Russian Prime Minister V.V. Putin Conducts a Meeting of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ Supervisory Board
V.V Putin’s Opening Address
Good afternoon, Esteemed Colleagues!
At today’s Vnesheconombank’s Supervisory Board meeting we’ll discuss the Bank’s participation in boosting mortgage housing lending. Today we’ll consider an issue of financing mortgage lending. And not a word about football. We’ll discuss ways of how we can help to finance housing construction in the Russian Federation through using Vnesheconombank’s capabilities. I’d like to remind you that despite the problems caused by the economic crisis, mortgage lending is still one of the most effective and affordable ways of purchasing housing in many countries of the world. It was also in great demand by Russian citizens.
Starting in 2005 and up until now, the amount of mortgage housing lending has increased manifold, for example, in 2005 the amount was 60 billion rubles and in 2008 it was 630 billion rubles.
Of course, the crisis changed the situation in mortgage lending. Since autumn of 2008, the amount of mortgage loans extended has fallen substantially and the terms of obtaining mortgage loans have significantly worsened. Factually, mortgage loans have become unaffordable for an absolute majority of Russians.
In this situation our top priority was to support those who came up against problems of financing and who could not repay loans. Eighty thousand families have used the so-called maternity capital to fully or partially repay their mortgage loans. I’d like to remind you that maternity capital could be used from January 1, 2009, rather than from 2010 as planned. We also implemented the plan of allowing people to defer payments on mortgage loans. Both the Mortgage Housing Lending Agency and private banks, factually, with our Bank’s support participated in implementing this plan.
At the same time, while addressing day-to-day problems we should think about a post-crisis recovery of the mortgage sector. The more so, we can now see that people’s interest in applying for mortgage loans is growing.
Banks have started to expand mortgage business; they are reducing the size of down payment and interest rates on their mortgage loans.
Of course, 14.5% - an average interest rate on mortgage loans is too high for Russian citizens. Incomes in Russia are not high enough to pay such high interest rates. For mortgage loans to become affordable for a wide range of people we should try to reduce interest rate on such loans to 10-11%.
We can’t make it happen through giving directive instructions, this is an economic process but we should do our best to achieve this. And I suggest that we should discuss today ways of reinforcing the current trend for reducing interest rates on mortgage loans.
We are well aware that all over the world pension funds are used as an instrument for securing long-term credit resources.
Here I mean the amount of pension savings funds managed by Vnesheconombank, we might think about using these instruments in our country, of course, very carefully, with maximum guarantees.
Pension savings funds worth 690 billion rubles are currently managed by Vnesheconombank.
A month ago the Government approved a new strategy of investing pension savings funds managed by Vnesheconombank. Up to 20% of these funds or some 100 billion rubles can be invested in mortgage bonds of Russian banks.
So, banks will be able to extend new mortgage loans within this amount at more affordable interest rates and for longer periods. And by financing these loans, VEB should in fact act as a bank for development.
I know that the state bank’s attitude to this is anything but simple because mortgage loans do not generate high incomes but still it is a key function of this financial institution.
I suggest that we should discuss available options and practical steps VEB can make to implement these plans. We’ also discuss some other routine issues. Let’s proceed to the issues on our agenda.
Origin: Internet-portal of the Government on the Russian Federation
On Signing Memorandum between Vnesheconombank, the Omsk Region Administration, ROSNANO and the Titan Group of Companies
State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’, the Omsk Region Government, the State Corporation “The Russian Corporation of Nanotechnologies” (ROSNANO) and the Titan Group of Companies entered into a Memorandum on Cooperation.
On behalf of Vnesheconombank the Memorandum was signed by Vnesheconombank Chairman Vladimir Dmitriev, on behalf of the Omsk region Government - by Governor and Chairman of the Government Leonid Polezhaev, on behalf of ROSNANO – by its General Director Anatoly Chubais, on behalf of the Titan Group of Companies by its Board Director Alexandr Sutyaginsky.
Under the Memorandum the parties plan to promote all-round cooperation to increase the level of the Omsk region’s economic and technological development, encourage innovations in electric power and petrochemical industries and agro-industrial complex.
Top priority is to be given to the following projects to be implemented on the territory of the Omsk region:
building a full-cycle production facility for a complete silicon conversion from a mineral raw material to a top-quality raw material for ferrous and non-ferrous metal-making industries, solar energy industry, microelectronics industry and nanotechnologies;
building a plant to manufacture a high-octane oxygen-containing additive to gasoline – ethyl tert-butyl ether with the use of nanoporous multi-layer membranes.
The implementation of this Memorandum would help encourage investment activity aimed at boosting the region’s socio-economic and infrastructure potential and create new jobs.
Russian State Corporation of Nanotechnologies (ROSNANO) was founded by Federal Law №139-FZ on July 19, 2007 to pursue the state’s policy in the field of nanotechnologies, develop innovation infrastructure in nanotechnologies and implement projects aimed at creating promising nanotechnologies and nanoindustry.
Titan Group of Companies is a holding company with an annual turnover in excess of 550 million US dollars. It is among 100 largest companies in Russia. The holding’s main line of activity is to manufacture and sell petrochemical products.
Origin: Press Office of Vnesheconombank
Contact Person: Ekaterina Karasina
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