VEB.RF published its interim condensed consolidated financial statements as prepared in accordance with IFRS as at 30 September 2019
VEB.RF Group’s key performance indicators for the nine-month period of 2019 are as follows:
- The Group’s assets as at 30 September 2019 amounted to RUB 3,209.5 bn. The decline against the beginning of the year was RUB 152.4 bn (-4.5%), mainly due to the decrease in the loan and leasing portfolios, and assets of disposal groups and non-current assets held for sale.
- Loans to customers accounted for 41.9% of the Group’s total assets. As compared to the beginning of 2019, the loan portfolio after allowance for expected credit losses decreased by RUB 217.7 bn (-13.9%) to reach RUB 1,343.9 bn. The portfolio decrease was largely attributed to the disposal of Sviaz-Bank.
- In Q3 2019, the loan portfolio posted a slight growth of RUB 13.9bn (+1.1%).
- The amount of loans granted by VEB.RF in the nine-month period of 2019 reached RUB 65.5 bn. The Group’s investment priorities included industry, export support, infrastructure and urban economy. VEB.RF started financing the first projects within the Project Financing Factory.
- In the nine-month period of 2019, there was a reversal of allowance for expected credit losses in the amount of RUB 3.2 bn vs the reversal of allowance of RUB 1.4 bn in the same period of 2018.
- The total liabilities of the Group as at 30 September 2019 amounted to RUB 2,778.1 bn, decreasing by RUB 299.7 bn (-9.7%) against the beginning of the year. The decline was mostly due to the decrease in the amounts due to banks and in the amounts due to customers brought about by the disposal of Sviaz-Bank.
- The operating income for the nine-month period of 2019 went up to reach RUB 48.3 bn as compared to the operating income of RUB 18.6 bn for the same period of 2018.
- The Group’s negative financial result for the nine months of 2019 came to RUB 18.6 bn, decreasing four times as compared to the loss of RUB 69.6 bn for the same period of 2018. The financial result for the nine-month period of 2019 is, inter alia, attributable to the net interest income decrease against the general interest rates drop.
- The Group’s equity for the nine-month period of 2019 went up by RUB 147.3 bn (+51.8%) to reach RUB 431.4 bn as at 30 September 2019.
- VEB.RF’s capital adequacy ratio (according to RAS) was 16.7% as at 1 October 2019 (11.8% as at 1 January 2019).
VEB.RF’s Chairman Igor Shuvalov met yesterday with the Chief Executive Officer of the Investment Promotion Agency of Qatar (IPAQ), Sheikh Ali Alwaleed Al Thani. The visit was proposed by His Excellency Sheikh Al Thani, who wanted to learn more about the activities of Russia’s major development institution and explore areas of mutual interest that could encourage cooperation.
During the meeting, Sheikh Al Thani gave an overview of IPAQ, which was launched in July 2019 to attract foreign investment in the country in line with the objectives of Qatar’s National Vision 2030. The IPAQ Advisory Board is chaired by His Excellency Ali bin Ahmed Al Kuwari, Qatari Minister of Commerce and Industry.
Igor Shuvalov described the strategy, principles and priorities of VEB.RF’s operations, the Project Financing Factory programme, and the functional areas of development institutions involved in VEB.RF’s activities. The Qatari delegation particularly took an interest in VEB.RF-financed urban development projects, guarantee mechanisms, and Russian Export Center programmes.
Considerable interest was aroused by Igor Shuvalov and VEB.RF’s Deputy Chairman Alexey Sorokin participating in preparations for the 2018 FIFA World Cup in Russia. Qatar is to host the World Cup in 2022.
The parties agreed to continue communication with each other and search for joint projects.
State Development Corporation VEB.RF sees good prospects for building a mutually beneficial partnership with the Colombian business community, VEB.RF’s Deputy Chairman Daniil Algulyan said in an interview with Russian News Agency TASS on Friday following a visit of VEB.RF’s Chairman to Colombia.
“It was a very important visit. We met with our potential Colombian partners,” said Daniil Algulyan.
According to Daniil Algulyan, VEB.RF sees good prospects for joint projects to develop infrastructure, transport and industry.
