OREANDA-NEWS. The Bank's strategic business guidelines for a period of up to the year 2020 were discussed at the meeting.

After the Meeting of Vnesheconombank's Supervisory Board, VEB Chairman Vladimir Dmitriev Held Briefing for Journalists

V.Dmitriev: So, our regular meeting of Vnesheconombank Supervisory Board is over. As usual, a lot of problems had piled up by the end of the year, with some of them being of extraordinary importance for Vnesheconombank. They include an issue of budget, an issue of the Bank's strategy as well as matters related to funding Olympic projects, our charitable and sponsor's activities, providing support for a whole number of investment projects and the Bank's subsidiary institutions:
- Above all, I'd like to say that as a whole we have approved proposed approaches to our strategy and strategic business guidelines on the basis of which Vnesheconombank's development strategy up to the year 2020, from 2015 to 2020 will be formulated and submitted to our Supervisory Board next year, in the second quarter of the next year. The strategy is quite ambitious. Besides our traditional lines of activity top priority is to be given to supporting industrial exports taking into account decisions taken by the Government on preferential funding of importers and domestic producers. This support would apply to both lending proper and to guarantee business. Vnesheconombank was offered to raise the bar significantly and set serious, ambitious tasks before itself in this sphere of activity. Although it was recognized and stated that Vnesheconombank had already set up a comprehensive system of supporting exports which applies to Vnesheconombank's activity as well as to the activity of the Export Credit Agency of Russia (EXIAR) which set off to a good start and is already now a reliable partner of a number of Russian enterprises operating on the CIS and near-abroad countries. This system also applies to Roseximbank whose activity focuses on providing support for small and medium-sized enterprises. It was also said that Vnesheconombank itself and its subsidiary bank - SME Bank should step up their efforts to support small and medium-sized enterprises. New forms of assisting the development of small and medium-sized enterprises were also supported. They will apply to not only to credit and guarantee support but also to creating special funds which would invest in small and medium-sized enterprises operating in the non-trade sector. We created this fund together with Germany's bank for development - KfW. Other potential foreign investors express their interest in participating in this Fund including international financing institutions. We hope that a managing company we are supposed to establish in the near future (the Fund itself was established and founded in Luxemburg), will operate here is to be established in the second half of the next year and we hope that this Fund will become an additional stimulus for the development of small and medium-sized enterprises in our country.

- Our business guidelines are aimed at our loan portfolio dynamic development, increasing Vnesheconombank's assets among other things by way of entering into capital of Ilyushin Finance Co where Vnesheconombank will own controlling stake. By way of buying out a stake in the United Aircraft Construction Corporation VEB will help to implement the Sukhoi Superjet program as well as to convert VEB's debt into equity of this company.

- We have also discussed the Bank's budget and agreed upon its key indicators. In the 2nd quarter of the next year after conducting a financial audit and publishing an auditor's report we'll publish data on the Bank's performance for 2013. And it's already clear that basic indicators of our activity for the next year would exceed indicators of the current year including projected profit, loan portfolio growth, the Bank's assets and liabilities growth, the Bank's participation in funding these transactions both by way of placing bond issues inside our country and abroad and by way of conducting transactions on the interbank market and here I also mean tied lending against imports of foreign equipment.

- In this respect it's very important to stress that there is no doubt these ambitious plans should be adequately supported by the state in terms of enhancing VEB's capital base. Various scenarios are being discussed for example direct monetary contribution, government guarantees, a contribution in the form federal bonds, conversion of some deposits into tier 2 capital, guarantees against Vnesheconombank's transactions. In this respect, it makes sense to consider practice of Germany's bank for development where all its borrowings are secured by government guarantees. National development institutions in various countries enjoy various forms of government support. They include preferential lending which is used in Brazil and direct monetary contributions into capital in China. So, we are not inventing and recommending anything new we rely on the existing practice and on specific features of banks for development which as a rule are not joint stock companies and therefore they can't rely on additional issue of shares and engaging shareholders in their capital thus increasing their resource base.

- All these support measures are acknowledged as substantiated and are worth being discussed. One of top priority scenarios is believed to be conversion of some deposits into two tier capital or a decision to include these deposits in two tier capital. This requires to introduce changes into applicable legislation but we feel and believe that this work will be completed next January. Now, the Bank is and will be involved in the coming months in implementing main lines of its activity, which will not require to increase capital immediately. And our forecast for the next year is that Vnesheconombank's capital adequacy ratio will be at a level that does not pose any problems and risks for our creditors, that is at a level higher than an upper limit of 10% which is to be maintained in our agreements on borrowings such as bond issues or interbank lending. By the way, this ratio was set by the Memorandum on Vnesheconombank's financial policies.

- Olympic projects. We have taken decisions on some of them to increase their budgets through using borrowers' funds rather than Vnesheconombank's monetary resources. But as a whole, we acknowledged that Olympic facilities are being funded dynamically in accordance with terms and conditions of credit agreements including with conditions precedent which borrowers are obliged to observe. We have also discussed a whole number of investment projects including providing support for Saturn Company and revision of financial terms of the credit extended to Tobolsk Polymer for the construction of a larger-scale integrated polypropylene production facility with a capacity of 0.5 million tons per year. The changes are caused by the fact that the project moved from its investment stage into its operation stage. Not long ago the integrated production facility was inaugurated in the presence of the Russian President. Due to achieving production capacity and availability of sales markets, risks with regard to the project are significantly lower now and so we offered our Supervisory Board to reduce the interest rate and refuse a whole number of collaterals transferring them to Sibur.

- As to investment projects designed to support industrial exports we made a decision to extend a credit worth 500 million dollars to the Belarusian Government represented by this country's Finance Ministry. This credit is designed to fund advance payments related to the construction of a nuclear power station in this country. Russia extended a credit worth 10 billion dollars for the construction of this nuclear power plant. They have started to use the credit. The Republic of Belarus made a part of advance payments through using budgetary funds but given problems with the budget, and in order to support Russian industrial exports the Bank's Supervisory Board made a decision that Vnesheconombank was to provide 500 million dollars to the Belarusian Finance Ministry to fund advance payments.

- We made a decision to increase capital of our subsidiary bank - Roseximbank through transferring a subordinated loan in the amount 1 billion 700 million rubles into tier 2 capital, this means that these funds will be used to buy out additional issue. The reason for it is that by stepping up its efforts Roseximbank was in line with the Central Bank's regulation and provided above all guarantee support for export-oriented medium-sized enterprises. Today, we have also discussed an issue of Vnesheconombank sponsor's and charitable assistance. Main lines of this activity remained unchanged. They above all include important projects in medicine, education, culture, sports and science. And the budget compared with this year's budget remains factually unchanged.