V.V. Putin’s Opening Address
Good afternoon, Esteemed Colleagues!
At today’s Vnesheconombank’s Supervisory Board meeting we’ll hear out a report on implementing the Government’s crisis management measures and discuss a number of new investment projects.
As you know, Vnesheconombank played a prominent role in supporting our country’s banking system in the crisis period and continues to play this prominent role. The Bank also extended subordinated loans worth 388 billion rubles to 16 commercial banks that went through a selection procedure and undertook to increase financing amounts to end borrowers at interest rates affordable for enterprises.
Our latest arrangement was the Central Bank’s refinancing rate plus three percent. I am not sure that all this was effective and implemented in due time but I nevertheless hope this played a positive and stabilizing role in the most difficult period of time.
Given that subordinated loans were extended for a period of 10 years, these additional financial resources would support business activity in the economy in the future.
In this respect, I’d like to place particular emphasis on the Government’s joint efforts designed to support the country’s banking sector in the crisis period. As opposed to the said events during the 1988 crisis we succeeded in preventing the collapse of the banking system and bankruptcy of our largest financial institutions. I think that everybody remembers quite clearly that in 1988 all the largest commercial banks that looked like giants and absolutely reliable giants, namely, Incombank, Imperial, ONEXIM Bank all but ceased to exist.
I think that owners did not suffer much but depositors, citizens lost a considerable part of their deposits in these financial institutions. We managed to prevent this worst-case scenario and supported all those who were viable. We defended the interests of depositors and above all citizens of the Russian Federation.
And those banks that proved to be in the most complicated situation and failed to overcome this complicated situation on their own – there were 18 such banks – were transferred for a symbolic payment, sometimes for 1 ruble, into the state system of the Deposit Insurance Agency.
This measure is designed to reorganize these financing institutions, to consolidate them and create viable banking institutions for them to be able to continue working normally with economic players, with natural and legal entities.
Today, we have to determine the future of Svyaz-Bank.
Like a number of other lending institutions it failed to resolve on its own the problems that emerged. And for this reason, it was transferred under Vnesheconombank’s management. Vnesheconombank fully restored the Bank’s solvency for a short period of time.
Our task now is to work out a strategy of Svyaz-Bank’s development as well as terms on which we are ready to engage partners into this project.
Moreover, we have to take a decision on committing 21 billion rubles to the United Aircraft Construction Corporation’s charter capital. We have been discussing this issue for a long time, it took several months to prepare the decision, it was thrashed out thoroughly and we should take it today.
This is targeted money designed to financially rehabilitate the company and enable it to make payments to its creditors and suppliers.
At the start of the next year, the company is to receive additional 10.7 billion dollars from the federal budget. And this money will be used not to fill in the gaps but to manufacture new civil aircraft, domestic aircraft.
We’ll also consider proposals for financing a new investment project in the Far East; this project is aimed at reconstructing the Khabarovsk oil refinery.
There are plans to fully upgrade this production facility, which is of great importance for the region, and introduce there the most advanced and environmentally friendly technologies and make it possible to manufacture engine fuel meeting the highest standards: Euro-4 and higher. The project’s total value is 1.3 billion dollars.
I would like to remind you that at our previous Supervisory Board meetings we made decisions on establishing Vnesheconombank’s subsidiary institutions to manage its assets as well as a specialized engineering company. Its main task is to conduct expert’s examination of project documentation, monitor thoroughly the implementation of investment projects and, if necessary, take measures against non-targeted and inefficient use of Vnesheconombank’s credit resources.
Today, we’ll discuss and approve documents that will make it possible for VEB-Capital and the engineering company to start operating.
NOVO-OGAREVO, November 19 – RIA Novosti. At its meeting on Thursday, Vnesheconombank’s Supervisory Board considered an issue of the State Corporation’s possible participation in the coming Rusal’s IPO but the information on the decisions taken is confidential and will not be made public, Vnesheconombank Chairman Vladimir Dmitriev told journalists.
“We considered this issue and certain decisions were made. Any information on placing shares is confidential”, said Dmitriev at the end of VEB’s Supervisory Board meeting conducted by its Chairman –Russian Prime Minister Vladimir Putin.
“Any information on this account that gets into the mass media does not have anything to do with VEB”, said the Chairman of Vnesheconombank.
The Russian aluminum giant’s IPO is to be held until this year-end. Rusal’s shares are to be placed on the Hong Kong Stock Exchange and the Paris Euronext. The Company plans to sell 10% of its shares believing that it would raise 2.5 billion dollars through this IPO.
Earlier, the source close to Rusal told RIA Novosti that the Company stood a very good chance of reaching a final agreement on restructuring its debts to the consortium of foreign banks until November 19 - a critical date in terms of being able to hold IPO in the current year. Nevertheless, Rusal did not say that it had signed such an agreement.