Igor Shuvalov: BRICS Inter-Bank Cooperation to Focus on Infrastructure Investment in 2020
On the sidelines of the BRICS Summit in Brazil, VEB.RF Chairman Igor Shuvalov described major areas of cooperation among the development banks of the five economies in 2020. With Russia’s presidency of BRICS, VEB.RF is to be in charge of the association’s Inter-Bank Cooperation Mechanism for one year.
“Top of our agenda is attracting private investment in infrastructure. I mean joint efforts to bolster up public-private partnerships. There is extensive experience of using this mechanism globally. Public-private partnerships should be involved in creating the country’s main infrastructure. It was previously part of VEB.RF’s internal agenda. We are now submitting this issue to BRICS,” Igor Shuvalov said.
A special area of cooperation is a modern urban economy. “Developing an urban economy has a direct impact on quality of life. VEB.RF systematically works to build up competencies in this area. For example, we fully share an understanding of this issue with Brazil’s BNDES. We have their active support for this,” he added.
Additionally, Igor Shuvalov announced plans to continue to work on widening the use of national currencies for international payments. According to Shuvalov, the use of the Russian rouble is a key element in the country’s financial and economic sovereignty. Shuvalov said: “It is necessary for us to maintain our currencies and trade capabilities. We are working to come up with a technological solution for this problem. We need to demonstrate several deals with major players. During our presidency, we will attempt to make as much progress towards this goal as we can.”
The important areas of cooperation also include integrating the national payment systems and digital platforms, along with maintaining the principles of multilateral regulation for international trade and investment relations.
VEB.RF Discusses Investment Cooperation Prospects and Buenos Aires’s Urban Environment Transformation Experience with Argentina
VEB.RF’s delegation headed by Chairman Igor Shuvalov visited Argentina. During the visit, the delegation met with energy companies, YPF and Pampa Energia, and Corporacion America, a group specialising in construction and airport management.
As a guest of honour, Igor Shuvalov visited one of the oldest financial institutions in Latin America, the Buenos Aires Stock Exchange. VEB.RF’s Chairman highlighted the role of business dialogue in strengthening relations between Russia and Argentina and in establishing closer contact between EurAsEC and MERCOSUR. The Argentinian side presented promising projects for joint investment. VEB.RF’s delegation presented Russian export support instruments and the Project Financing Factory’s programme.
VEB.RF’s Chairman also had a meeting with Buenos Aires Mayor Horacio Larreta. During the meeting, the Mayor presented recent developments in the Argentinian capital’s economy, transport, safety and municipal waste management. Igor Shuvalov told him about Russia’s experience in urban transformation and VEB.RF’s involvement in the development of a modern urban economy.
VEB.RF and BRICS Development Banks to Form Common Approaches to Financing for Infrastructure Projects
State Development Corporation VEB.RF signed a Memorandum on Mobilization of Private Investment in Infrastructure with the BRICS Inter-Bank Cooperation Mechanism.
The BRICS Inter-Bank Cooperation Mechanism will create a working group which will study business cases, financing formats, project selection models and legal innovation success stories which contribute to mobilization of private investment in infrastructure.
The Memorandum will establish a new ICM working group and promote the sharing of best infrastructure PPP practices between key BRICS development institutions.
VEB.RF Chairman Igor Shuvalov said “Currently, we see great interest in PPP projects, primarily in infrastructure projects. It is the global trend, which we are striving to implement to ensure sustainable economic growth. The development banks play a special role. Many banks aggregate PPP competencies. We plan to follow this way in Russia by creating an integrated infrastructure development centre. VEB.RF has extensive experience in mobilization of private investment in major transport infrastructure projects; our state corporation’s portfolio features dozens of sea, land and air infrastructure assets. Under the supervision of the Government and the President’s Executive Office, VEB.RF plays a role in promotion of PPP legal instruments to encourage and mobilize investment.”
