On Agreement between Vnesheconombank and the Krasnoyarsk Territory

27 february 2009 года

Today, on February 27, 2009 State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ and the Krasnoyarsk Territory Administration entered into an Agreement on Cooperation.

On behalf of Vnesheconombank the Agreement was signed by Vnesheconombank Chairman Vladimir Dmitriev, on behalf of the Krasnoyarsk Territory – by Governor Alexandr Khloponin and First Deputy Governor – Chairman of the Government Edkham Akbulatov.

This Agreement aims to establish strategic partnership, promote long-term effective and mutually beneficial cooperation of the two parties in innovation activity.

Under the Agreement the two parties intend to cooperate in raising funds to finance investment projects planned to be implemented in the Krasnoyarsk Territory. A list of projects is to be made annually based on the Concept of the region’s socio-economic development and main lines of Vnesheconombank’s acivities.

The parties give top priority to projects aimed at removing economic growth infrastructure restrictions, boosting power engineering, transport and municipal housing and communal sector infrastructure, more efficient utilization of natural resources, environmental protection, improving ecological situation and boosting innovations.

The Agreement also provides for Vnesheconombankl to help build up support for small and medium-sized business by strengthening the mechanism for micro-financing by way of lending regional credit institutions and legal entities that provide support for small and medium-sized business.

The implementation of this Agreement would help address top-priority objectives of the region’s socio-economic development and enhancing its economic and industrial potential.


Origin: Press Office of Vnesheconombank
Contact person: Ekaterina Karasina
Phone: +7 (495) 608-46-93, Fax: +7 (499) 975-21-34
E-mail: press@veb.ru


Vnesheconombank Deputy Chairman Mikhail Kopeikin’s Interview to Newspaper Vremya Novostei

25 february 2009 года

Vremya Novostei
№31 February 25, 2009



“Vnesheconombank’s objective is to make credits affordable”

Vnesheconombank Deputy Chairman Mikhail Kopeikin talks about the program to support small and medium-sized business

- Mikhail Yurjevich, Vnesheconombank is usually seen as an institution related to major investment projects, interstate economic agreements and recently it has transformed into an anti-crisis instrument for supporting the domestic economy as a whole. Nevrtheless, one of your Bank’s lines of activity aimed at supporting small and medium-sized business is included in the list of the Bank’s top priorities. What’s the reason for such meticulous attention to small and medium-sized business?

- When our Bank was being established as a development institution it was meant for implementing major investment projects, above all, infrastructure projects. But as the global financial crisis escalated, the government realized that Vnesheconombank could become an important anti-crisis financial institution.  Significant state funds were channeled through it to support the banking system and companies operating in the real sector of the economy as well as to help them refinance their debts to foreign creditors.

The Bank’s support for small and medium-sized business is included in its top priorities and this line of activity is to be undertaken both under crisis and non-crisis conditions. Technically, support for small and medium business is provided through Vnesheconombank’s wholly owned subsidiary, the Russian Development Bank (RDB). Only in the year 2008, 9 billion rubles in credits were extended through the Russian Development Bank. Due to the changes in our financial system we acquired such new subsidiaries as Svyaz-Bank and Bank Globex.  Last year these banks as well as the National Trade Bank extended credits in the total amount of 20 billion rubles to small and medium-sized business. In 2009, 30 billion rubles in state funds are expected to be allocated (this is the government’s decision) to support small business through the listed financial institutions. As a result, the total amount of support for small businesses provided through the listed subsidiary banks would be in excess of 50 billion rubles

- Are 30 billion rubles earmarked by the government to provide support for small and medium-sized business a big sum of money?

- Of course not. In this case, we mean the money intended for helping this sector just now, at this particular moment against the background of long-term programs to support small and medium-sized business that have already been launched by the government as well as projects implemented through Sberbank (the Russian Savings Bank) and VTB. But if we mean the needs of small and medium-sized business, we, of course, should increase this figure by dozens of times.

- What credits are in high demand among small businesses?

- A credit of about 30 million rubles. This credit amount is pretty big for this economic sector.

- But on the other hand, 30 billion rubles is a great amount if we are supposed to divide it into a lot of relatively small credits. Will Vnesheconombank be technically able to secure such a large flow of small credits in different regions or is it going to cooperate with other banks to this end?

- This is targeted money. A special state control is to be exercised over it. As far as this money movement is concerned, 30 billion rubles will not be recorded in Vnesheconombank’s accounts. They will be transferred to the Russian Development Bank and will be also partially used for the Bank’s additional capitalization. Then criteria are to be established according to which the Russian Development Bank will extend credits to regional banks at an interest rate of 12% and these banks will be responsible for channeling these funds to small and medium-sized businesses. As a result, credits to small and medium-sized businesses may be extended at an interest rate of 16-17% and in the current situation this is a very low rate because commercial banks lend at a rate that is almost1.5 times higher. In the case that our partner regional bank has a small margin of about 4% businesses will have a chance to obtain a credit that is a lot less expensive than a standard commercial credit.

- This means that the Russian Development Bank will rely on regional banks?

