VEB.RF and the Yaroslavl Region agreed to develop the Golden Ring Resort. The cooperation agreement was signed on the sidelines of the St. Petersburg International Economic Forum by CEO of the Resort Yaroslav Voskresensky and Governor of the Yaroslavl Region Dmitry Mironov. The signing ceremony took place in the presence of Igor Shuvalov, VEB.RF Chairman, and Aleksander Kliachin, the founder of Azimut Hotels network being the project operator.
Specifically, the parties agreed to be jointly involved in the construction of a fitness centre on the territory of the resort under the investment programme of the Yaroslavl Region. The total project value will be RUB250mn, with VEB.RF being the major investor. Today VEB.RF is preparing a plan of historic part of Pereslavl-Zalessky. The Head of the Region offered to scale up the process stressing the benefits for the historic city which is an integral and important part of the Russian Golden Ring.
“Signing this investment agreement further fosters strategic cooperation between the Yaroslavl Region and VEB.RF. I would like to express my gratitude to VEB.RF for going ahead with upgrading the tourism and recreation centre which is becoming a local landmark of Pereslavl-Zalessky. This will allow us to take tourist proposals to a qualitatively new level. VEB development institutions actively support the development of recreation zones and tourist attractions in the Yaroslavl Region,” said the Governor of the Yaroslavl Region Dmitry Mironov.
“One of strategic and important priority tasks of VEB.RF as a national development institution is developing the domestic tourism market. We understand that the Golden Ring is comparable to other tourist locations in the world both in terms of sightliness and historic value. However, the resort needs upgrading to enhance the comfort level and stimulate the tourist interest based on the highest performance criteria ensuring convenient modern services and a high security level,” Alexander Tarabrin said.
“Developing the Golden Ring Resort, creating new urban spaces and infrastructure are our absolute priorities. We are currently preparing a master plan to develop the hotel’s territory including new services, and recreation and entertainment zones for tourists and guests. The hotel’s territory and facilities allow us to hold various high-level events. The hotel’s development will create new jobs for the local residents and increase tax revenues to the regional budget,” CEO of the Golden Ring Resort Yaroslav Voskresensky said.
VEB.RF, Sber and Partner Banks to Provide Financing for Kingisepp Ammonia and Carbamide Facility Construction
- Overall, VEB.RF, Sber and partner banks will provide c. RUB100bn to EuroChem Northwest-2;
- At the peak of construction, about 8,000 people will be working at the site;
- The facility is under construction, production is scheduled to start in 2023.
EuroChem Northwest-2, VEB.RF, Sber and partner banks (VTB, Gazprombank and Otkritie Bank) signed a complete set of loan and collateral documents to build phase two of the Kingisepp Ammonia and Carbamide Facility.
The signing ceremony took place during the St. Petersburg International Economic Forum at VEB.RF’s site in the presence of Member of the Strategy Committee, Chairman of the Nomination, Remuneration and Corporate Governance Committee and Non-Executive Director of EuroChem Northwest-2 Andrey Melnichenko, VEB.RF Chairman Igor Shuvalov and a representative of EPC, a subcontractor of Maire Tecnimont.
A syndicated loan arranged by VEB.RF and Sber will amount to c. RUB100bn net of VEB.RF’s optional tranche to cover interest payments and to increase the project budget totalling RUB123bn, exclusive of VAT. The first tranche of the syndicated loan amounting to RUB27bn will be provided in the near future.
The production facility with an annual capacity of 1.1 million tonnes of ammonia and 1.4 million tonnes of carbamide will be launched in 2023. This is the second phase of the large-scale industrial project. The first phase involved putting into operation an ammonia production facility with a capacity of 1 million tonnes per year. The products are exported to more than 10 countries.
Nikolay Tsekhomsky, First Deputy Chairman and Member of the Management Board, VEB.RF:
“Export-oriented projects are one of VEB.RF’s strategic areas. The new VEB.RF’s strategy views exports as one of strategic priorities. We focus on the promotion of Russian goods and services in entering new markets. Financing gas-to-chemicals projects is an important task for us. This is about considerable capital investment. It is necessary to provide long term money for borrowers.”
