Signing a Memorandum on Cooperation with the Federal Housing Construction Development Fund
State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ and the Federal Housing Construction Development Fund signed a Memorandum on Cooperation in order to confirm the possibility of Vnesheconombank’s participation in working out a scheme for financing the construction of engineering and social infrastructure facilities and in making capital investments in construction carried out as part of measures to promote housing construction in implementing projects of the Federal Housing Construction Development Fund.
On behalf of Vnesheconombank the Memorandum was signed by Vnesheconombank Chairman Vladimir Dmitriev, on behalf of the Federal Housing Construction Development Fund – by its General Director Alexandr Braverman.
Under the Memorandum signed, the parties intend to promote all-round cooperation and consider the possibility of their joint participation in implementing projects aimed at providing the Fund’s building estates with engineering and social infrastructure including pilot projects too.
The Memorandum provides for cooperation between the parties in the following fields: analyzing and developing schemes for implementing projects based on public private partnership mechanisms, gathering of macroeconomic, legal and financial and credit information that might influence the implementation of projects, assessment and comprehensive analysis of project risks.
The Memorandum’s implementation would promote the development of public private partnership mechanisms as an effective form of cooperation between the state and private sector in financing large-scale comprehensive housing development projects in the Russian Federation.
State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ was established subject to the Russian Federal Law “On the Bank for Development” by way of reorganizing Vnesheconombank of the USSR in 2007. The Bank for Development is a key instrument for pursuing the government economic policy aimed at removing economic growth infrastructure restrictions, boosting natural resources utilization efficiency, developing high-technology industries, unlocking innovation and production potential of small and medium-sized enterprises, providing support for industrial exports and services.
The Federal Housing Construction Development Fund was established subject to Federal Law dated July 24, 2008 №161-FZ. The Fund’s activity is designed to promote the development of housing construction and other forms of territory development as well as the development of engineering infrastructure facilities (including communications infrastructure facilities) social infrastructure facilities, construction materials production facilities, housing building structures. The Fund’s activity is also aimed at providing assistance in building industrial parks, technoparks, and business incubators in order to create a favorable environment for man and society including safe and favorable living conditions for all categories of citizens.
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Contact person: Ekaterina Karasina
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- Main Financial Indicators of Vnesheconombank’s Performance
Total assets as of late 2009 were 1 868.5 billion rubles (+15.8% as compared to early 2009).
The amount of the Bank’s own funds (own capital) as of 01.01.2010 was 340.1 billion rubles (+41.4% as compared to 01.01.2009).
The Bank’s balance sheet profit was 30.96 billion rubles for 2009 (more than 3.3 times more than the profit of 9.35 billion rubles for 2008).
The amount of loan portfolio (credits extended to non-credit institutions) as of late 2009 was 706.5 billion rubles (620.9 billion rubles as of early 2009).
The amount of securities portfolio[i] as of 01.01.2010 was 375.8 billion rubles (as of 01.01.2009 – 293.0 billion rubles).
The amount of investments in shares (stakes in charter capital) of companies as of 01.01.2010 was 149.7 billion rubles (5.5 times more than 27.4 billion rubles as of early 2009).
The total amount of borrowed funds raised as of 01.01.2010 from banks[ii] and through placing bonds issued by the Bank was 228.8 billion rubles:
- 60.5 billion rubles were raised through placing currency-denominated bonds issued by Vnesheconombank in June of 2009;
- 168.3 billion rubles are raised interbank credits.
Vnesheconombank’s Credit-Investment and Guarantee Activity as a Bank for Development (subject to Federal Law “On the Bank for Development” dated May 17, 2007 №82-FZ)
During 2009, the Bank extended credits to the non-financial sector in the amount of 122.8 billion rubles.
Out of them 106.8 billion rubles (87%) were committed for implementing investment projects, other credits were largely extended to finance Russian exporters’ day-to-day activities. The bulk of the credits extended accounts for infrastructure sectors (they are mainly intended for implementing investment projects to develop transport, energy infrastructure as well as sports and tourism infrastructure). A significant amount of credits was made available to companies operating in the agro-industrial complex, aircraft construction sector and defense industrial complex.
As of 01.01.2010 the total amount of credits extended by Vnesheconombank as a bank for development was 281.6[iii] billion rubles (almost 1.5 times more than credits worth 191.2 billion rubles extended as of early 2009).
Lending to investment projects:
As of late 2009, Vnesheconombank acting as a creditor participated in implementing 78 investment projects (the amount of investment credits portfolio was 230.1 billion rubles as opposed to 129.9 billion rubles as of 01.01.2009). In 2009, the Bank got down to financing 24 new projects.
Credits extended for supporting Russian exports and for other purposes:
The Bank provides financial support for Russian exporters and other companies of strategic importance for the Russian economy. In this respect, during 2009, the Bank extended credits in the total amount of 16.4 billion rubles. The funds were committed for pre-export financing (mostly to defense industrial complex enterprises), the Bank also extended export credits (to promote Russian products to foreign markets).
Providing support for small and medium-sized enterprises:
Another important line of Vnesheconombank’s activities is to implement the program of providing support for small and medium-sized enterprises. The program is being carried out together with the Russian Development Bank, VEB’s subsidiary bank. In 2009, the amount of financial support provided by Vnesheconombank to SMEs was 40.0 billion rubles. Taking a credit extended to the Russian Development Bank in 2008 into account, the total amount of funds committed by Vnesheconombank for the said purposes reached 49.0 billion rubles by the end of 2009.
