.

    “The past month was not easy both for me and the Bank’s team because of new principles, new people, structures and processes. So, our first main task was to size up the situation. We keep on estimating our assets and we are trying to evaluate subsidiaries. We’ll to analyze numerous aspects of the Bank’s activity during the whole April, although in general we can already say that the old model is not working”, Gorkov said to journalists at a briefing on Tuesday.

    According to him, the state corporation’s model was formed when the market was completely different and there were no sanctions. Mr. Gorkov is convinced that if sanctions hadn’t been imposed the state corporation would not have been confronted with such an acute liquidity problem.

    “The situation developed in the following way: we borrowed at high interest rates on the market however VEB had to invest in long-term, low-income projects. In principle, the model does not work in such a way. There is a need for long cheap money rather than short money but initially this discrepancy was built into the model”, explained the new head of the Bank for Development.

    The problem is that VEB should change both the pattern of funding and the pattern of assets, recommended Mr. Gorkov.

    Difficulties are left behind

    At present, VEB doesn’t have any problems with liquidity, all covenants are fulfilled in particular thanks to a subsidy worth 150 billion rubles provided by the Finance Ministry, said Mr. Gorkov.

    “I can say that “the patient” is more alive than dead because we had a crucial moment of going through covenants as of the end of the first quarter and we have gone through all covenants successfully. As a whole, it was very important for us to go through capital adequacy ratio covenants and net assets covenants – two basic covenants which are of interest for our investors”, said Gorkov.

    According to him, now the state corporation’s capital adequacy ratio exceeds 11%. “As far as net assets are concerned, we also exceeding this covenant”, he said acknowledging that they had such problems in late February.

    “We don’t have any problems with liquidity. You know that we received subsidy worth 150 billion rubles from the Finance Ministry for us to be able to make payments to our international investors – 74 billion rubles were provided in the first quarter. This enables us among other things to normalize all our basis parameters”, explained the head of the state corporation.

    Foreign best practices

    At present VEB’s new business model is only being developed, noted Mr. Gorkov. He said that VEB’s experts are studying best practices of many foreign development banks including Brazilian, Chinese, RSA and European banks.

    “De-facto they all have different business models. None of these development banks are alike, so it’s very important for us to find our own place”, explained VEB’s Chairman.

    Speaking about international best practices he mentioned the Brazilian Development Bank which is funded from pension and sovereign wealth funds. “European banks raise funds from the market but market borrowing conditions are completely different from ours and they don’t have sanctions. As to the China development bank, its task was a bit different, it was responsible for supporting infrastructure and it received financial resources from special funds”, said Mr. Gorkov.

    “It’s very important for us here to find a model of our own and we are thinking hard on it because we’ll have to make a somewhat unique history because we can’t make use of Brazilian experience alone, we can’t use Chinese expertise and we can’t’ follow German best practices alone”, he stressed.

    Unique combination

    “We’ll have to weigh all models and find out what is applicable for us, identify Russian specific features and the best ways of using the bank for development in Russia. This is a very difficult task and we are given short time”, he said.

    Mr. Gorkov, former Deputy Chairman of Sberbank’s Executive Board said that the Russian largest bank’s expertise will be used in the state corporation’s new model, for example in risk management but he believes that not all business experience of Sberbank could be directly applied at VEB.

    “It’s very comfortable for us to use risk analysis which is used at Sberbank. We have some specifics but in this case we can use best practice but as you can see not all business experience of Sberbank could be directly applied at VEB, he said.

    Nevertheless, Mr. Gorkov said that they didn’t have any have ready solutions with regard to VEB’s business model. “Perhaps, we’ll ty to devise some sort of combination, it’s hard to say which combination because in the situation when we are denied access to foreign markets we’ll have to focus on domestic markets. We are now considering various instruments and it’s a matter of a wide-ranging discussion including with the government and the Central Bank”, he said.

    At the same time VEB’s Chairman said that he didn’t want the Bank to receive banking license. “We can discuss all possible scenarios but I am not a proponent of this model because none of development banks in the world have banking licenses except for Mexico. I don’t have a position now so when we form it we’ll state it”, he said.

