Russian President Dmitry Medvedev Signs the Law that Provides for Banks to Obtain Subordinated Loans under the Scheme One to Three
Russian President Dmitry Medvedev signed the Federal Law “On Introducing Amendments to Federal Law dated October 13, 2008 № 173-FZ “On Additional Measures for Supporting the Financial System of the Russian Federation”.
A text of the law signed on July 17 was posted on the official site of the Russian President.
Russian Prime Minister V.V. Putin Holds a Working Meeting with Vnesheconombank Chairman V.A. Dmitriev
Shorthand record of the meeting’s beginning
V.V. Putin: Vladimir Alexandrovich, how is the Bank implementing its programs? How do you plan to use financial resources received?
V.A. Dmitriev: We are working very hard but in our opinion we are accomplishing all objectives set for us by our Supervisory Board. In the first place, I would like to express my gratitude for making a 100 billion ruble contribution to Vnesheconombank’s charter capital, so now our charter capital is more than 360 billion rubles. These are very large financial resources. First, they, above all, strengthen our base for financing key industries and, by the way, these are long-term and capital-intensive projects and second, our increased charter allowed us to meet all banking regulations.
I would like to stress that for the first half-year our balance-sheet profit was almost 6 billion rubles and this is about 60% of the last year’s balance-sheet profit. Therefore, we are developing at normal, sustainable rates. Our loan portfolio increased by 30% to 250 billion rubles for the first half-year. So, we are meeting a regulation that requires state banks to increase their loan portfolio by 2% monthly. And we have built quite a substantial potential for increasing our loan portfolio. At the next meeting of our Supervisory Board we are going to discuss new investment projects worth about 90 billion rubles, with the Bank’s participation share being 30 billion rubles. These are projects in key industrial sectors and infrastructure. By the way, we are going to discuss an infrastructure project in which Vnesheconombank participates as a creditor under the first concession agreement - this is section “15-58” of the Moscow-Saint Petersburg motorway.
Moreover, I would like to say that we are also ready to participate in implementing other major projects. Here, above all, I mean support for small and medium-sized enterprises. You know that last year the amount of our support for small and medium-sized enterprises was 9 billion rubles.
V.V. Putin: Now this amount should be increased to 30 billion rubles.
V.A. Dmitriev: We increased 9 billion rubles provided for by the old program to 12 billion rubles. And now we have received applications from 130 banks for just 30 billion rubles. And if we launch this program by extending credits to banks, the banks can refinance them through the Central Bank using these funds as collateral and we have an agreement with the Central Bank on this account, and this would allow us to produce a multiplier effect with regard to lending to small and medium-sized enterprises.
V.V. Putin: At the year’s start we appropriated financial resources to get our major companies’ assets from western financial institutions and transfer them to Vnesheconombank. How much money was spent for this purpose?
V.A. Dmitriev: In total, we spent 10 billion dollars. Using these funds, Rosneft early repaid a credit worth 577 billion dollars. And the financial resources made available by Vnesheconombank are being serviced in full and in due time. Of course, companies which received refinancing and are most likely to apply to Vnesheconombank to roll over their loans at the end of credit period welcomed our Supervisory Board’s decision to allow them to have their loans rolled over for a period of one year, provided that they meet all original conditions and conditions precedent as well as additional conditions.
V.V. Putin: Are you working with these companies to roll their loans over?
V.A. Dmitriev: Yes, we are. Basically, we worked out draft loan agreements but due to the fact that upon rolling these loans over we are guided by market-oriented rates, basic financial terms have to be agreed upon at a time of rolling loans over. I mean market oriented rates which will be applied to various borrowers depending on their risks on the part of financial institutions on the roll-over date.
V.V. Putin: It was a timely measure. We took it purposely under the conditions of the world financial crisis. But at the same time the Bank’s customers should understand that loans are not going to be rolled over indefinitely. They should be gradually moving to operating under normal conditions.
V.A. Dmitriev: I agree with you and I would like to tell you about western creditors positive attitude to the Russian Government’s support for refinancing Russian companies’ foreign debts, this action helped our companies to be in a position to service their foreign debts and now they are at an advanced stage of talks on restructuring their foreign debts beyond the framework of Law 173 (the Federal Law “On Additional Measures for Supporting the Financial System of the Russian Federation”).