Moreover, in order to support small and medium-sized enterprises Vnesheconombank expands cooperation with foreign and international financial institutions. In 2009, Vnesheconombank signed a number of agreements (with KfW, the European Bank for Reconstruction and Development (EBRD) and with the Italian Banking Group – Intesa Sanpaolo. The agreements provide for the said financial institutions to extend credits to Russian banks to provide support for small and medium-sized enterprises against Vnesheconombank’s guarantees.
The Bank is responsible for providing guarantee support for enterprises and companies which are for the most part are exporters of Russian industrial products and services.
During 2009, the Bank extended 121 guarantees for a total amount of 34.1 billion rubles. The guarantee portfolio as of 01.01.2010 increased to 79.5 billion rubles (as opposed to 56.9 billion rubles as of 01.01.2009).
Efforts to support the Russian financial system
Since the 4th quarter of 2008, Vnesheconombank has been an active participant in implementing crisis management measures set forth by law and decisions adopted at the national level.
Refinancing of companies’ debts to foreign creditors:
As part of measures set forth by article 1 of Federal Law dated October 13, 2008 №173-FZ “On Additional Measures for Supporting the Financial System of the Russian Federation (herein after referred to as Law 173-FZ), since the 4th quarter of 2008 the Bank has extended credits to 10 organizations for an amount of 11.6 billion US dollars. During 2009 the indebtedness under the said credits diminished by a total amount of 3.9 billion US dollars. As of 01.01.2010 the portfolio of the said credits was 7.8 billion US dollars.
Extending of subordinated loans:
Subject to articles 6 and 6.1 of Law № 173-FZ Vnesheconombank extended subordinated loans to 17 Russian banks for a total amount of 404.0 billion rubles (in 2009 – to 15 banks for an amount of 179.0 billion rubles). After considering Vnesheconombank’s report on extending subordinated loans as part of measures provided for by the said Law, the program was declared completed by the Supervisory Board.
Diversification of National Wealth Fund monetary resources investments and stabilization of the stock market:
Monetary resources of the National Wealth Fund in the amount of 175 billion rubles which were earlier placed on deposit with Vnesheconombank for them to be invested in shares and bonds of Russian corporate issuers were returned in full with interest being paid.
Vnesheconombank activity as an agent for the Russian Government in extending and using government guarantees of the Russian Federation subject to Resolutions of the Russian Government dated 14.02.2009 № 103 and № 104.
In 2009, 158 applications from 118 organizations – claimants to obtaining government guarantees of the Russian Federation – were accepted for consideration, 99 approvals for extending government guarantees of the Russian Federation were given for a total amount of 176.5 billion rubles. Formal guarantees of the Russian Federation issued by the Russian Finance Ministry were registered by Vnesheconombank in the analytical record.
Trust management of pension savings funds:
The market value of the state trust management company’s extended investment portfolio was 480.08 billion rubles as of late 2009, investment yield was 9.52%, with inflation rate being 8.8%. So, the main objective of preserving pension savings funds transferred to Vnesheconombank for trust management was achieved.
Financial indicators of Vnesheconombank Group’s performance subject to financial statements made in accordance with international standards:
Total assets were 1 939.21 billion rubles by the end of 2009 (+17.90% as compared to early 2009).
Profit subject to the profit and loss statement for 2009 was 38.32 billion rubles.
The said profit for 2009 was primarily gained from:
incomes from transactions with securities in the amount of 70.46 billion rubles including transactions with investment securities available for sale in the amount of 42.94 billion rubles as well as incomes from transactions with trading securities and other financial assets re-evaluated fairly through profit or loss in the amount of 27.52 billion rubles;
net interest incomes in the amount of 51.94 billion rubles (+132.39% as compared to 22.35 billion rubles for 2008, largely through increased amount of credits extended).
Net commission incomes were 7.19 billion rubles (+341.10% as compared with incomes of 1.63 billion rubles for 2008 mainly through increased commission incomes for extending guarantees and letters of credit).
The said financial result was achieved with due regard to expenses on forming credit depreciation reserves by Vnesheconombank Group in the amount of 114.84 billion rubles.
Vnesheconombank Group’s capital subject to the report on the financial position as of late 2009 was 455.24 billion rubles (+111.44% as compared to 215.30 billion rubles as of early 2009).
Vnesheconombank Group’s capital was increased by 239.94 billion rubles for 2009 largely through:
the Government’s contributions to Vnesheconombank’s charter capital in the total amount of 121.0 billion rubles in June and December of 2009;
Positive unrealized re-evaluation of investment securities available for sale included in the capital in the amount of 78.58 billion rubles;
Vnesheconombank Group’s profit for 2009 in the amount of 38.32 billion rubles.
Vnesheconombank Group’s capital is taken from an appropriate line of the report on the financial position of Vnesheconombank Group’s consolidated financial statements made in accordance with the International Accounting Standards.
[i] Debt obligations (including bills of exchange) and shares (minus investments in shares of investment nature).
[ii] Borrowed funds category does not include paid resources which are time deposits of banks (including Bank of Russia funds placed into Vnesheconombank’s time deposit accounts to implement measures for supporting the Russian financial system) as well as balances of LORO accounts.
[iii] The portfolio of credits extended by Vnesheconombank as a bank for development to non-credit institutions, which does not include credits extended through using Bank of Russia funds as part of implementing crisis management measures (including the measures provided for by article 1 of Law 173-FZ) and credits extended through using monetary resources of the National Wealth Fund as well as Rosneft’s credit extended through using the China State Development Bank’s funds.