    Mr. Gorkov told journalists about prospects for the Bank’s Ukrainian business. According to him, he met head of the Ukrainian National Bank Valeria Gontareva and discussed the future of Prominvestbank – VEB’s Ukrainian subsidiary. The liquidity situation at Prominvestbank got normal and he expects the National Bank to make a decision this week to withdraw the bank from the list of problem banks, said the head of the state corporation.

    Nevertheless, VEB is going to leave the Ukrainian market in the foreseeable future. A final decision will be made after a new strategy has been developed. “In the long term we’ll consider the possibility of leaving the Ukrainian market. Until now we haven’t held talks on this issue. But in terms of our strategy it might make sense for us to leave the market in the foreseeable future because Vnesheconombank is after all Russia’s development institution and in terms of strategy we shouldn’t have a commercial bank in Ukraine. But a decision on this bank will be made when we develop our strategy”, he said.

    “At the same time, the liquidity situation at VEB’s other subsidiary banks – Svyaz-Bank and Globex is normal and if necessary VEB is ready to additionally capitalize them. “The liquidity situation is quite normal. As to Svyaz-Bank, we are getting substantial inflows of customers and as to Globex, we are also getting inflows of customers. These subsidiaries are of course very important for us and if necessary we are ready to additionally capitalize them”, he said.

    VEB’s Chairman added that they hadn’t made a decision on the future of their subsidiary banks yet. “We are considering various options but in our strategy we’ll decide what to do with them. We have at least four different development scenarios” he said declining to disclose details.

  • VEB will go on living but hasn’t decided how (INTERFAX-AFI)

    Moscow. April 6. INTERFAX-AFI Vnesheconombank (VEB), which was established to develop Russia’s economy needs now government support because of the sanctions and the accumulated problems. The Bank will develop a new business model until late June and decide the future of non-performing assets as well as banks in the Russian Federation and in Ukraine.

    “We keep on estimating our assets and we are trying to evaluateour subsidiaries. “We’ll analyze numerous aspects of the Bank’s activity during the whole April, although in general we can already say that the old model is not working, because this model was based on raising redeemable market funds and placing them in non-performing assets”, VEB Chairman Sergei Gorkov told journalists at the first news conference in his new status.

    He described the situation at VEB as follows: “the patient is more alive than dead” adding that internal due diligence will be completed by late April and a new business model will be presented until June 30.

    According to him, the state corporation’s model was formed when the market was completely different and there were no sanctions. “If sanctions hadn’t been imposed the state corporation would not have been confronted with such an acute liquidity problem at the end of the last year and at the start of this year. In the situation when we are denied access to foreign markets we’ll have to focus on domestic markets”, he said.

    Now VEB’s management is studying best practices of foreign development banks in China, Brazil, India, RSA as well as best practice of IFC although he admits that they will have to develop a unique model adapted to the Russian realities.

    “In my opinion a new model will be of great interest for the pension system. We would like to have a look at foreign best practices. For any development bank it’s a matter of where to get money from to fund significant strategic projects”, said Gorkov without disclosing VEB’s proposal.

    He said that a development institution should operate on a break-even basis but it should not be a highly profitable institution because it invests long-term at low interest rates.


    Thanks to the state’s support VEB ended the first quarter successfully by resolving liquidity problem and fulfilling covenants on obligations. The Finance Ministry provided the state corporation with 150 billion rubles to make payments to international investors.

    “Moreover we worked with our customers that is why as a whole we don’t have problems with liquidity although in late February we had such a problem. In principle we can’t see liquidity problems in the second quarter. To a large extent we’ll cope with the problem till the end of the year. I’m sure we’ll make it next year too,” Sergei Gorkov said adding that this year VEB does not expect any assistance from the Finance Ministry.

    According to him, VEB is working on the market for corporate deposits and is interested in raising funds of companies and state corporations.

    “We are working with companies, raising deposits at the moment, it’s very important for us to have balanced funding, we want companies and state corporations to keep money in our Bank but we are not discussing any compulsory measures”, Gorkov said.

