Meeting of the Vnesheconombank Supervisory Board
29 october 2012
Dmitry Medvedev’s opening remarks:
Today we are holding a regular meeting of the Supervisory Board. I’d like to say a few words to begin. Our agenda is extensive – we have more than 20 items on it. We’ll discuss topics that are linked with the funding of the infrastructure, construction of Olympic facilities, crediting of small and medium-sized business and advancement of high-tech exports of Russian enterprises.
Before the discussion of the agenda, I’d like to make one more important point – VEB has attracted 20 billion roubles on the domestic bond market. As I see it, this successful placement has created considerable interest on behalf of foreign investors – their share amounted to one quarter in this deal. I hope that this testifies to their confidence in our bond market and the bank itself. This is a good event.
Now I’d like to turn to the aircraft industry, which is a priority of Government policy. This October, amendments have been made to the rules for granting subsidies to Russian producers of the aircraft, helicopters and aircraft engines, with a view to reimbursing them for the expenses on loans received for technical re-equipment and leasing payments made for the same purpose. I have signed a relevant resolution. This will help attract long-term loans to the industry, and to carry out projects on the manufacture of new aircraft. At the same time, we must of course promote our aircraft in foreign markets, using all the tools at our disposal, including loans to customers and exports insurance.
Today we must take a decision on funding international sales of the Sukhoi Superjet-100, or to be more precise loans worth a total of up to 2.5 billion dollars to foreign buyers of these airliners. I’d like to emphasise that this is very important, although such deals should be made on a case-to-case basis. Our goal is to increase the sales of these aircraft in the foreign market using mechanisms we’ve gained access to by joining the WTO.
There is one more issue pertaining to the promotion of our high-tech produce in the world market. Vnesheconombank has set up the Russian Agency for Export Credit and Investment Insurance (EXIAR) to help our exporters succeed in new markets. Our aims are ambitious – by 2014 support should reach about 500 billion roubles and the share of insured non-primary exports should grow from the current one percent to 10%. We need mechanisms for protecting exporters against the risks of foreign trade and more flexible terms for funding export transactions. Two measures have been proposed in this context. First, we must discuss the issue of long-term government-backed guarantees of up to $10 billion by Vnesheconombank to EXIAR. Second, we must review options for supporting high-tech exports, as suggested by the National Business Initiative. This concerns the funding by Vnesheconombank and EXIAR of Russian exports and investment projects of our companies abroad.
One more important issue that we have been discussing for the last few months and on which I held a special meeting is Vnesheconombank’s participation in the development of the Far East and the Baikal area. Last year, the joint-stock Fund for the Development of the Far East and the Baikal Area was established to encourage cooperation with regional authorities, foundations and investment companies, private ones, of course. There are plenty of business ideas in the Far East on the fuel-and-energy complex, metallurgy, the timber and fishing industries and infrastructure. They have compiled a whole booklet on this subject. The fund is selecting the projects to be carried out under co-financing. We must primarily invest in the most effective projects that are ready to go. Today, we’ll discuss the allocation of 15 billion roubles from the federal budget via VEB’s capitalisation to the charter capital of the afore-mentioned fund. But this is only the first step. In the future, we’ll probably send other funds to it, and some of the new projects in the Far East will be carried out this year and next year under other programmes. According to our current estimate, total funding will exceed 100 billion roubles.
Now I’d like to say a few words about lending to small and medium-sized business. Recall that under VEB’s strategy, this support is to have reached 150 billion roubles by the end of 2015. The bank is cooperating with international financial institutions in this direction. It is establishing the international fund for business support with German partners and has already invested a handsome $150 million in this project. Its partners have contributed the same amount of money. The main point is that the fund is oriented towards long-term lending to industrial enterprises, which is particularly important for us.
We will also discuss modernisation of energy infrastructure – the agenda includes a number of items on this subject. The matter deals with the issue of loans to TGC-9 for the construction of the new Bereznikovskaya thermal power station in the Perm Territory and the Nizhneturinskaya GRES power plant in the Sverdlovsk Region. These long-term projects will pay off in about 10 years. Their implementation will make it possible to meet the demand for heat and electricity, not only today but also in the near future, and will create the conditions for the comprehensive development of the relevant regions.
There are also other items on our extensive agenda. Let’s get to work.
* * *
Vnesheconombank Chairman Vladimir Dmitriyev holds a news conference following a meeting of the company’s Supervisory Board
Vladimir Dmitriyev: Over twenty issues were discussed at the Vnesheconombank (VEB) Supervisory Board meeting, including issues related to forming a comprehensive system to support high-tech Russian exports under specific projects. Also discussed was the sale of Sukhoi-Superjet and the first shipment of 11 jetliners under a loan arrangement which includes VEB resources, Export Insurance Agency of Russia (EXIAR) insurance support and VEB-Leasing insurance companies. Main parameters of this deal were agreed. A decision was taken at the meeting, in light of Russia's accession to the WTO and in keeping with OECD best practices, to create a comprehensive system to support high-tech exports based on the experience of selling the Sukhoi-Superjet to third countries.