VEB’s Supervisory Board decides to expand financing of mortgage lending through using pension funds
Moscow. November 19. INTERFAX-AFI – Vnesheconombank’s (VEB’s) Supervisory Board made a decision to expand the program of financing mortgage lending through using pension funds under the Bank’s management, VEB Chairman Vladimir Dmitriev told journalists after the Bank’s Supervisory Board meeting.
“A substantial part of about 470 billion rubles under VEB’s current management might be used to finance mortgage lending”, said V. Dmitriev.
According to him, VEB is expected to receive funds from the Russian Pension Fund in the first quarter of 2010. As a result, according to VEB’s Chairman, the total amount of pension funds under the Bank’s management would be 690 billion rubles.
“Taking into account limitations on investing funds in certain types of bonds, that is, 70% of one issue (in this case mortgage bonds) and no more than 20% of the total investment portfolio, we believe that the amount of mortgage lending would be significantly increased.
Moreover, he said the Bank’s Supervisory Board had also considered an issue of financing mortgage lending through using incomes generated by VEB through using financial resources of the National Wealth Fund.
V. Dmitriev said that through financing mortgage lending by VEB, interest rates on mortgage could be reduced and credit periods could be increased.
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.
Vnesheconombank Chairman Vladimir Dmitriev’s Briefing on the Results of Vnesheconombank’s Supervisory Board Meeting
TV Channel Vesti-24
HOST: Now Vnesheconombank Chairman Vladimir Dmitriev’s briefing is starting at the House of Government. Our channel is telecasting the briefing live.
Vladimir DMITRIEV, Vnesheconombank Chairman: At our Supervisory Board meeting we discussed an issue of developing Vnesheconombank’s subsidiary banks and above all GLOBEX and Svyaz-Bank. We also discussed banks incorporated in Vnesheconombank as development institutions – Roseximbank and the Russian Development Bank. We approved their core activities as a whole. Having been reorganized such commercial banks as Svyaz-Bank and GLOBEX started to operate on a break-even basis. It is safe to say that they started to develop in a sustainable and dynamic way. As far as the future of these banks is concerned, we believe that in the long run they will be offered to the market either to strategic investors or through placing shares for Vnesheconombank to cover its expenses on reorganizing the banks and securing their sustainable financial development.
As far as the Russian Development Bank is concerned, it remains to be a key financial instrument for making government money available to small and medium-sized enterprises.
Russia’s export-import bank is the agent for the government in providing guarantee support for industrial exports. In this respect, we are also considering prospects for establishing a state-run export credits insurance agency. In any case, basic strategic plans relating to each of these banks will be submitted for consideration by Vnesheconombank’s Supervisory Board by the end of this year.
The second issue was associated with the fact that Vnesheconombank both in its capacity as a development institution and as an instrument for taking crisis management measures became an owner of both bad and solid industrial assets and shares and for the most part, it’s not typical for a bank of development to manage them. So, our idea is that VEB should set up a sort of specialized investment institution to which VEB could transfer these assets for management or into ownership for them to be capitalized, professionally managed or sold on the market in order to reorganize commercial banks on a break-even basis and make it possible for Vnesheconombank to generate acceptable incomes. This proposal was also backed. Our Supervisory Board made a decision on considering in the short term, till this year-end, specific measures for transferring these assets to this company with its organizational-staff structure with a view to considering this company’s potential for managing other assets which the state would deem it wise to transfer to it. And we’d like to stress that personnel formation is no less important than the creation of this institution. Therefore, we have stringent criteria for selecting managerial staff in terms of their professional competence and impeccable reputation placing great emphasis on statesmanlike approach to their work.
We also discussed a number of issues relating to refinancing Russian companies’ foreign debts. By the way, all the companies that were supported by Vnesheconombank with the Central Bank’s funds got their credits rolled over. A decision to roll over the credits was taken by Vnesheconombank’s Supervisory Board at the beginning of this June. And the main terms of the rollover are in line the Supervisory Board’s decisions, that is, they are market-oriented. So, the risk assessment of these companies in the current situation is in line with the market assessment and with the assessment of their risks by international creditors. In making our proposals we worked on the assumption that a number of Russian companies are at a final stage of their negotiations with the clubs of foreign creditors and there is no doubt that the Russian Government’s decision to roll over Russian companies’ debts would to a great extent influence Western creditors’ stance on restructuring these debts.