    At the same time, VEB’s new Chairman does not want the Bank to receive a banking license. According to him, none of development banks in the world have banking licenses’, Sergei Gorkov said.

    One of the other measures under discussion now is a sale of ADR Gazprom (MOEX: GAZP). Sergei Gorkov said that VEB was in talks now and a final decision hasn’t been made so far, but in case of ADR’s sale it will be done outside the market.


    According to VEB’s new management estimates, up to a half of the state corporation’s assets do not generate sufficient incomes. These assets got into a difficult situation because of the market conditions, explained Sergei Gorkov.

    “We are examining special projects - it is our theme for the near future, I think we’ll sort out the situation out until late May. We have different kinds of assets – we have not bad assets, complicated and bad assets. So far, we have been evaluating them, our task is to formulate a strategy with regard to them by late May. For example, we have a lot of forest assets and I set up a group for working with them because these assets were spread out in different departments. And when you look at them separately you can’t see any strategy.

    Moreover, a subdivision for working with problem assets were set up at VEB. “This must have been the first order that I issued”, adding that the head of the subdivision has not been appointed.

    When asked a question if they discuss the possibility of transferring a part of VEB’s assets to a closed-end investment fund he said: We discuss many options including this one too. In fact, we discuss 5-6 options but first of all we want to size up the situation. In order to decide what to do with them we should formulate our strategy. Our task now is to additionally examine the Bank’s portfolio and form up a strategy.

    The Olympic projects account for almost 10% of VEB’s loan portfolio.

    “When they say that the Olympic projects are bad projects, I can assure you that it is not the case. The Olympic projects are performing well and this season in Sochi will be a special one and there will be no hotel vacancies in Sochi, it will be a golden time for the Olympic facilities. Some of them are located in the lowland and some - in the mountain cluster. As a whole, it’s evident that these are performing assets, they generate operating incomes, they are not idle, they are working, they are reserved well. I don’t think that these projects are bad. Each project is most likely to be in its specific situation, they differ in terms of their clusterability, economics and de-facto quality”, he said.

    As far as VEB’s subsidiary banks are concerned, their future will be specified in the state corporation’s new development strategy. Now we are considering at least four possible options for developing Svyaz-Bank (MOEX: SVZD) and Bank Globex, on which the future of VEB’s debt obligations to the Central Bank will depend. The Central Bank provided 211 billion rubles to the state corporation in 2008-2009 to rehabilitate these banks.

    Sergei Gorkov also said that that the situation in VEB’s subsidiary bank in Ukraine had normalized but the state corporation could leave the Ukrainian market in the future.

    “In the long term we’ll consider the possibility of leaving the Ukrainian market. Until now we haven’t held talks on this issue. But in terms of our strategy it might make sense for us to leave the market in the foreseeable future because Vnesheconombank is after all Russia’s development institution and in terms of strategy it shouldn’t have a commercial bank in Ukraine. But a decision on this bank will be made when we develop our strategy”, VEB’s Chairman said.


    A new organizational structure is scheduled to be formed in the coming months.

    “We plan to start the second half of the year with a new organizational structure and with performance tasks for the second half of the year. The Bank’s structure is sure to be changed. Our task is to put together a basic team. To my mind, a final structure will be put in place as of January 1, 2017 and an intermediate one - as of July 1”, said VEB’s Chairman.

    With his appointment as Chairman, the role of the risk management subdivision was enhanced, now risk management is to be supervised by Sergei Gorkov himself.

    “VEB used to have a mixed financial unit, for example, borrowing activity was not supervised by this unit it was supervised by the export unit. The Bank’s IT is very outdated, like in the 90s, the Bank has paper document flow. In this sense, the Bank is in need of modernizations, said the state corporation’s new Chairman.

    In his opinion, the Bank needs to change its organizational structure and corporate culture.

    “We have rated 1100 managers working for VEB and its subsidiaries. Unfortunately, our conclusion is that VEB’s culture was not focused on the result. At the same time, intellectual level is high – higher than the market one as a whole but readiness for change is very low. In this sense it’s very important for us to select those leaders of change (we have launched such a project) who would be able to become drivers, points of change. They are above all VEB’s employees”, said Sergei Gorkov noting that it’s not possible to replace VEB’s managers with people from the market.

