V.V. Putin’s opening address
Good afternoon esteemed colleagues.
We are holding the first meeting of Vnesheconombank Supervisory Board this year. Today we’ll discuss the Bank’s plans and long-term objectives. In the period of the crisis Vnesheconombank played a very important role in supporting key economic sectors such as the banking system, the real economy and participated in the programs of rehabilitating enterprises and credit institutions. In fact, VEB became an efficient anti-crisis-financial management center. Nevertheless, as the situation was stabilizing in 2010, we started to shift priorities by placing more emphasis on long-term development goals, large-scale investment projects aimed at modernization, technical retooling and providing support for small and medium-sized enterprises. It is these lines of activity that should become key priorities this year The Bank’s loan portfolio is scheduled to be increased by 100 billion rubles. These financial resources will be used to fund large-scale investment projects and we’ll discuss a number of these projects today.
Another 10 billion rubles are to be used to support small and medium-sized enterprises. I’d like to remind you that we must bring the amount of financial support for small and medium-sized enterprises to 250 billion rubles. As you know this amount in 2010 was only 50 billion rubles. The mortgage lending development program should be up and running at full capacity. VEB earmarked about 200 billion rubles for these purposes including mortgage housing loans refinancing.
VEB’s participation must secure affordable interest rates on mortgage housing loans. The total amount of mortgage lending is bound to increase too. We expect the total amount of annual mortgage housing loans to reach the pre-crisis level of 650 billion rubles per year by 2012.
VEB must also give top priority to get its regional structures to operate effectively; here I mean the North Caucasus and the Far East. Their task is to be in close contact with investors. You know that the North Caucasus Development Corporation has already been established. And we have to resolve all organizational issues on forming a Direct Investments Fund for the Far Eastern Federal District and the Baikal region before May 1, 2011. At present, Vnesheconombank is conducting expert examination of Far Eastern projects worth 88 billion rubles. I’m sure that all the plans mentioned will be implemented and VEB’s team will go on working on a traditionally high professional level.
In this connection, I’d like to note that in 2010 VEB received the prestigious Deal of the Year Award. Please, accept my congratulations!
The highest marks were given to the following three projects – the Khabarovsk refinery modernization, the construction of an advanced petrochemical complex in Tobolsk and Pulkovo airport reconstruction in Saint Petersburg. We’ll also discuss another several high technology projects today.
I’d like to place particular emphasis on several projects. Here I mean a $1.6 billion credit line for the construction of an ammonia, methanol and carbamide integrated plant in the Republic of Tatarstan. Upon implementing the project the most advanced resource saving and energy efficient technologies will be used; the project will minimize negative impact on the environment and introduce digital production control methods.
I’ d like to stress that the most part of manufactured products (these are nitrogenous fertilizers) will be in demand by our agricultural producers and granulated carbamide have good prospects for export to the CIS, Europe and Asian countries.
We have discussed this project at great length with Tatarstan’s leaders. The Republic’s leaders also attach considerable importance to this project and are deeply involved in this work this is an additional guarantee of this project’s success.
I’d like to draw your attention to one more issue. At the end of the last year we took a decision on Vnesheconombank’s participation in funding regional and urban communal services infrastructure development projects. We have to put in place public private partnership mechanisms for modernizing water and heat supply systems, municipal transport and other facilities. For these purposes VEB is to commit annually 2 billion rubles in the period of five years (2011, 2012, 2013, 2014, 2015).
As a result of their joint efforts Vnesheconombank ad Moscow’s Government have already made a list of investment projects in the transport infrastructure and the communal services system. The Bank plans to commit 900 million rubles in 2011 for these projects’ implementation.
And now I’d like to single out one more important project that involves shipbuilding. You know that we laid down a whole program to rebuild shipbuilding. New shipyards are being built in the Far East and in the North-West of Russia. The United Shipbuilding Company has already formed a good backlog of orders for more than 100 ships. At the same time and for quite apparent reasons our enterprises find it difficult to carve out a niche in the shipbuilding market after a pause of many years. And here there is a need for special government support measures. One of these measures is to be carried out by Vnesheconombank. VEB is to extend payment reimbursement guarantees to ship customers. And this will give an additional competitive edge to our shipyards. Ship customers will be sure that the proper performance of contracts is backed by solid financial guarantees. Their total sum is to amount to 40 billion rubles.
