OREANDA-NEWS. June 21, 2011. IFC, a member of the World Bank Group, the Russian Federation, and state-owned development bank Vnesheconombank today agreed to work together to create the Russian Banking Opportunity Fund. The fund will provide much-needed capital for banks in regions of Russia to finance small and medium enterprises, creating opportunities for businesses.

Lars Thunell, IFC Executive Vice President and CEO, and Alexei Kudrin, Deputy Chairman of the Government - Minister of Finance of the Russian Federation, signed an agreement under which Russia committed to invest USD 50 million to the fund. Vnesheconombank, represented by Vladimir Dmitriev, Chairman of Vnesheconombank, and IFC signed a separate memorandum of understanding through which the bank is considering investing up to USD 250 million toward the fund. IFC will invest up to USD 250 million of its own funds.

“The Russian banking system is gradually recovering from the global financial crisis,” said Kudrin. “Today, we took a first step toward creating a specialized fund that will enable local banks to become catalysts of economic development by financing companies operating in non-financial sectors of the local economy, particularly small and medium enterprises.”

Vnesheconombank’s Dmitriev said, “The fund is to become an effective instrument for financing the real sector of the Russian economy, as well as small and medium enterprises. We are happy to support the initiative and unite our efforts and resources to create an instrument for increasing the capital of Russian banks. For most of the country’s regional banks, long-term investments are still difficult to access, which, in its turn, narrows the banks’ capabilities for financing enterprises of the real economy.”

IFC’s Thunell said, “IFC aims to develop the private sector and create financial opportunities for small and medium companies wherever they are needed most—especially in remote and frontier regions. Our global experience and financial resources, combined with those of Russia and institutional investors, will help diversify the economy and strengthen the financial system in remote areas.”