    According to him, VEB’s culture is not oriented on the result and there is no customer orientation.

    “VEB has never been a commercial bank and there are in fact a lot of customers – state-run companies, the state itself and many private companies. We should give top priority to the result and customer orientation, responsibility and as a whole responsible attitude to state money, Sergei Gorkov said reminding of his track record in forming values in various organizations.

    According to VEB’s new management estimate, a potential for optimizing the number of employees in subdivisions performing supporting functions is about 400 people but in other lines of activity new positions will appear.

    “We can see that VEB lacks some functions so we have to create them. In general, we’ll be optimizing the number of employees but we’ll have to engage about 100 people to perform these functions”, said Sergei Gorkov. Now the average staffing number of VEB’s employees is 2,2 thousand people.

  • VEB’s new strategy will be ready in early summer (TASS)

    MOSCOW, April. /Corr. TASS Natalia Starostina/ VEB’s new management will present its reform strategy only in the mid-year but even now it is clear that VEB will drop its old business model and is most unlikely to become a commercial bank. Vnesheconombank Chairman Sergei Gorkov told about it at the first news conference after his appointment.

    “VEB’s old business model based on investing market funds in non-liquid assets is not working”, said VEB’s new Chairman Sergei Gorkov at the start of his first meeting with journalists after his appointment.

    According to him, a main task of VEB’s new management is to evaluate assets, personnel potential of the state corporation and develop a new development strategy. Mr. Gorkov plans to present first results as early as in June.

    A bank of bad debts

    As early as last year, representatives of the state corporation spoke repeatedly about VEB’s debt problems and its need for a substantial additional capitalization to avoid default on debt obligations. The Bank’s former management cited different amounts of support – up to 1.2 trillion rubles.

    According to Finance Minister Anton Siluanov, VEB received up to 150 billion rubles for its additional capitalization from the budget to fulfil its obligations.

    In his State of the Nation Address to the Federal Assembly Russian President Vladimir Putin stressed that many of development institutions numbering more than two dozens had become a dumping ground for bad debts. And VEB’s management also said earlier that one of its strategic objectives was to fight bad debts.

    In late February, new Chairman was appointed at Vnesheconombank. On February 26, Russian President Vladimir Putin signed a decree on appointing Sergei Gorkov - former Deputy Chairman of Sberbank’s Execute Board as Chairman of the state corporation. In this post he replaced Vladimir Dmitriev who had been in charge of VEB for the past 12 years.

    VEB’s problem assets

    According to VEB’s new management estimate, up to a half of the state corporation’s assets do not generate sufficient incomes and are not covered by funding. “For the most part theses are credits. Some of them are sufficiently reserved and some are not. These are different assets including Russian ones which got into a complicated situation because of the market conditions”, said Mr. Gorkov.

    VEB was active in extending credits to finance projects that required urgent funding.

    VEB has a lot of problem debts in the forest sector. In the real property sector Vnesheconombank has fewer such projects and some of them are profitable. The Olympic projects funded by VEB are not hopeless. “The Olympic projects account for 10% of VEB’s portfolio. They are sufficiently reserved. They are not VEB’s worst projects”, said Mr. Gorkov.

    According to him, VEB’s business model was formed when there were no sanctions but because of new realities it should be changed.

    VEB’s global transformation

    VEB is on the threshold of great changes: Mr. Gorkov is determined not only to renew personnel but also change the state corporation’s organizational structure. During March, the Bank’s new management tested the work of the state corporation’s employees. “We have rated 1100 managers working for VEB. Unfortunately, VEB’s culture was not oriented on the result and customer orientation”, said Mr. Gorkov. According to him, this is what they have to change.

    They have already started to make personnel changes, for example, Senior Vice President, Director of Sberbank’s Finance Nikolai Tsekhomsky and Deputy Head of Strategy at Sberbank Nikolai Klekovkin moved to VEB.

    The Bank’s team will change too”, Mr. Gorkov said. According to him, no all Sberbank’s best practices are applicable at VEB. “We’ll take a part of specialists from the market”, said Gorkov noting that salaries are not high at VEB and they will have to change personnel’s motivation.