On Vnesheconombank’s Supervisory Board Decisions
VEB to allocate 900 million rubles in 2011 for PPP infrastructure projects in Moscow
Moscow. February 24. INTERFAX - Vnesheconombank’s Supervisory Board approved a list of investment projects in the transport infrastructure and the housing and communal services system in Moscow. In 2011, up to 900 million rubles are scheduled to be committed for pre-project work, said Vnesheconombank Chairman Vladimir Dmitriev after a meeting of Vnesheconombank’s Supervisory Board on Tuesday
“This year we are to allocate about 900 million rubles for pre-project work. Today we have made public a list of projects which might be funded on a PPP basis. We are going to implement these projects together with Moscow. Engineering companies are to be set up. Interested investors and Vnesheconombank will be among these companies’ participants and shareholders”, said V. Dmitriev.
At the same time he noted that because of these allocations Vnesheconombank would increase the total amount of limit to fund similar regional public private partnership (PPP) projects from 2 to 3 billion rubles in 2011.
VEB plans to generate net profit of a bit over 30 billion rubles in 2011
MOSCOW, February 24, - RIA Novosti. Vnesheconombank plans to generate net profit of a bit over 30 billion rubles under the Russian Accounting Standards (RAS) against 28.9 billion rubles in 2010, Vnesheconombank Chairman Vladimir Dmitriev told journalists on Tuesday.
“We plan to generate profit of a bit over 30 billion rubles’, said Dmitriev adding that he meant net profit in 2011.
In early January, VEB said that it increased its net profit in 2010 by 26.8% under the Russian Accounting Standards from 2009 to 28.901 billion rubles.
According to VEB, the Bank generated net profit of 22.79 billion rubles in 2009.
Main objectives of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ established on the basis of Vnesheconombank of the USSR are to make the Russian economy more competitive, diversify it, encourage investment business by way of undertaking credit-investment, guaranty, insurance and consulting activities associated with implementing projects in Russia and abroad among other things, with the participation of foreign capital, as well as with providing support for Russian industrial exports and for small and medium-sized enterprises.
VEB to buy out bonds of the United Aircraft Construction Corporation worth 13.7 billion rubles
MOSCOW, February 23, (Reuters) – Russia’s Vnesheconombank is to buy out bonds of the United Aircraft Construction Corporation worth 13.7 rubles. The funds are to be used to refinance the Corporation’s credit, Vnesheconombank Chairman Vladimir Dmitriev told journalists on Tuesday evening.
In the first quarter of 2011, the United Aircraft Construction Corporation intends to issue 9-year bonds worth 46.28 billion rubles at a fixed coupon rate of 10 percent [ID:nMUE6B81BD]. The bond issue arrangers are Sberbank, VEB Capital and VTB Capital. The company announced that it would borrow money to repay its debt to large banks and as a result, its effective interest rate on debts will diminish to 6 percent from 10 percent.
By the end of 2010, the United Aircraft Construction Corporation’s consolidated debt was 147.6 billion rubles.
Vnesheconombank owns 11 percent of the Corporation’s shares, the state’s stake exceeds 80 percent and private investors own a bit more than 8 percent.
In December of 2009, the United Aircraft Construction Corporation placed an additional issue of shares worth 45.15 billion rubles in favor of the state and VEB in order to restructure its debt and finance investment projects. All in all the United Aircraft Construction Corporation placed three additional issues worth about 67 billion rubles, in the course of which the Russian Federation transferred government stakes of aircraft construction companies to the Corporation’s charter capital.
The United Aircraft Construction Corporation incorporates aircraft construction assets of the Russian Federation; it owns stakes of Sukhoi Holding Company, Research Production Association Irkut, the Nizhny Novgorod Aircraft Construction Plant Sokol, Ilyushin Finance Company, the Tupolev Company.
VEB’s Supervisory Board approved financing of the mineral fertilizers plant construction project in Tatarstan
MOSCOW, February 22, - RIA Novosti. At its meeting on Tuesday, Vnesheconombank’s Supervisory Board approved the Bank’s participation in funding the mineral fertilizers plant construction project in Tatarstan, Vnesheconombank Chairman Vladimir Dmitriev told journalists.
