OREANDA-NEWS. November 22, 2010. The meeting’s transcript: V.V. Putin: Vladimir Alexandrovich, I’ve got two questions to ask you. How are things progressing with providing support for small and medium-sized enterprises? I know that you’ve issued eurobonds, what’s the result of this transaction?

V.A. Dmitriev: As far as small and medium-sized enterprises are concerned, we view this line of activity as one of our top priorities. We pledged that by the end of the year the program of supporting SMEs would be expanded and almost all Russia’s territory would be covered by this program being implemented through the Russian Development Bank. We are sure that about 100 billion rubles will be made available to small and medium-sized enterprises through the Russian Development Bank by the year-end. And in this line of activity we are carrying out new programs and here I mean programs related, above all, to co-financing. Earlier, we used to say that Vnesheconombank’s and the Russian Development Bank’s money were received by banks and they in their turn financed small and medium-sized enterprises but now in exchange for reducing interest rates we encourage banks to co-finance programs of supporting small and medium-sized enterprises. For example, if we give a ruble, a bank pledges to also commit a ruble to support small and medium-sized enterprises and in doing so it receives an interest rate, which is significantly lower than a usual one.

V.V. Putin: How much lower?

V.A. Dmitriev: We expect an average interest rate for the end borrower to be 12% till the year-end. Although upon launching the program, regional banks’ interest rates amounted to 20% now they are a lot lower. On average they are 12%. And the lowest interest rates are given to those banks that are engaged in co-financing and also to those that lend to innovative small and medium-sized enterprises.

V.V. Putin: What is your participation amount going to be for this year?

V.A. Dmitriev: 100 billion rubles, that is, the funds that would be made available directly to end borrowers, small and medium-sized enterprises. As we are Vnesheconombank Group, we expect to commit a total of 125 billion rubles to support small and medium-sized enterprises through our subsidiary banks, namely, Globexbank, Svyazbank and the National Trade Bank.

V.V. Putin: That’s not bad. It’s a sizable figure.

V.A. Dmitriev: We hope to bring this figure to 250 billion rubles by 2015.

V.V. Putin: How would you describe your cooperation with small and medium-sized enterprises? Of course, you are aware of their abilities, their economic and financial standing, how do they observe the requirements of financial discipline?

V.A. Dmitriev: We have an extremely low percentage of loan default and bad loan servicing. And I have already told you that we staked on supporting the real economy, although small and medium-sized enterprises are actively operating in the trade sector, we shifted our support to the real economy. For example, five years ago 60% percent of funds were consumed by small and medium-sized enterprises operating in the trade sector, now 60% of funds account for industry, construction and transport. We issue a bulletin on a monthly basis (he shows a bulletin), in this bulletin you can read about sectors, in which we operate with regard to each region, each city.

V.V. Putin: So, we can say that small and medium-sized enterprises in the real economy are reliable, good and stable borrowers.

V.A. Dmitriev: Yes, of course. By the way, providing support for small and medium-sized enterprises proved to be a serious crisis management measure. It was at that time that we felt we were in great demand. To put it straight, unemployment was a serious consequence of the crisis but the demand for workforce was higher in the small and medium-sized business sector.

V.V. Putin: And now a few words about the placement of eurobonds.

V.A. Dmitriev: Just recently our team has come back from, say, the world tour because we have visited various parts of the world – we met investors in South-East Asia, America, Asia, and Europe. Luckily, we managed to actually place two bond issues with one of them being a debut one for Russian corporate borrowers – a 15-year bond issue. We borrowed a billion rubles at an interest rate which is also uniquely low for Russian borrowers. The bond issue was four times oversubscribed and naturally we chose parameters that suited us.

And the second issue was worth 600 million dollars – a seven-year bond issue. So, this year we have placed the first debut successful issue worth 1.6 billion and now we have placed a 15-year and a seven-year bond issues.  What does this show? This shows that trust in Russian borrowers has restored. It’s clear that our rating is in line with a sovereign one and our risk is viewed as quasi sovereign, nevertheless, this is Russian borrowers’ serious bid for success on capital markets. Various investors show interest. Investor distribution is even both in America and Europe and in other parts of the world. I’m sure that investors regained their trust in Russia are ready to invest long money.

V.V. Putin: Are you happy about the results?
V.A. Dmitriev: Of course I am.
V.V. Putin: That’s fine.