    VEB’s new Chairman also intends to change the state corporation’s organizational structure. According to him, everything was separated in the old structure, there was no unified asset management.

    “There were 6 subdivisions which operated on the sectoral principle. There was no problem debts department. It is this department that Gorkov created when he moved to VEB. Moreover, Mr. Gorkov was amazed at a large volume of paper document flow and outdated IT which are most likely to be updated.

    Following foreign development institutions’ best practices

    The state corporation’s management plans to prepare new strategy by late June. Upon preparing new strategy VEB will take into account foreign development institutions’ best practices, said M.Gorkov. Now VEB’s experts are studying best practices of many foreign development banks including Brazilian, Chinese, Indian RSA ones and IFC.

    They all have different business models. None of these development banks are alike, Gorkov said.

    According to him, it’s very important for us to find our own model. “We can’t use only Brazilian, Chinese and German best practices. For example, IFC is not limited to funding projects but it is also responsible for monitoring them following certain rules. We are most likely to come up with some sort of combination”, said Mr. Gorkov.

    Mr. Gorkov doesn’t think that VEB should become a commercial bank. “I don’t think that a bank for development should have a banking license, because none of development banks in the world have banking licenses except for Mexico’s bank”, said VEB’s Chairman.

  • VEB wants to meet investors from Asia and the US in April-May – First Deputy Chairman Tsekhomsky (RIA Novosti/Prime)

    MOSCOW, April 5 – RIA Novosti Prime Vnesheconombank intends to meet Asian investors in April, and after it publishes its annual financial statements under IFSR it also plans to hold meetings with investors from the US, VEB First Deputy Chairman Nikolai Tsekholmsky told journalists.

    “Yes, we plan. In late April I intend to visit Asian investors and then I’ll go to the US, after we publish our financial statements under IFRS, I think in the middle - end of May”, he answered a question if VEB planned to meet investors.

    “We are going to tell them about our tactics said Mr. Tsekhomsky.

    According VEB Chairman Sergei Gorkov, restructuring of the state corporation’s foreign debts is impossible because of the sanctions. “Minimum restructuring is possible, “basically we need to agree it upon with Americans explained Mr. Tsekhomsky.

    VEB Chairman Sergei Gorkov said they could meet investors only after publishing financial statements. “So we’ll meet investors after publishing them, we’ll tell them about our current status and what we are going to do. We have been told that our financial statements are fairly normal. By this time, we’ll already find out what we are supposed to do in the first place”, said Gorkov.

    “I think that in autumn we’ll organize a normal road show to tell investors about our new strategy. We hope that by this time there will be some changes in geopolitics and we’ll have a good window. Now we don’t have it because of the sanctions.

  • VEB seeks to get rid of a half of non-performing assets in the limited budget (Reuters)

    MOSCOW (Reuters) A half of Vnesheconombank’s assets are rated as low income ones. The Bank’s new management plans to formulate a development strategy of the state corporation by July. This strategy might provide for withdrawing from Ukrainian business and adding legal entities deposits and pension money as funding sources.

    Due to the state’s support in the form of placing the Finance Ministry’s deposits and 150 billion rubles from the budget, VEB met capital adequacy ratio included in covenants on foreign loans said Vnesheconombank Chairman Sergei Gorkov at the first news conference in his new status.

    Mr. Gorkov moved to VEB with his team from Sberbank in February and replaced former VEB Chairman Vladimir Dmitriev.

    “The patient is more alive than dead. We went through a very important period and fulfilled all covenants. Our capital adequacy ratio is more than 11 percent”, Mr Gorkov told journalist on Tuesday.

    VEB was hit by Western sanctions and was denied access to foreign capital markets, its balance is burdened with problem assets in Ukraine and with Olympic projects which inflict losses and eat up its capital.

    Mr. Gorkov said that a half of VEB’s assets do not generate sufficient incomes. As of September 30, 2014, VEB’s assets amounted to 4.3 trillion rubles out of which 2.5 trillion account for credits. The state corporation’s losses exceeded 133 billion rubles for nine months of the last year.