A trilateral agreement on building this first, in the past 20 years, large mineral fertilizers manufacturing plant on the Russian territory was signed in November of 2010 by Japan’s Mitsubishi Heavy Industries and Sojitz, the China National Engineering Co. (CNCEC) as well as Russia’s state-run company OJSC Ammonii founded by Tatarstan’s Government and VEB in 2006.
Dmitriev said that in the current year VEB would implement large-scale projects and one of them is the ammonia, methanol and carbamide manufacturing integrated plant construction project in Tatarstan.
He added that the project would be for the most part implemented with Japanese banks’ money. “We have agreed that the plant’s products would be for the most part sold on the Russian market”, said Vnesheconombank’s Chairman.
Russian Prime Minister Vladimir Putin, who chairs VEB’s Supervisory Board, said on Tuesday that the total amount of the credit line opened for funding the project was estimated at 1.6 billion dollars.
Under the project the plant is to be put in operation in 2015. The production facility’s capacity would make it possible to simultaneously manufacture ammonia and methanol from natural gas.
A new fertilizers plant is to be built in the city of Mendeleevsk (the Republic of Tatarstan). The city is located about a thousand kilometers to the east of Moscow. The plant is scheduled to manufacture 2.05 thousand metric tons of ammonia per day and 1.382 metric tons of ammonia and 668 metric tons of methanol upon simultaneous production.
VEB to hold a tender to select a managing company of the Traktornye Zavody Concern
Moscow. February 24. INTERFAX - VEB’s Supervisory Board made a decision to hold a tender to select a managing company of the Traktornye Zavody Concern, said VEB Chairman Vladimir Dmitriev after VEB’s Supervisory Board meeting.
He didn’t rule out that the company might be bought out by its former owners.
“A decision was made to hold a tender to select a managing company. In part, we accomplished our mission. We consolidated various isolated entities incorporated in the so called the Traktornye Zavody Concern and conducted financial and technological audit. This company should be managed professionally by highly qualified specialists who have positive experience in crisis management”, said V. Dmitriev.
He also noted that all could participate in a tender to select a managing company including former owners of the Traktornye Zavody Concern.
By the way, V. Dmitriev said that VEB was not so far going to sell the company as it had an option for its former owners who could buy it out”.
Besides, V. Dmitriev said that VEB would participate in the ammonia, methanol and carbamide manufacturing integrated plant construction project in the Republic of Tatarstan together with the republican investment fund.
At the same time, V. Dmitriev said that for the most part the project was to be financed by Japanese banks with the assistance of Japanese state-run institutions, he also added that VEB jointly with the investment fund would have more than a controlling stake in the project.
On Tuesday, VEB’s Supervisory Board approved the extending of guarantees to Russian ship customers against payments to shipyards where appropriate vessels are to be built.
“The problem was that shipyards failed to secure guaranteed reimbursement of payments made for building vessels. Now Vnesheconombank is to assume this mission and we believe that we’ll be able to guarantee and secure an adequate volume of orders and our fleet will be provided with vessels it really needs”, said V. Dmitriev
Vnesheconombank is ready to participate in financing Sollers and Ford joint venture
MOSCOW, February 22. /ITAR-TASS/. Vnesheconombank is ready to participate in financing Soller and Ford joint venture, Vnesheconombank Chairman Vladimir Dmitriev told journalists about it. “We are ready”, he said.
Dmitriev made it clear that the Bank hadn’t so far entered into any agreements with this tandem. He added that as soon as the joint venture’s financial model became clear, VEB would be able to take a decision.
Last week, the Russian automaker Sollers announced its withdrawal from the agreement on establishing a joint venture with Fiat. Sollers also announced that instead of Fiat, Ford auto concern would be Sollers’ partner. The companies have already submitted an application for participating in a new mode of industrial auto assembly.
Vnesheconombank does not plan to purchase Alexander’s Lebedev’s stake in Ilyushin Finance Company
MOSCOW, February 22. /ITAR-TASS/. Vnesheconombank does not plan to purchase Alexander Lebedev’s stake in Ilyushin Finance Company. Vnesheconombank Chairman Vladimir Dmitriev told journalists about it today.