Vladimir Rashevsky, CEO, MCC EuroChem:
“Financing of construction by EuroChem of phase two of the Ammonia Facility in Kingisepp, Leningrad Region, started by VEB.RF, Sber, VTB, Gazprombank and Otkritie Bank is the biggest project financing ever in the history of our company. It is noteworthy that this is the first such project implemented by EuroChem with Russian banks, and debt-to-capital ratio is 80% to 20% for the first time. Financing the construction of phase 2 of EuroChem Northwest-2 facility will bring added impetus to further development of our facility cluster in Kingisepp formed after the operational commissioning of EuroChem Northwest-1 two years ago.”
Andrey Shemetov, Senior Vice-Pressident and Head of SberCIB:
“We have been cooperating with EuroChem in various areas and recognise a thorough elaboration of all its initiatives. Sber as an arranger of this syndicated financial transaction highly significant for the Russian market is pleased to provide financial backing to such a large-scale project. Construction of a modern advanced production site of a world class will substantially strengthen Russia’s and EuroChem’s positions in the global ammonia and carbamide market.”
Dmitry Snesar, Head of Client Coverage and Senior Vice President, VTB Bank:
“VTB and EuroChem have a long-term and successful relationship. We are very pleased to support the construction of phase 2 of a modern ammonia and carbamide facility. Such advanced facilities produce added-value gas products and increase Russia’s export potential, create new jobs and increase budget revenues, thus having a significant role in the development of the region and contributing to the local residents’ well-being. In addition, for us as a creditor is very important that the company uses advanced technologies that ensure efficient processing of initial products and resource cycling.”
Aleksey Belous, Deputy Chairman, Gazprombank:
“For several years, Gazprombank has been involved in large-scale investment projects in cooperation with leading producers of mineral fertilisers. This sector is among the few global economy segments demonstrating sustainable increase in production and consumption volumes. Implementation of the EuroChem Northwest-2 project will not only enhance the company’s exports but also contribute to the development of this whole sector of Russia’s chemical industry. Tightly scheduled commissioning of a large-scale production facility requires consolidated efforts of many parties, and we are pleased to be one of the financial partners selected by EuroChem to implement such a high-technology project.”
Viktor Nikolaev, Deputy President & Chairman of the Management Board, Otkritie Bank:
“Otkritie Bank pays particular attention to financing projects with high export potential. Cooperation with EuroChem is fully in line with our development strategy, and we are pleased to witness its further strengthening. The EuroChem Northwest-2 project will create new ammonia and carbamide production facilities, thus facilitating the growth of non-resource exports and creating new jobs in Kingisepp. I’d like to note close, effective cooperation between VEB.RF and commercial creditors resulting in an optimal investment solution involving several measures of government support.
The project will ensure the annual growth of non-resource exports of USD0.4bn. At the peak of construction, about 8,000 people will be working at the site. The project will create 354 high-technology, competitively paid jobs.
Russia to Start Building Modern University Campuses Before the End of 2022
At least three projects to build world-class campuses will be started in Russia before 1 December 2022. The project launch was agreed by participants in the strategic session of the Ministry of Science and Higher Education focused on creating and developing modern university campuses in Russia.
Before 15 June 2021, the Ministry of Science and Higher Education is to establish the selection criteria for university campus projects, and before mid-August - to select at least five most mature projects. Construction will be based on the inter-university model, and the new campuses will meet strategic development goals of the respective universities and regions.
“We intend to achieve this goal together with regional authorities relying on the best global solutions and existing campus models. It is very important to develop an architectural concept for each campus to make sure it blends in with urban environment. In addition, it is necessary to consider territorial innovative capacity and specifics and ensure qualitative growth of Russia’s economy through a synergy between research centres and academic institutions,” Deputy Prime-Minister of the Russian Government Dmitry Chernyshenko said at the end of the strategic session.
The campus building projects will be based on Public-Private Partnership mechanisms. The government contribution will be no more than 60%. The remaining financing will be provided by private investors including raised funds.