    “In late February we were confronted with liquidity problems, now we don’t have such problems”, Mr. Gorkov said adding that the state’s support this year will be limited to 150 billion rubles.

    The authorities estimated the total amount of the state’s support at 1.2 trillion rubles but this year the amount of support was limited to 150 billion rubles, a decision on converting the Central Bank’s deposit into the state corporation’s capital has not ben made so far. The deposit was made available to rehabilitate Globex and Svyaz-Bank.

    Four scenarios of the future of Gloex and Svyaz-Bank are under discussion now.

    “If necessary we are ready to additionally capitalize them. We’ll decide their future as we prepare the Bank’s strategy, we are discussing various options”, he said promising to formulate strategy for the Bank’s assets.

    VEB could abandon Prominvestbank and leave the Ukrainian market.

    “In the long term we’ll consider the possibility of leaving the Ukrainian market. Until now we haven’t held talks on this issue. But in terms of our strategy it might make sense for us to leave the market in the foreseeable future because Vnesheconombank is after all Russia’s development institution and in terms of strategy it shouldn’t have a commercial bank in Ukraine”, said Mr. Gorkov.

    As of September 30, the loan portfolio of VEB’s Ukrainian subsidiary was 23.4 billion rubles and its reserves were 6.5 billion rubles. As a whole the state corporation estimated its risks in Ukraine at 561 billion rubles. Reserved risks account for less than a third – 170 billion rubles


    Mr. Gorkov said that VEB would prepare a new business model of the Bank by June 30: it doesn’t provide for receiving a banking license but it may include new sources of funding the state corporation – the Central Bank stopped refinancing it against the security of non-market assets.

    “It is now clear that the old business model is not working. It was based on the one hand on raising redeemable market funds and on the other hand on placing them in non-performing assets”, he said.

    Mr. Gorkov believes that VEB’s sources of funding could be expanded by way of raising deposits of companies and pension money.

    “We are working with companies, raising deposits at the moment, it’s very important for us to have balanced funding, we want companies and state corporations to keep money in our Bank but we are not discussing any compulsory measures”, Gorkov said.

    Mr. Gorkov didn’t say how pension money would be used in the new business model.

    According to him the Olympic projects are not the worst at all.

    “They are sufficiently reserved; most projects are working. When they say that the Olympic projects are a bad hole for VEB, I can assure you that this is not the case”, he said.

    The Olympic projects account for 8.5 percent of VEB’s assets.

    Mr. Gorkov also said that he would downsize VEB’s personnel, the number of which is excessive.

    “Essentially, we’ll make it till the end of the year. By the mid-year, we’ll be able to develop a strategy, and I’m sure we’ll make it next year too.

  • Diagnosis was given to VEB. The state corporation was prescribed with new strategy (Kommersant)

    Sergei Gorkov, who became Chairman of Vnesheconombank (VEB) a little more than a month ago, made public his first conclusions about the condition of the bank for development: “more alive than dead”. He plans to change the existing business model based on raising expensive credits and sort out problem assets. By the way, experts do not believe that VEB will be able to resolve its problems without the state’s support.

    VEB’s new management have analyzed the situation with assets which it was left with after Vladimir Dmitriev’s resignation. “During the whole April we’ll analyze various aspects of VEB’s activity although as a whole it’s already clear: the old business model which is on the one hand is based on raising redeemable market funds and on the other hand on placing them in assets almost a half of which do not generate sufficient incomes is not working”, VEB Chairman Sergei Gorkov said at a news conference yesterday. A new model providing for raising cheaper credit facilities will be completely ready by June 30, although its main principles can be formulated a month earlier, he added.