As far as Vnesheconombank’s core activities as a development institution are concerned we discussed the project aimed at building a large-scale shipbuilding production facility, the Primorsk shipyard, in Primorsk, not far from Vyborg. Now a decision has been taken to finance the project design work, the pre-project design work was financed by the project’s initiator. We agreed today that in order to secure this project’s success the government should make appropriate moves in parallel with efforts made by Vnesheconombank and its Supervisory Board. Here I mean the Investment Fund’s resources, certain aspects of customs tariff policy and a number of other key tasks. We are sure that the project has a good chance of success because Gazprom and Sovkomflot will place orders with this shipbuilding production facility. These orders include ships to be constructed under the program of developing the Russian shipbuilding industry, that is, ice class ships, liquefied gas ships, oil platforms, and ships with deadweight of more than a hundred thousand tons. Thus, within a week very important decisions were made on constructing new shipbuilding production facilities such as a new Far Eastern shipbuilding production facility on the basis of Zvezda plant as well as a production facility in the North-West of our country in the city of Primorsk.
We also discussed an issue of structuring a transaction in a project in the Olympic construction, this is a media-centre. We participate in this project together with the Krasnodar Territory Administration. Now we have determined participation amounts – Vnesheconombank accounts for 90 percent of investments and the Krasnodar Territory Administration – for 10 percent and the Administration is ready to consider an issue of extending the Territory’s guarantee for the project. The project’s budgeted value is not known yet because we plan to start financing project engineering work. In summary, I’d like to say that today we have done an excellent job in taking quite serious decisions that are crucial for many Russian companies and Vnesheconombank’s core activities. Thank you.
HOST: And now questions, please.
-Good afternoon, Vladimir Alexandrovich, Maxim Tovkailo, the newspaper Vedomosti. Information agencies have just reported that Gazpromneft was refused to get its credit rolled over. All other companies were allowed to get their credits rolled over, here I mean Sitronics, Altimo, EVRAZ, RUSAL, PIK. Can you confirm if this is so or not?
Vladimir DMITRIEV: I don’t have this sort of information. I can confirm that Gazpromneft got its credit rolled over.
-Is that really true?
Vladimir DMITRIEV: Yes, it is. And I can also confirm the fact that the terms and conditions as well as the terms and conditions of original agreements differ because in assessing risks Vnesheconombank takes into account objective market assessments with regard to a specific borrower. But I confirm that all the borrowers that requested us to get their credits rolled over received a go-ahead.
Did I get you right that additional terms and conditions are not related to interest rates alone, did you impose any additional terms and conditions?
Vladimir DMITRIEV: I haven’t said anything about it.
-Are there any additional terms and conditions for some companies besides increased interest rates?
Vladimir DMITRIEV: We haven’t changed basic parameters which were agreed upon and specified in the last year’s agreements.
-And now my final question. Not all companies that obtained your credits for refinancing their debts submitted applications for getting their credits rolled over. VEB has never made public the total number of companies that received the Bank’s credits for refinancing their debts. Can you tell us now how many companies received your credits?
Vladimir DMITRIEV: To my mind, this information is in the public domain. Except for Rosneft that repaid the credit all other companies are included in the said list. If you know something different, please let me know.
-Thank you very much
-Maria Knayzeva, RIA Novosti, good afternoon. May I ask three questions? Can you name companies for which interest rates on rolled over credits were raised and to what extent?
Vladimir DMITRIEV: No, I can’t
-The second question deals with VEB’s capital. Can you tell us what assets, both bank and non-bank ones, VEB is ready to transfer to a newly-established company.
Vladimir DMIOTRIEV: You know that under the Supervisory Board’s decision a new company, VEB-INVEST, was established. Bad assets bought out from GLOBEX-BANK were transferred to this company. In terms of reorganizing banks, above all, such as Svyaz-Bank, VEB has a number of assets that should be isolated and transferred to a professional team. There are also assets that VEB acquired in the course of taking crisis management measures with a view to selling them later or transferring them for professional management or returning them at a certain profit for Vnesheconombank. In order to manage assets efficiently you need a team of professional managers, a team of professional invest-bankers. In this sense, we do not intend to divert Vnesheconombank’s efforts and resources, instead, we are setting up a new company that should operate on the basis of self-recoupment and be responsible for bringing assets to a marketable state. For example, Amurmetall. We believe that this asset should be managed by professionals and VEB’s employees should focus on Vnesheconombank’s core activities. Here I mean assets as those of Kraslesinvest which is responsible not only for implementing a major project aimed at building the Boguchan hydropower station (to my mind our stake there is about twenty five percent) but also the projects to build a pulp and paper mill and a large-scale timber-industrial complex. We’ve got this sort of assets. Moreover, we have also shares on our balance sheet owned by such companies as Rostelecom and EADS and a number other assets, which in our opinion can be managed by a specialized investment company. Having made a decision to establish such a company Vnesheconombank’s Supervisory Board expects concrete proposals for transferring assets to balance sheet or for management to be submitted to the Supervisory Board later.