The projects will be initiated by regions. Involving private investors is a compulsory condition, given that the projects will be based on their financial models. Campus management will also be conducted by private investors. Investors’ future income will comprise campus accommodation fee for students and university teachers as well as fees for commercial, social and housekeeping services.
VEB.RF is actively involved in pre-project work including joint discussions with customers and potential investors.
“We would like to provide project implementation tools and offer a helping hand. We have extensive expertise in Public-Private Partnership projects. But we cannot build a modern campus without a private investor,” said VEB.RF Chairman Igor Shuvalov.
Resolution of the President of the Russian Federation No. 419-pr of 17 March 2021:
“To create in 2022-2030 a network of modern university campuses in specific Russian regions designated as priority and geostrategic border territories of the Russian Federation*, and launch at least three campus building projects before 1 December 2022 involving major repairs and reconstruction of the existing academic institutions.”
VEB.RF’s Green Finance Achievements Are Presented at Nevsky Ecological Congress
VEB.RF’s First Deputy Chairman and Member of the Board Aleksey Miroshnichenko presented on Thursday the outcomes of VEB.RF’s one-and-a-half-year efforts in sustainable finance at the 9th Nevsky International Ecological Congress held on 28-29 May at the Tavrichesky Palace. He introduced a new version of green finance system developed by a task force chaired by the Ministry of Economic Development to develop the green finance market in Russia. The main changes in the recent months relate to the division of the taxonomy for environmental projects into green and adaptational parts. The second part includes projects still not eligible to be recognised as green in accordance with international standards but having substantial environmental potential and thus being subject to support.
“We tried to make the green finance system easy to understand by the Russian and global community and win their support,” Aleksey Miroshnichenko said. “The development process was unprecedentedly transparent for such type of documents: we received more than 600 comments via our public email and a detailed assessment by representatives of global sustainability organisations (CBI, ICMA, IDFC). We expect that the Russian system will be internationally recognised along with the European taxonomy and methodologies developed by ASEAN and other countries and regions. Anyway, we will use our best endeavours because foreign markets demonstrate high demand for green instruments, and Russian companies should be able to meet such demand having obtained all the required national certifications.”
Aleksey Miroshnichenko added that a pillar of the system are measures of government support for the green debt market being developed by the Ministry of Economic Development and other ministries. “One of the objectives of the taxonomy is to specify areas eligible for government support thus contributing significantly to the development of Russia’s economy,” he said. “Division into green and adaptational parts shows that our first priority is to take into account the real needs of our country and to gradually modernise outdated facilities without jeopardising jobs and regional budgets.”
The conference participants included Deputy Minister of Economic Development Ilya Torosov, Chairman of the Federation Council Committee for Agricultural and Food Policy and Environmental Management Aleksei Mayorov, First Deputy Minister of Natural Resources and Environment of the Russian Federation Konstantin Tsyganov, First Deputy Governor of the Bank of Russia Sergei Shvetsov, CEO of Climate Bond Initiative Sean Kidney and others. “Today the world is facing the global environmental crisis and we should prevent the catastrophe,” Mr Kidney said. “The frequency of fires in Siberia has increased, wheat growing areas are shifting, and the heat above 30 degrees lasts for weeks. All these factors motivate us to reach political decisions.”
“We won’t be able to fundamentally change the situation unless every citizen of the Earth is involved in the ESG process,” Sergei Shvetsov said. “The climate and atmosphere are the only things we have in common. The governments are incapable of introducing the required changes until the behavioural patterns are changed. Our task is to provide tools so that people choose to materially support improvements to the environment. Business should also boost the ESG investment. The structure of Russia’s economy doesn’t meet environmental needs yet. Business should undergo a radical transformation which requires substantial funding.”
VEB.RF published its interim condensed consolidated financial statements prepared in accordance with IFRS as at 31 March 2021.
“We are pleased to report a net profit of RUB 22.7 bn for the VEB.RF Group for the first quarter of 2021 in accordance with IFRS. At the end of the first three months we observe the growth in the loan portfolio, net interest income and fee and commission income.
