Draft Law on VEB's Capitalization Approved by Governmental Commission
OREANDA-NEWS. The Governmental Commission on Legislative Drafting Activities has approved a Draft Law on Vnesheconombank's Additional Capitalization. The Draft Law was introduced by the Finance Ministry.
It is proposed to introduce a change in the Budget Code providing for a possibility to place 7% of financial resources of the National Wealth Fund on Vnesheconombank's deposits. Re-registration of deposits will make it possible for Vnesheconombnank to increase its capital by about 220 billion rubles.
The Federal Draft Law "On Introducing Changes in article 9610 of the Russian Budget Code was prepared in fulfilment of the Russian Government's instruction to additionally capitalize State Corporation 'Bank for Development and Foreign Economic Affairs (Vnesheconombank)' by way of re-registering deposits placed at Vnesheconombank by the Finance Ministry from financial resources of the National Wealth Fund (NWF) in subordinated loans with a maturity of 15 years.
Additional capitalization of Vnesheconombank is associated with the need to maintain its financial solvency whose key indicator is capital adequacy ratio. Meeting a capital adequacy ratio of at least 10% is a pre-requisite for raising funds on capital markets on the terms acceptable for the Bank.
The Draft Law proposes to introduce a change in article 9610 of the Budget Code providing for a possibility to place 7% of financial resources of the National Wealth Fund on Vnesheconombank's deposits.
Vnesheconombank's additional capitalization is to be made through re-registering dollar-denominated deposits, in which financial resources of NWF are placed in special deposits with a maturity of up to 15 years making it possible to record them upon calculating the amount of the Bank's capital. The total amount of the said deposits is 6.25 billion US dollars, the return date is December of 2014.
Re-registration of the deposits will make it possible for Vnesheconombank to increase its capital by about 220 billion rubles (unadjusted for potential fluctuations in the dollar exchange rate). The rated value of capital adequacy ratio will amount to 11-12% by the end of 2014.
Vnesheconombank is to pay interest on effective deposits that were charged as of the date of re-registration.
It is proposed that interest payments on subordinated deposits should be made on an annual basis.
The Draft Law is to be discussed at a meeting of the Government.
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