OREANDA-NEWS. January 18, 2013. Andrei Kostin reported to Vladimir Putin on financing the state defence order and issuing military mortgage loans.

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PRESIDENT OF RUSSIA VLADIMIR PUTIN: Mr Kostin, I would like to hear your report today on the progress made on financing the defence order (since your bank financing nearly 45% of it) and issuing military mortgages.

VTB BANK CHAIRMAN AND CEO ANDREI KOSTIN: Mr President, last year we increased the amount of credit resources that we made available to the defence industry by 82 billion rubles [USD 2.7 billion], or 37%. The total amount currently exceeds 303 billion rubles [USD 10 billion], and a significant part of that figure has been earmarked for financing the state defence order.

In 2011 and 2012, the volume of loans issued by the VTB Group as part of the state defence order programme amounted to about 155 billion rubles [USD 5 billion]. If the defence order parameters are dynamic this year – and we are confident that they will be – this amount will double in 2013.

I would like to note that we have a strictly fixed rate for this type of loans. It is more favourable than the market rate and is calculated as follows: the Central Bank refinancing rate plus 1.5%. This is an absolute condition of defence order loans. In addition, it is vitally important that these funds are spent on the modernisation of production and the manufacture of cutting edge technology that is superior in many ways to the goods on the international market.

VLADIMIR PUTIN: What about the mortgages?

ANDREI KOSTIN: As for the mortgages, last year the division that is in charge of loans for individuals became involved in the effort to issue loans to servicemen, the military mortgages. Last year we had planned to issue over 2,000 mortgages in the amount of 3.5 billion rubles. This year our target is to increase the volume of mortgages by 300% to about 8,000 mortgages amounting to over 15 billion rubles [USD 0.5 billion].

I must point out that the VTB Group’s terms are the most attractive in the market today. The first year rate is 8.7%, we require a down payment of 10% and the maximum amount of the loan is 2.25 million rubles. We operate in 69 Russian regions, so servicemen can choose to buy housing in almost any region across the country. We think providing housing for military personnel is a very important social challenge and we want to continue to build up and develop military mortgages.

VLADIMIR PUTIN: How are your relations with the Defence Ministry in both of these areas?

ANDREI KOSTIN: Our relations are very constructive. We are interacting with the new leadership at the Ministry, holding regular meetings with the Minister and his deputy to make sure that both their and our management don’t lose sight of these issues. I expect the work to proceed efficiently, at a steady pace. We have no issues today in our cooperation with the Defence Ministry, in lending for the state defence order or in the development of social programmes. Therefore, I believe that this effort has been successful and the biggest Russian banks are able to implement these programmes.

VLADIMIR PUTIN: Good.