    Now VEB’s specialists are analyzing international best practices of development institutions. “All of them have different business models. In Brazil funding is carried out from pension funds in China – from special funds because the task was to implement domestic infrastructure projects in Europe they have for the most part market funding but their conditions differ from ours and there are no sanctions there”, explained Mr. Gorkov. According to him, VEB will think of some combination of the existing models upon creating its own business model. And at the same, as long as foreign capital markets are closed we’ll focus on our domestic market, we do not rule out that we’ll also raise pension money, VEB will discuss this issue with the Government and the Central Bank, he added. As of today, VEB resolved its liquidity problems which VEB faced in late February. They were resolved with the assistance of the Finance Ministry. It provided VEB with a subsidy of 150 billion rubles – 74 billion rubles in the first quarter. As a result, VEB’s capital adequacy ratio exceeds 11% (a minimum established ratio is 10%). In Mr. Gorkov’s opinion, VEB won’t have liquidity problems till the end of the year.

    VEB will have to think over market sources of raising credit facilities - the absence of banking license denies it the opportunity to raise cheap household deposits or legal entities’ funds. According to Mr. Gorkov, there are good inflows of customers in such VEB’s subsidiaries as Svyaz-Bank and Globex and if necessary VEB can capitalize them additionally. But the subsidiaries’ destiny will be determined by the first half-year. VEB wouldn’t refuse legal entities’ funds but in order to raise them it needs to receive a banking license (now VEB has the right to raise deposits of those legal entities with which it has projects). In February of 2016, Governor of the Central Bank Elvira Nabiulina said in her interview to Reuters Agency that the Central Bank is discussing the possibility of transforming Vnesheconombank into a commercial bank. But VEB’s new management doesn’t like such option. “I don’t want VEB to receive banking license”, said Sergei Gorkov yesterday. In experts’ opinion it would be difficult for the Bank to implement measures made public by VEB’s management because the state corporation doesn’t have many possibilities to raise cheap credit facilities from the market. “VEB cannot raise natural entities’ deposits and doesn’t have settlement accounts of legal entities, whereas these are cheap sources for commercial banks”, says Fitch analyst Anton Lopatin. So, a main way of making credit facilities cheaper is to receive funding from the state at interest rates below the market rates”. Gazprombank’s analyst Andrei Klapko believes that VEB can receive cheap credit facilities by additionally capitalizing its subsidiaries which can raise funds of natural and legal entities. “Another option is to issue bonds”, Mr. Klapko goes on to say. It’s hard to imagine any other market options for reducing the cost of funding if a development institution doesn’t have a banking license.

  • New business model and values are to be developed for VEB (Vedomosti)

    Vedomosti, Margarita Papchenkova,Alexandra Prokopenko 05.04. 17:12

    “The patient is more alive than dead”, said VEB Chairman about the Bank’s condition.

    Vnesheconombank’s old business model is not working any longer – by June 30, VEB is to prepare a new business model, said new VEB Chairman Sergei Gorkov at a meeting with journalists.

    Former model does not fly any longer

    The former model does not fly, explains Mr. Gorkov, one thing runs counter to another - raising funds at market rates and funding low-income projects. We’ll have to change the structure of both assets and liabilities, he says.

    Now VEB is studying best practices of development banks in different countries – in Brazil, RSA, China as well as Germany. For example, in Brazil funding is carried out by way of using pension funds and in Germany the bank for development is mostly funded through using market funds but it operates in a different situation – the bank is not under sanctions like VEB, says Mr. Gorkov. In general, a bank for development’s objective is not to generate income but to invest in projects that are important for our country’s development even the ones with low profitability that is why funding should be adequate.

    Now they are studying several models, Mr. Gorkov didn’t disclose any details. One of the options is to increase the proportion of long cheap money in the amount of funding.

    VEB was active in placing Eurobonds – before the accession of Crimea the market conditions for Russian quasi-sovereign bonds were very favorable in the world but then sanctions made it impossible to prolong these Eurobonds and a sharp devaluation of the ruble increased VEB’s debt obligations manifold. If sanctions hadn’t been imposed VEB’s problems wouldn’t be so acute, says Mr. Gorkov.

    VEB can find long cheap money in pension funds. But a decision to abolish funded portion of pensions which is now under discussion in the Government could significantly limit VEB’s capabilities. If the funded element is abolished,VEB can go after money that has already been accumulated in the pension funds and in the Russian Pension Fund.