A decision was also taken to improve cooperation between VEB structures, that is, VEB proper, the Export Insurance Agency of Russia, Roseximbank and VEB-Leasing – with the participation of relevant federal executive bodies, including those dealing with Russian industrial exports and high-tech production. What this means is creating a system of cooperation and a system of submitting relevant procedures of governing such cooperation to the Supervisory Board when considering issues related to supporting industrial exports. We plan to submit this procedure within a month. Under the procedure, when considering concrete applications for industrial export support, VEB jointly with its structures and executive bodies is to take relevant decisions within two months. Some additions will be introduced to Roseximbank's (Russian Export and Import Bank) operation, so that this VEB structure can finance supplies of high-tech products produced by the enterprises classified as small and medium-sized (primarily medium-sized) businesses.
In addition, we have discussed the system of bank guarantees extended by VEB to the Export Insurance Agency of Russia (EXIAR). The federal budget provides $10 billion for this. VEB will extend its main guarantee support to EXIAR.
In addition to these issues, jointly with the leading foreign national financial institution for development, KfW (Kreditanstalt für Wiederaufbau), we have discussed the establishment of a special fund supporting medium-sized businesses in Russia. VEB and KfW intend to invest $150 million each in this fund. We see as realistic the participation by foreign development institutions – such as the European Investment Bank, the European Bank for Reconstruction and Development, and some foreign funds – in the fund to support small and medium-sized businesses in Russia which is being created. This support will be realised by acquiring stakes in small and medium-sized businesses. But this is not the only form of support for small and medium-sized businesses in Russia. As you know, there is a programme for extending KfW loans to some Russian banks with VEB security for those regional banks that work with small and medium-sized businesses.
We also have a programme to support small and medium-sized businesses in the Northwestern Federal District. Thus, in our view, we are forming a rather attractive system of support for small and medium-sized businesses. It is attractive in terms of the level of funding and of financial conditions of the support system. In addition, at the meeting we also considered some specific VEB investment projects. These include projects on energy infrastructure and financing the construction and modernisation of two large stations, the Bereznikovskaya Thermal Power Station and some projects in the Urals. We have discussed some technical changes with respect to funding Olympic sites, that is Krasnaya Polyana, Roza Khutor, and the construction of a hotel accommodating 400 people, being performed by the Mostovik company.
Besides, we discussed some projects to support the defence industry. Some defence enterprises require rather significant investment or loans from VEB.
We have also reviewed the current system to support investment projects in the Chechen Republic: we have discussed the projects that will receive VEB loans without Government guarantees, without federal budget guarantees. In such cases, security will be provided by the funds extended by the federal budget for creating a special guarantee fund for the Chechen Republic. Currently it amounts to some 2 billion roubles, and this offers the possibility of extending loans for some projects in the Chechen Republic with guarantees from this fund. Currently, we are working on about six projects in agriculture and related industries, logistics, construction materials, transport and energy infrastructure. To summarise, in the short term, the new system will make it possible to fund a number of projects.
These are the main conclusions of today’s Supervisory Board meeting.
Question: Could you elaborate on the deal involving those 11 Superjets: who is the buyer, what is the period for supply, what financial facilities are concerned?
Vladimir Dmitriyev: The buyers are companies with which Sukhoi-Superjet has strong commitments. And jointly with the Ministry of Economic Development, we have formulated the main loan terms, making it possible to maintain competitive rates and thereby ensure sales of these jets to other countries. What is important here? Since the production of these aircraft involves international cooperation and major components, and joint engine production is conducted in cooperation with French and Italian partners, export insurance agencies of relevant countries participate in promoting these jets abroad. These agencies include COFACE in France and SACHE Group in Italy. We will have to review the agreement that VEB had signed earlier with these agencies because the Export Insurance Agency of Russia becomes their full partner. Under the current agreement, VEB will be replaced by the Export Insurance Agency of Russia. As far as bank guarantees for EXIAR are concerned, these will apply not only to high-tech exports but also to Russian investments in third countries. Other specific terms of the deal constitute a commercial secret, so I will not comment on them.
Question: Which countries will buy these 11 jets? Who is the buyer?
Vladimir Dmitriyev: I have hinted these are the countries and the companies with strong contractual commitments with Sukhoi-Superjet.
Question: Is $2.5 billion the amount being extended?
Vladimir Dmitriyev: Yes, up to $2.5 billion.
Question: Could you say what funds are being extended for those two thermal power stations?
Vladimir Dmitriyev: If I’m not mistaken, VEB is providing 11 billion for one project, and 15 billion for the second project.
Vladimir Dmitriyev: Roubles.
Question: What are the terms?
Vladimir Dmitriyev: They are acceptable terms for the borrower. That is a long-term loan extended for over 10 years.
Question: And what funds will VEB extend to defence enterprises?
Vladimir Dmitriyev: Over 20 billion roubles.
Question: Mr Dmitriyev, can you say whether the state corporation is considering the possibility of extending loans to Rosneft for the deal – acquiring TNK-BP?
Vladimir Dmitriyev: No. Thank you.