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International Investment Bank board endorses new strategy for 5 years

June 28, 2017, 1:45 UTC+3 BUCHARES

The participants signed a range of documents on cooperation and held a business forum on new opportunities for business in Romania

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BUCHARES, June 28. /TASS/. The 107th session of the board of the International Investment Bank (IIB) on Tuesday endorsed the investment strategy of the institution for the period of 2018 through to 2022. The participants also signed a range of documents on cooperation and held a business forum on new opportunities for business in Romania.

"The end of this year will see completion of a five-year strategic cycle, the task of which was to restore operations of the bank, to help recover it from the harsh financial situation and to turn it into a multilateral institute for development," the Chairman of the Board, Nikolay Kosov said in an exclusive interview with TASS.

"For a long time the bank mired in stagnation after a number of countries going through an overhaul of the foundations of the statehoods had withdrawn from the bank," he said. "Many problematic debts appeared then and the shareholders’ interest in the bank began to wane away. In 2012, the shareholders passed a strategy for restoration of the bank and now its tasks have been fulfilled."

"The strategy adopted in Bucharest today has the form of a roadmap for the next five years,"Kosov said. "Stability and moderate development of the bank are its keynotes. It spells out an annual growth at a rate of 10% to 12% over a period of five years and an increase of the assets to 1.8 bln to 1.9 bln euro."

"Simultaneously, the credit portfolio stands at 1.3 bln euro," he said. "Our assets have gotten over 1 bln euro and the current credit portfolio totals 550 or so million euro."

"The bank draws its funding from the financial markets of Russia, Slovakia and Romania - very successfully in the latter case," Kosov said. "We floated bonds in Romania in 2015 and 2016 at a price that was very lucrative for us, and every time we had an oversubscription measured by a factor of 2.5 to 3.0."

"We cooperate closely with the Romanian exchange and get support from the authorities every time we come to the Romanian market," he said. "This is very important for Romania, as the number of international investment banks bringing their securities to the local market isn’t really big here," he said.

"The portfolio of our loans in Romania is getting close to 70 mln euro and loans in the amount of about 40 million mln euro will be issued shortly," Kosov said. "That’s about 12% of our total portfolio of loans."

"If you look at the fact Romania has a 5.9% share in the paid-up capital of the bank, the indicator isn’t all too bad," he said. "Also, we’ve invested in Romanian securities - mostly in sovereign bonds - about 16% of our fiscal portfolio."

"The IIB is developing trade financing over the past two years," Kosov went on. "This type of operations particularly enjoys demand during sanctions because many Western banks, which interpret the sanctions in an expansive manner, refuse to cooperate with Russian commercial banks just because they are Russian."

"Yet these very same banks have years-long history of trade operations with partners in the Czech Republic, Slovakia, and Romania," he said. "The IIB is adapting itself to this niche now. Trade financing and assistance to export/import operations will take an important position in our daily routine soon."

"We’re planning to set up a direct investment fund and a fund for support to small and medium-sized businesses because this sphere has fallen out of the field of vision of large banks in recent years," Kosov said. "Many of them stop fulfilling their main function, which is to generate financial assistance to the development of industry."

"That’s why I believe the role of international investment banks will growing in the next five to ten years," he said. "Since they are supra-national entities, they can take a broad look at the assistance to small and medium-sized businesses. The role of projects that may be risky but still useful for the economy will be growing, too."

"Russia continues playing a leading part in the bank as it has the largest share in its paid-up capital," Kosov said. "It gets substantial support from the bank and this support will be expanding. We’re supervising several major projects in Russia and the volume of investment there is nearing 300 mln euro."

"We’re building innovative green hydropower stations in the Karelia (a northwestern region rich in rivers and lakes - TASS) where we run the White Rift project," he said. "We support the Lysva steel smelter and the State Transport Leasing Company. Also, we work on the Russian market securities and the Russian exchange where we’ve floated five issues of securities.".

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