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Putin to chair regular meeting of VEB Supervisory Board

September 27, 2011, 10:00 UTC+3
As a result of implementing its new development strategy the VEB will significantly enhance its role in funding programs and projects to modernise the country’s economy
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MOSCOW, September 27 (Itar-Tass) — Russian Prime Minister Vladimir Putin on Tuesday will chair a regular meeting of the Supervisory Board of Vnesheconombank (VEB). The Board will consider a draft Strategy for the Development of VEB for 2011-2015, which will replace the existing Vnesheconombank Strategy for 2008-2011, the press service of the Russian government reported.

As a result of implementing its new development strategy the VEB will significantly enhance its role in funding programs and projects to modernise the country’s economy. In particular, the share of innovative projects in the bank’s loan portfolio volume should grow to 20 percent, which in monetary terms could reach 170 billion roubles.

For the period of 2011-2015 the high-priority investment projects financed by the Development Bank will include: projects aimed at renovation and modernisation of existing Russian enterprises manufacturing competitive products; projects to create new production capacities, ensuring the production of innovative high-tech products that are in demand on world markets.

The share of infrastructure projects by the end of 2015 will amount to at least 34 percent, the share of projects in industrial sectors - about 58 percent, in agriculture - 8 percent of the bank’s total loan portfolio.

Pursuant to the instruction of the Government of the Russian Federation and the Supervisory Board of Vnesheconombank, the issue of the establishment of the Russian Export Credit and Investment Insurance Agency in the form of an open joint-stock company with VEB’s 100-percent stake in the Agency’s authorised capital that will amount to 30 billion roubles, was put on the agenda.

The Agency is being created for structural support of functioning of the mechanism of export credit and investment insurance from business and political risks, designed to complement the range of commonly used financial instruments to support exports, such as guarantees and financing, and therefore to raise the effectiveness of government support for exports in general.

The order of the establishment and the main provisions relating to the regulation of the Agency’s activities is stipulated by the Federal Law of 18 July 2011 “On Amendments to Certain Legislative Acts of the Russian Federation for Improving the Mechanism of Export Credit and Investment Insurance from Business and Political Risks” that came into force on July 22, 2011.

The VEB Supervisory Board meeting agenda also includes the issue of VEB’s participation in the financing in the amount of up to 40 billion roubles of the project “Construction of the Taishet Aluminium Plant” for the production of primary aluminium with a capacity of 750 thousand tonnes per year. The project is aimed at the removal of infrastructure constrains of economic growth and at raising efficiency of the use of natural resources. As a result of the plant’s construction up to 3,000 new jobs will be created, and payments to the budget during the period of Development Bank’s loan will amount to 17.4 billion roubles.

The meeting participants are also expected to consider the issue of funding by VEB of the investment project “Creation of the Ford-Sollers JV” in the volume of 39 billion roubles. The project envisages the establishment of large-scale production of cars and commercial vehicles, as well as SUVs with a capacity of 350 thousand vehicles per year with the target localisation level of at least 60 percent, including the production of powertrains in Russia.

VEB is a Russian, and former Soviet, bank and translated to English as the Bank of Foreign Economic Activity. It is commonly called the Russian Development Bank, although it refers to itself as “the state corporation “Bank for Development and Foreign Economic Affairs.” The institution is used by the Russian government to support and develop the Russian economy, to manage Russian state debts and pension funds. It is a part in the governments plan to diversify the Russian economy, and to do so receives funds directly from the state budget.

According to the VEB website, in 2010 Vnesheconombank carried on its core activity as a Bank for Development and stepped up its international efforts. Twice in the year Vnesheconombank placed eurobonds on the international markets. The volume of the eurobond issues exceeded 3 billion US dollars, bond maturity periods were seven, ten and fifteen years.

In 2010, Vnesheconombank entered into agreements with many regions on implementing projects and programs aimed at innovation development of the Russian constituent entities. The Bank initiated the signing of a multilateral agreement between development institutions to provide support for innovation line of development in SMEs and became one of the founders of the Skolkovo Centre. As a national development institution Vnesheconombank participated in implementing investment projects aimed at supporting mono-cities.

The Bank virtually completed the rehabilitation of its three subsidiary banks (Svyaz-Bank; Globexbank; Prominvestbank, Ukraine). Vnesheconombank Group was formed. In order to streamline Vnesheconombank’s structure the following departments were established: the Innovation and High Technology Department, the Natural Resources Department, the Regional Policies Department, representative offices were opened in Yekaterinburg, Pyatigorsk and in the French Republic.

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