    Mr. Gorkov said that if they restructure the Bank and introduce a new business model VEB’s bonds could be very attractive for both for pension funds and other investors. Everything depends on how exactly the state would cover funds’ risks - if they have 100%- guarantees and the state’s subsidiary responsibility there will be no problems, says a topmanager of one of the largestnon-governmental pension funds. If this is not the case, we have to study VEB’s assets attentively: the fact that profit is not the state corporation’s top priority does not at all mean that its bonds are not reliable, the fund’s top manager thinks.

    More alive than dead

    “It should be stressed that the patient is more alive than dead”, said Mr. Gorkov about VEB’s condition. The most important task for the new team was to save VEB from breaching covenants on Eurobonds. We managed to do it including covenants on capital adequacy ratio and net assets.

    VEB doesn’t have any problems with capital – its capital adequacy ratio exceeds 11%. This is more than 10% agreed upon for VEB. After creating additional reserves on non-performing assets this indicator could go down but now it’s difficult to determine how many funds we will need, says Gorkov. We have yet to make a large-scale evaluation – maybe in some cases we’ll have to dismiss reserves, he said.

    VEB used to have problems with the Olympic and Ukrainian assets. The Olympic assets reservation accounts for 70% but the level of reserves against Ukrainian assets is very low as estimated by Fitch Ratings. The Olympic credits are not the worst – there are performing assets there. We are very worried about credits extended to companies operating in the timber industry and in the real estate market. VEB’s borrowers ran into problems because of the general situation in the Russian economy and this affects VEB too, explains Gorkov.

    VEB also resolved liquidity problems for 2016.In part, the Finance Ministry helped by providing 150 billion rubles (74 billion in the 1st quarter). Problems with covenants could have emerged in February but the Bank went through this period successfully, says Mr. Gorkov. According to him, there is no urgent need to sell liquid assets for example such as ADR Gazprom.Mr. Gorkov hasn’t said so far if VEB will be able to resolve liquidity problems in the future but he said that a new business model would be developed which is supposed to resolve liquidity problems too.

    VEB’s reforms will be also aimed at introducing a new corporate culture: So far, no specific objectives have been set before VEB’s employees, there were no key performance indicators (KPI). By July values will be developed for VEB. Mr. Gorkov said that upon developing new culture he will rely on his own business experience but at the same time it won't be a direct copying of Sberbank. VEB is a different institution and it has completely different objectives and tasks and its values will be different, explains Mr. Gorkov.

  • VEB announces restructuring (RBK Newspaper)

    Sergei Gorkov announced the preparation of a unique business model. VEB is to prepare a new business model by June 30, said VEB Chairman Sergei Gorkov. He noted that they would have to develop a unique business model on the basis of the world’s best practices. “We looked at different development banks, each of them is unique, for example the Brazilian development bank is funded by way of using pension funds, in China by way of using special funds, neither of them in its pure form will work in Russia, said Mr. Gorkov at a briefing on Tuesday, on April 5. Sergei Gorkov stressed that he doesn’t want the Bank to receive banking license because none of development banks in the world have banking licenses. He said that VEB’s current model was not working : “We used to have market funding at high interest rates but VEB has to invest in low income, long-term projects. It was an unbalanced model”. According to Mr. Gorkov, as a result, 50% of projects do not generate sufficient interest incomes. A significant part of non-performing assets is in the timber sector, Ilgiz Valitov was responsible for supervising it. He was arrested on Eurodon case. According to Gorkov, VEB will not face liquidity problems this year. Mr. Gorkov says that VEB has two subsidiaries which are important for it – VEB leasing and Prominvestbank (Ukraine). “As far as Prominvestbank is concerned, a decision was made to get its problem bank status abolished, we can also apply for a stabilization credit”, said Mr. Gorkov. According to him, in the long-term VEB would consider the possibility of leaving the Ukrainian market. As to VEB Leasing, Mr. Gorkov said that its head Vyacheslav Solovyov was undergoing a course of treatment in Switzerland. “The situation is under control. VEB Leasing is to make certain payments in the near future. The future of Svyaz-Bank and Globex has not been decided, four deferent scenarios are under discussion now”, said Mr. Gorkov.


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