As a reminder, VEB.RF will hold the presidency of the BRICS Inter-Bank Cooperation Mechanism in 2020. The BRICS Inter-Bank Cooperation Mechanism members are VEB.RF, BNDES, Eximbank of India, CDB, and DBSA. The BRICS ICM was established in 2010 to promote and strengthen economic and investment cooperation between BRICS countries. Currently, the BRICS ICM has five working groups.
VEB.RF and VTB to Finance Coal Transhipment Facility Construction at Port of Vanino
The project will be carried out under the Project Financing Factory programme.
State Development Corporation VEB.RF, VTB and VaninoTransUgol have signed a loan agreement to finance the project to build a high technology transhipment facility at the seaport of Vanino in the Khabarovsk Territory.
Phase 1 of the transhipment facility will have a capacity of 12 million tonnes of coal per annum. The facility’s commissioning and start-up are planned in 2020. The project will create more than 600 new jobs. Overall potential capacity of the facility is up to 24 million tonnes of coal per annum.
The partner banks will provide 34 billion roubles to the project using the Project Financing Factory’s programme. Under the syndicated loan, VEB.RF will provide financing to cover more than one third of the project’s Phase 1 expenses.
VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky said: “Investment into state-of-the-art port infrastructure is one of the key priorities of VEB.RF. We would like to thank our esteemed partners and are confident that our joint efforts will have not only positive impact on the Far Eastern economy but also will open more opportunities for Russian exports to the Asia-Pacific Region.”
VTB’s Head of Client Coverage and Senior Vice President Dmitry Snesar said: “Financing for the project to build the high technology coal transhipment facility at the seaport of Vanino is the first port infrastructure financing deal between VTB and VEB.RF under the Project Financing Factory. VTB has extensive experience in financing major infrastructure projects. The construction of VaninoTransUgol’s terminal means new infrastructure to develop further Russian coal export and contribute to the economic development of the Far East.”
VaninoTransUgol’s CEO Yuri Tyamushkin said: “Construction of the terminal’s Phase 1 is at an advance stage. VaninoTransUgol is not only developing the Far Eastern economy and infrastructure but is also actively contributing to the regional infrastructure, including corporate housing, educational establishments support, building a talent pool and establishing high living standards in the Far East.”
VEB.RF Finances Ust-Luga’s Gas Chemicals Polyethylene Production Facility
- The loan will be allocated to finance the early phase of the project
State Development Corporation VEB.RF and Baltic Chemical Complex signed a loan agreement to finance the early phase of the project to build the largest Russian gas chemicals facility next to the sea port of Ust-Luga (Leningrad Region). The total capacity of the gas chemicals facility will be up to three million tonnes of polyethylene per annum.
VEB.RF’s loan will be allocated to finance FEED, advance payments under license agreements and subcontracts, including long lead items and other project related expenses.
Financing will be allocated in instalments matching the project’s schedule milestones. VEB.RF financing the early stage of the project will improve significantly credit and investment ratings of the project, which is important to attract other Russian financial institutions, international ECAs and banks.
RusGasDobycha’s CEO Konstantin Makhov said: “We are creating an unprecedented industrial cluster. It will be the largest in Russia. The vertical integration of gas supply and treatment in Russia represents a new economic model for the gas industry. The facility may export its products to Europe, Asia, India, and China. It is a large scale project. The construction phase alone required more than 25 thousand specialists. The start-up of Phase 1 is scheduled in 2023-2024. The full ramp-up will be in 2025. More than five thousand new highly qualified jobs will be created to operate the facility.”
VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky said: “Today, it is the largest greenfield project with 100% export potential in VEB.RF’s portfolio. As a development institution, we see that it is important to offer financial leverage to the project which will build the largest gas chemicals facility in the world and make Russian products more competitive in the global market.”
Sovcomflot and VEB.RF Sign Financing Agreement for Construction of Pilot LNG Carrier at Zvezda Shipyard
SCF Group, the VEB.RF Group and the Zvezda shipyard formally agreed to finance the construction of a pilot LNG carrier at the Zvezda. The carrier will be time chartered by Novatek for Arctic LNG 2 project.
The ice class (Arc7) will enable the LNG carrier to be used for year-round navigation in challenging ice-bound conditions. The carrier is designed to navigate without an icebreaker escort through more than 2-metres-thick ice.