-I wonder if Svyaz-Bank and GLOBEX will be transferred to this company or not. Have you got such plans?
Vladimir DMITRIEV: No, we haven’t got such plans. I’d like to stress it once more that the two banks have entered a stage of sustainable and financially sound development, their customer base and loan portfolio are on the rise. They are operating on a break-even basis increasing their profits dynamically. They are independent institutions and are almost hundred percent Vnesheconombank’s subsidiary banks.
-And now my last question. You’ve just said that VEB will finance the construction of a shipyard. How much money is VEB going to invest?
Vladimir DMITRIEV: The total amount of funds is about 38 billion rubles. The project is expected to be financed by Vnesheconombank, the Investment Fund and the project’s initiators. The project’s initiators are ready to invest twenty percent of this amount.
-And the remaining eighty percent will be invested by the Investment Fund and VEB?
Vladimir DMITRKIEV: Yes, that’s right.
-And what’s VEB’s participation amount?
Vladimir DMITRIEV: It’s about 60 percent.
-Newspaper Gazeta, Andrei Birykov. Vladimir Alexandrovich, have you discussed an issue of AvtoVAZ? Is VEB going to provide financial assistance to AvtoVAZ? And if it is, what’s the amount of this assistance?
Vladimir DMITRIEV: We haven’t discussed an issue of AvtoVAZ today. But VEB is the creditor of AvtoVAZ and at the same time our subsidiary banks just a year ago were among the first ones that provided emergency support to AvtoVAZ. Here I mean GLOBEX and NTB.
-Are you discussing a issue concerning VEB’s possible purchase of bonds worth 40 billion rubles?
Vladimir DMITRIEV: Yes, we are.
-Another question. Today the Prime Minister made public a figure of 11 billion rubles. This is the total amount of credits that were extended. He also said that borrowers were repaying these credits properly. Can you tell us how much money out of the said 11 billion rubles has been returned to VEB?
Vladimir DMITRIEV: Whereas the credits were extended a year ago and they were serviced properly the most part of credits.
-The most part – is this more than a half?
Vladimir DMITRIEV: I can’t give this figure now.
Vladimir DMITRIEV: It’s not a matter of repayment; it’s a matter of servicing. Credits are repaid at the end of credit period. And they are being serviced properly. If they had been repaid it would make no sense to talk about rolling them over.
HOST: Any more questions? Thank you very much.
Vladimir DMITRIEV: Thank you.
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!
Let’s start a meeting of Vnesheconombank’s Supervisory Board
I’d like to remind you that at our previous Supervisory Board meeting in September we heard the information on the progress of reorganizing VEB’s subsidiary banks.
Today we’ll consider an issue on the strategy of managing VEB’s group of lending institutions.
And in this respect, I’d like to say the following: we believe that Vnesheconombank’s participation in the financial restructuring of a number of commercial banks is a forced project. This was VEB’s contribution to joint efforts to maintain sustainability and operability of the Russian financial system in the situation of the global crisis.
The end result of these efforts should be the full restoration of problem lending institutions’ solvency and their subsequent sale on the terms beneficial for VEB and of course for the country as a whole.
At the same time, in order to support small and medium-sized enterprises and encourage industrial exports, the Bank for Development will continue to participate in the capital of specialized banks and perhaps other institutions.
Another crisis management measure in which VEB participated was to extend credits to major domestic companies. This made it possible to refinance their debts to foreign financial creditors avoiding the sale of important strategic assets under the conditions of the crisis and at a knocked down price at that. In total, the amount of such loans was about 11 billion dollars.
I must say that borrowers are servicing VEB’s credits properly by making interest payments and repaying principal on schedule.
Nevertheless, a number of borrowers requested the Bank to roll their loans over. Today, we are to consider these requests. I was told that the situation differed from borrower to borrower. Some borrowers are in a position to repay their loans.
We’ll consider both their financial and economic position taking into account their prospects for development. We’ll take into account the market conditions and the current financial position of borrower-companies. But in any case there will no writing-offs.
We’ll also analyze proposals for financing a number of major projects, specifically, in shipbuilding in the North-West of the country in Primorsk.
At the same time, VEB is addressing an issue of its participation in constructing new shipbuilding facilities in the Far East as well. Here I mean the project on the basis of Zvezda plant
In my opinion, it is these enterprises being built from scratch with the use of cutting edge technology that would be capable of restoring leading positions of our shipbuilding industry on the world market and meeting our companies’ demand for oil and oil products delivery ships and in the long term liquefied gas ships.
Let’s get started with our work.