- As it is known, the Russian Development Bank does not provide direct assistance to small and medium-sized businesses, it provides this assistance to regional banks. Not long ago on February 5, the procedure for providing support for small and medium-sized businesses was changed at a meeting of Vnesheconombank’s Supervisory Board. Out of 30 billion rubles to be made available, a limit is to set for each region. And then a tender among contender banks in accordance to specially worked out requirements is to be declared. The tender winners will be responsible for financing small businesses. Having extended a certain amount of money to a small business, regional banks can apply for refinancing against this amount of money under a pledge of receivables at the Russian Development Bank. After that, the Russian Development Bank would extend new credits to them. In its turn, the Russian Development Bank would be refinanced at the Central Bank the Russian. Here we’ve got a revolving credit facility scheme. Roughly speaking, regional banks will have money available on a permanent basis.

- The second important thing is that the Russian Development Bank will finance such infrastructure organizations as leasing companies, micro-financial institutions, venture funds, factoring services companies.

- This new procedure is the latest development in providing support for small business?

- The procedure was worked out together with the Ministry for Economic Development. While working out this procedure we placed much emphasis on international business experience as it proved to be very effective. We secure targeted funding to regional banks at low interest rates providing small businesses with available money.

- Do you think that the scheme is viable?

This scheme has been just approved and nobody has used it. You should operate it for some time to say if it is viable or not. But I for one like it very much. I think that it is easy to operate and understand, it’s transparent and makes it possible to refinance this kind of credits against a pledge of receivables. And regions are given a chance to reduce social tensions by retaining banks, small businesses and jobs.

- What will amounts of limits set for constituent entities depend on?

- They will depend on the socio-economic situation in a specific region, its employment rate, the number of small and medium-sized businesses operating on its territory, commercial banks’ standing, local authorities’ negative or positive attitudes to small business.

- Are remaining regions going to receive any support at all?

- There is no doubt that support for small business is aimed at reducing social tensions. So the Ministry for Economic Development and our Bank should analyze sore spots: we have to identify regions where small business feels confident and gains momentum as well as those where small business can provide jobs to redundant workers. Moreover, I take part in meetings of the Governmental Commission on Sustainable Economic Development where the state of our industrial sector, specifically, large system-forming enterprises is monitored on a permanent basis. So we are in a position to be in control of the current situation in the regions and set appropriate credit limits for individual regions.

- What businesses will receive financial assistance in the first place?

- These are going to be small and medium-sized businesses operating in the real sector of the economy: enterprises operating in innovation, transport and industrial production sectors. And only secondarily we are going to lend service and trade sectors. By the way, this Vnesheconombank’s approach differs significantly from that of commercial banks, which focus on financing service and trade sectors in order to generate fast profits.

- The scheme is easy to understand but it’s rather lengthy, it will take quite a while for the money to reach businesses. How soon are businessmen going to get the money?

- Regional banks have virtually put together their demand and supply packages. They already know what sums of money they can apply for to obtain these credits through the Russian Development Bank. As soon as we receive money from the Finance Ministry, regions will receive it right away.

- At a meeting of the Government Presidium Prime Minister Vladimir Putin demanded that all the money earmarked for small businesses should be fully used by the year-end.

- You can hardly spend the money that has not been made available. As far as we are concerned, we are quite ready.

- Are you sure that all the funds will be needed?

- Yes, I think they will be needed pretty soon.

- There is no doubt that the crisis hit small and medium sized businesses. Are they in a more difficult situation today than others or may be life is easier for them?

- On the one hand, it’s easier for them because small businesses are the most flexible and viable. They are sensitive to market challenges and more responsive to changes in market conditions. But on the other hand, it’s more difficult for them to receive loan funds. Moreover, in the times of crisis numerous administrative barriers are on the rise and they are justified by increased risks.

- To what extent, do you think, this state financial support will be efficient?

- It will be pretty good if in the crisis situation small business’ contribution does not diminish and if it diminishes by a fraction of percent it won’t be bad. And if it increases, we can say that it is a victory. By the way, our country has to do a lot to increase small business’ contribution to GDP. By various estimates in our country it accounts for 15% of GDP. In industrialized countries this indicator amounts to more than 70 %. And we should use the crisis to diversify our economy and expand small and medium-sized business sphere of influence.

- Under what conditions should state credits become less expensive than they are today?

- I wouldn’t say that current state credit resources are expensive they are already pretty inexpensive. Just consider that the Central Bank’s rate of refinancing is 13% and inflation rate is in excess of 13%. When banks receive money at interest rates of 12-13%, it means that the state is effectively subsidizing them. If credit resources are to become less expensive, our economy should stabilize, our national currency should recover, inflation should drop and as a result the Central Bank would reduce rates of refinancing.

- I would like to mention that the most crucial thing for us as the Bank for Development is to pursue the national policy of supporting small business. And our objective is to make credits affordable.

- When is the crisis going to end? What do you expect of small business?

- I want small business share of our country’s GDP to reach 50% in the short term. And I want small businesses to shift away from consumption sector to high technology and industrial production sectors. The future of small and medium sized business is a very important theme. A special conference will be devoted to it within the framework of the coming Krasnoyarsk Economic Forum. I hope the conference participants would suggest new ways and ideas of supporting and boosting small business in Russia.

Host – Vera Kuznetsova


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