In total, VEB.RF’s Supervisory Board approved financing for 15 carriers of this type. The supply of carriers will be synchronised with the start-up of Arctic LNG 2.
“It is the seventh vessel to be built by the Zvezda under a loan facility signed here. The vessels will be leased by Sovcomflot. VEB.RF’s governing bodies approved participation in the financing of 21 tankers. The growth of the shipyard’s portfolio will enable our partners to keep localising their manufacturing,” VEB.RF’s Deputy Chairman Artyom Dovlatov said.
VEB.RF and the African Export-Import Bank (Afreximbank) signed a master agreement for VEB.RF’s participation as a confirmation bank in Afreximbank’s Trade Confirmation Guarantee Programme. The agreement was signed at the Russia-Africa Economic Forum in Sochi.
The document was signed on behalf of VEB.RF by its Deputy Chairman Daniil Algulyan and on behalf of the African Export-Import Bank by its Executive Vice President Amr Kamel.
“Providing export support and promoting Russian goods, work and services to open up new markets are high on VEB.RF’s list of priorities. African countries have tremendous potential to develop economic partnerships with the Russian Federation. The VEB.RF Group now has an anchor partner in this area of cooperation. It is Afreximbank. We’ve joined Afreximbank’s Trade Confirmation Guarantee Programme as it will enable us to use Afreximbank’s guarantees to mitigate the risks involved in trade financing transactions with local African banks,” Daniil Algulyan said.
“By signing the agreement, Afreximbank will strengthen its support for Russian companies with a presence in Africa,” Amr Kamel commented.
The African Export-Import Bank (Afreximbank) is a development bank mandated to promote intra- and extra-African trade. In December 2017, Russian Export Center on behalf of Russia became a shareholder of Afreximbank.
The bank is headquartered in Cairo and has regional offices in Cote d’Ivoire, Nigeria, Kenya and Zimbabwe. The bank’s rating: Baa1 (Moody’s), BBB- (Fitch), BBB+ (GSR). Founded in 1993. Authorised share capital: USD5bn. As at the end of 2018, the bank’s total assets were USD13.4bn.
Russia-Africa Summit: Memorandum of Cooperation Signed by VEB.RF and Russian Export Center to Build Republic of the Congo Pipeline
At the Russia-Africa summit, VEB.RF, Russian Export Center, Afreximbank and Société Nationale des Pétroles du Congo (SNPC) signed a memorandum of cooperation to build a pipeline in the Republic of the Congo. The pipeline will connect the deep-water port of Pointe-Noire to the Maloukou terminal and the Lutete intermediary terminal.
“Export support and the promotion of Russian goods, work and services in entering new markets, including Africa, are high on VEB.RF’s set of priorities. The African markets are promising for future trade and economic cooperation and, primarily, increases in Russian exports. Afreximbank has become the anchor partner for the entire VEB.RF Group in this work. As a shareholder of this bank, we were able to reduce risks for the Russian companies. When evaluating projects in African countries, we can also rely on Afreximbank’s expertise,” VEB.RF’s Deputy Chairman Daniil Algulyan said.
“The construction of the pipeline in the Republic of the Congo not only will help to resolve most problems of this region of Africa in respect of providing petroleum products, but also will make a considerable contribution to economic growth in several countries experiencing an acute shortage of high-quality and affordable energy resources. Russian companies have gained extensive experience and technologies in the construction of petroleum pipelines in difficult climatic conditions and are pleased to share them with the African partners,” Russian Export Center’s Senior Vice-President Nikita Gusakov commented.
It is noteworthy that, upon construction, the pipeline will be able to transport a wide range of petroleum products, including petrol, diesel fuel and jet fuel. In addition to the Republic of the Congo, the ultimate consumers of petroleum products will be the Democratic Republic of the Congo and the Central African Republic, which will have a significant effect on the economic development of these countries.
The implementation of one of the largest infrastructural projects in Congolese history will take three years. The estimated capacity of the pipeline will be 2.1 million tonnes per year, and the period of pipeline operation will be at least 40 years.