Support for business during the pandemics remains high on our agenda. Guarantees issued by VEB.RF against interest-free and low-interest loans for commercial banks enabled companies to retain jobs and resume operations. We can see the results of our efforts. We note the general trend for improved performance of our borrowers.
With support from the Russian Government, VEB.RF is vigorously building up its new portfolio of high-quality projects in infrastructure, industry, exports and urban development. Liquidity and capital adequacy ratios allow VEB.RF to be actively involved in priority business areas,” VEB.RF Chief Financial Officer Andrey Moskovskikh said.
Key financial results of the VEB.RF Group in Q1 2021:
- In the first quarter of 2021, the VEB.RF Group made a profit of RUB 22.7 bn against a loss of RUB 22.5 bn as compared to the corresponding period of last year.
The positive financial result was driven by:
- net operating income of RUB 33.9 bn;
- reversal of allowance for expected credit losses of RUB 16.7 bn. In the corresponding period in 2020, the allowance for ECL was charged in the amount of RUB 10.5 bn;
- the decrease in non-interest expense from RUB 51.7 bn in Q1 2020 to RUB 26.0 bn;
- Operating income (net of allowances) was RUB 33.9 bn in Q1 2021, or RUB 9.2 bn less than in Q1 2020.
- The decrease in operating income was attributable to the decrease in non-interest income to RUB 13.0 bn against RUB 33.0 bn in Q1 2020. The dynamics is related, among other things, to the loss on initial recognition of guarantees issued in Q1 2021 on preferential terms as part of the new state COVID-19 rescue scheme.
- Net interest income grew to RUB 3.0 bn in the reporting period (Q1 2020: RUB 0.7 bn) largely as a result of the decrease in interest expense on amounts due to banks, the Government of the Russian Federation and the Bank of Russia due to reduced liabilities and interest expense on debt securities issued because of lower interest rates in debt markets.
- Net fee and commission income also went up from RUB 2.3 bn in Q1 2020 to RUB 9.2 bn in Q1 2021 due to the amortisation of loss on initial recognition of guarantees issued as part of the state anti-crisis programme.
- The VEB.RF Group’s assets decreased by 4.4% (–RUB 150.9 bn) against the beginning of the year to RUB 3,255.2 bn as at 31 March 2021. The amounts of reverse repurchase agreements with non-banking credit institutions for up to 90 days went down, brought about by the decrease in idle cash balances largely due to the increase in the loan and leasing portfolios and settlement of VEB.RF’s obligations as at 31 March 2021.
- As compared to the beginning of 2021, the loan portfolio (net of provision for impairment) increased by 5.8% (+RUB 67.4 bn) to RUB 1,236.5 bn. The leasing portfolio grew by 11.3% (+RUB 19.9 bn) to RUB 195.7 bn. In total, the loan and leasing portfolios account for 44.0% of the Group’s total assets.
- The loans granted by VEB.RF in Q1 2021 totalled RUB 89.6 bn. Investment priority sectors were industry, infrastructure and urban economy as well as export support.
- Allowance for expected credit losses was reversed in the amount of RUB 16.7 bn in Q1 2021. The allowance for financial guarantees was reversed in the total amount of RUB 8.8 bn largely due to the decrease in guarantees issued under the state support programme for business during the pandemics. The loan loss provision was reversed for RUB 4.4 bn.
- The Group’s liabilities decreased by 6.7% (–RUB 181.1 bn) in Q1 2021 to RUB 2,536.0 bn as at 31 March 2021. This dynamics was attributable to the decrease in amounts due to banks by 22.9% (–RUB 136.3 bn) and to the Government of the Russian Federation and the Bank of Russia by 5.5% (–RUB 34.0 bn).
- The Group’s equity went up by RUB 30.2 bn (+4.4%) in Q1 2021 to RUB 719.2 bn as at 31 March 2021. The equity growth was primarily driven by the profit in Q1 2021 and the increase in gains from investment financial assets at fair value through other comprehensive income. There were no changes in the authorised and additional paid-in capital.
- VEB.RF’s capital adequacy ratio in accordance with RAS was 17.0% as at 01 April 2021 (17.0% as at 01 January 2021).