OREANDA-NEWS. August 25, 2009. Transcript of the start of the meeting: Vladimir Putin: Mr Gref, let's start with the Sayano-Shushenskaya hydropower plant. You are familiar with the situation, and you know how much money is needed to finance the reconstruction. How are your relations with RusHydro developing? What kind of arrangements have you come to?

German Gref: Mr Putin, last week, we made a preliminary decision to finance RusHydro for the reconstruction in an amount up to 20 billion roubles.

Today, we already conducted preliminary negotiations with the company CEO, CFO and executive director, so we're ready to sign an agreement in August and start financing of up to 20 billion roubles on the most preferential terms.

By the end of this year, we will be ready to open a credit line of up to about 10 billion roubles. The work and designation of funds are being coordinated. First and foremost, we discussed that development of a water drainage system, which could be subject to the availability of financing. We will decide on financing within two weeks.

Vladimir Putin: Good. As you know, there are also many social issues. One of these issues is resolving the housing problems of victims and their families and families of the deceased and the missing. This includes families that took out mortgages.

German Gref: We have received a report from RusHydro management today. There are people who took out mortgages and had dealings with our bank. We have 26 people among the deceased and missing who have more than six million roubles worth of outstanding mortgage loans.

We considered the request just today, and in the evening, we informed RusHydro that Sberbank would assume these loan repayments. This will be our contribution to the welfare of the families of the deceased and missing.

Vladimir Putin: Good. Thank you. Regarding other such issues, the company, the republic, and if need be, the federal government will address them. In general, how is the bank's work with the public going?

German Gref: Mr Putin, on our end, with regard to consumer loans, the situation is stabilising compared to last year. We are seeing a restoration of demand for loan products. And in terms of the number of loans disbursed, the number of loans tripled in the period from January to July.

In January, we issued 64,000 loans across the country, and in July we issued 244,000 loans. In March, 17 billion roubles worth of loans were disbursed to individuals, while in July it was 40 billion. In other words, we have seen growth over seven months in the monetary amount and the number of loans. Demand has almost tripled.

Vladimir Putin: Good. We have already talked about new "instruments," new services that you plan to offer to the public, and their introduction in the nearest future. What has been done on this front?

German Gref: We have launched a whole series of new projects. This has to do with both small businesses and loans to individuals. We launched three such products for small businesses - we launched them as part of a so-called "loan factory". This is a very rapid credit financing process, loans for small businesses to buy real estate. This is a new product, which we introduced in August.

And two more new types of loans are also new products for small businesses that are just starting out. For the moment, unfortunately, we only have these products running in "pilot" mode in three regions. Starting next year, we will launch them across the entire country. I think that lending to small businesses will increase considerably, specifically small businesses.

Vladimir Putin: You know, some time ago you decided to raise the ceiling on providing loans for car purchases - now it is already in the 600,000-rouble bracket. Have you felt the consequences of this decision?

German Gref: Mr Putin, I have specially brought the latest data with me today. We see that the programme of providing loans to support the auto industry was, in our view, one of the most effective anti-crisis measures. As of August 19, we have disbursed 22,104 loans to the tune of more than four billion roubles.

Vladimir Putin: How does this compare to previous programmes?

German Gref: The new programme, in which the Cabinet approved raising the ceiling from 350,000 to 600,000 roubles, was launched on August 3.. In the period from August 3 to August 19, we disbursed more than 4,500 loans, which is more than the monthly disbursements for the previous four months.

The number of cars that people are buying increased considerably. While Lada's share was 93% before, it has now fallen to 85%. This is not because of a decrease in Lada sales, but because commercial vehicles, Gazelles manufactured by GAZ and other cars made by other plants also made the count. I think that growth in August will be about double what it was in previous months.

Vladimir Putin: Mr Gref, one of the main issues is lending volumes. We had agreed - I met twice with your colleagues - on specific volumes, quite sizable volumes in August and September.

It's not a big secret if I tell you that I formulated these requirements for the country's major banks after appropriate consultations with the Central Bank of Russia. How is lending to the real economy going in your bank?

German Gref: In July we disbursed, excluding the carryover of restructuring expenses, loans totalling 286.4 billion roubles. These were only those loans disbursed by Sberbank. All state banks disbursed a total of around 500 billion roubles.

We have almost the same kind of dynamics in August. In the first 19 days in August, our net disbursement was 195 billion roubles as of August 19. I must say that the trend we are now facing is a large volume of loan repayment. A restructuring of our portfolios is taking place. If at the start of the year loans that we disbursed were...

Vladimir Putin: You're hard to please! First you say that there are major defaults, and now you're aggrieved because there are so many repayments.

German Gref: On one hand, we still have defaults on loans. But the repayments are coming from major companies. Western markets have opened, and generally, this is a good opportunity. Our companies now have access to "cheap money" on western markets.

Vladimir Putin: But you should also lower interest rates. This is competition, after all. So lower interest rates. Then the companies will never leave you. I meet with them regularly, you know. They say, "What are we to do if ‘cheap' money is available?" I surely cannot force them and say, "No, keep borrowing from Sberbank and pay it high interest."

German Gref: That's true. It's good that they're looking for the best possible terms - this also spurs us on. We have reduced interest rates on rouble loans by 3.75 percentage points and three percentage points on dollar loans in the last two months. And more than 42% of our corporate portfolio was disbursed at a rate below that of the Central Bank, plus 3%.

Vladimir Putin: Good. This means that the total lending volume is what? After we just got done talking about the need to increase lending volume?

German Gref: In July, we, Sberbank alone, disbursed 286 billion. It's hard to talk about the end of August; for the moment, we have big plans. Plus, today we finally coordinated all issues associated with state guarantees with the Finance Ministry. And we hope that by the end of the month, we will be able to disburse the first loans based on state guarantees.

Vladimir Putin: Understood. Are you now satisfied with the terms for providing state guarantees?

German Gref: Today we settled all of the issues that had been disputed. Late August and September, I think, will be very active from the point of view of aiding companies, both local economic mainstays and backbone enterprises, for which the government is ready to issue state guarantees. I think that we'll try to grant a large part of the loans in September. I think it may be 150 to 200 billion with state guarantees.

Vladimir Putin: Excellent. You have already started and are increasing the volume of foreign currency loans to the public.

German Gref: Yes, we have made this decision. Starting next week, we will start on the actual implementation of this decision. Last autumn, during the period when there was a threat of devaluation, we stopped lending in dollars. In addition, we offered the public the opportunity to convert dollar loans into rouble loans.

Now we see that the situation has stabilised considerably, and devaluation risks are significantly lower, so we decided that we will reinstate dollar loans to individuals except for mortgage loans.

We issued car loans in dollars - more than 50% of them. Especially in the major cities, in Moscow and St Petersburg, in dollars.

Vladimir Putin: In other words, Sberbank is returning to the practice of issuing foreign currency loans to individuals?

German Gref: In any currency - dollars, euros...

Vladimir Putin: Good.