“An issue of buying out these shares is not on the agenda”, he said.
The National Reserve Corporation owned by Alexander Lebedev holds 8.65% of Ilyushin Finance’s shares. A buy-out of this asset was at issue as part of preparations for a public offering of Ilyushin Finance Company’s shares but the Company decided to determine its shareholding structure before conducting a public offering of shares.
Ilyushin Finance is incorporated in the United Aircraft Construction Corporation as a main sales unit of new civil Russian-aircraft. In particular, Ilyushin Finance Company leases out An-148 and MS-21 aircraft.
V.V. Putin’s opening address:
Some of you attended the United Russia’s conference in Khabarovsk yesterday, where we discussed plans for the Far East. Specifically, we discussed Vnesheconombank’s and other development institutions’ involvement in implementing investment projects in the region.
There are many interesting business ideas for the Far East, in particular for its fuel and energy sector, steelmaking, forestry and fishing industries. As I have already said, we plan to establish a Direct Investments Fund in the Far Eastern Federal District and the Baikal Region.
VEB’s participation in this Fund will make it possible to engage major financial institutions, funds and investment companies in cooperation. Today, we’ll discuss the Fund’s concept and proposals for its organizational structure. I would also like to note that yesterday Vnesheconombank signed an agreement on extending a three billion ruble loan to Dallesprom for building a deep timber-processing integrated plant in the city of Amursk in the Khabarovsk Territory.
We’ll also consider another project that is critical for the Far East, the reconstruction of the Knevichi airport. This project will be implemented as part of preparations for the APEC summit and the program to remake the image of Vladivostok.
A new modern passenger terminal’s commissioning would increase the airport’s capacity to four million people per year. After reconstruction, the airport’s runway will be able to operate almost all types of aircraft, both Russian and international. Vnesheconombank’s investment in the project will total four billion rubles, of which it has already provided 2.3 billion rubles in loans.
Today we’ll also hear out a report on the progress the Bank has made on its mortgage lending program. I’d like to emphasize that the program began nearly a year ago, and Vnesheconombank has already extended more than 4,000 mortgage credits worth some seven billion rubles, which account for about 30% of the credits received by Russian citizens to buy new housing.
I’d like to stress that as we expected the average interest rate – stands at 11% per annum. Moreover, the banks that obtained VEB’s credits have cancelled commissions for issuing credits. There are mortgage credits extended at lower interest rates. For example, Sberbank extends mortgage credits for several categories of employees at 9.5% per annum. There are also higher interest rates of 11%, 12% and even a bit higher. But the average interest rate stands between 11% and 11.5% per annum across the country. These are the target figures we set for this year. Not bad for a start. We can expect the amount of loans to increase significantly in 2011.
There are also proposals to expand Vnesheconombank’s involvement in housing program for the Bank to encourages not only mortgage lending but also accomplish a task of increasing housing construction.
To this end, Vnesheconombank could lend to commercial banks for them to fund projects aimed at building affordable economy-class housing. As we agreed before, this investment is to amount to 50 billion rubles, and the funding source is to be Vnesheconombank’s profits from transactions in financial markets. I’d like to remind you that the Bank generated significant profits from the increased value of Russian companies’ shares, which it bought during the crisis. And it makes sense to invest these profits in implementing housing programs. Credits will be extended at only 3%, which will allow banks to reduce interest rates for end borrowers, that is, natural persons. VEB will soon begin to finance regional and municipal projects to upgrade utilities infrastructure. The Bank will use public-private partnership mechanisms to modernize water and heat supply systems, municipal transport and other facilities. The Bank will commit two billion rubles for these purposes annually. And one more point: this year Vnesheconombank has raised more than $5 billion for a period of up to 15 years in the international market. It is the first time that a Russian lending institution has raised funds on such favorable terms. The Bank has also successfully placed ruble-denominated bonds worth 25 billion rubles. This testifies to the increased trust in Russian banks and shows that Vnesheconombank’s team is comprised of real professionals.
Let’s start our discussion.