Vladimir Putin Holds a Working Meeting with Vnesheconombank Chairman Vladimir Dmitriev

V.PUTIN:Dmitriev, let’s discuss the Bank’s activity for 2013 on the main projects and on a large-scale program as part of preparations for the Olympic Games.

V.DMITRIEV: Thank you Mr. President.

The Olympics became a national project for us, as indeed for the whole country. We have invested considerable amounts of money in many projects over the last few years.

Our overall loan portfolio for the Olympics is close to 240 billion rubles. These are major projects that include hotel complex, facilities to accommodate the Olympic Committee and sports facilities too of course.

V.PUTIN: You mean credits to commercial institutions to implement various projects, that is, credits to be repaid.

V.DMITRIEV: Yes, of course.

We are well aware that these are complicated projects, including hotels and buildings that will be in the long run sold on a market basis. We know that we cannot expect these projects to pay off within 2-3 years of course.

To this end we established an inter-agency commission headed by Deputy Prime Minister Dmitry Kozak, to jointly address issues related to the facilities’ future and repayment of credits we extended. We are seeing a very constructive attitude from investors and the federal and regional authorities.

We decided to introduce a two-year moratorium on servicing credits because we think that by the end of this year, the future of the projects and facilities built with Vnesheconombank’s support will be more or less clear.

We are viewing the situation in an absolutely calm and sober way and understand that the situation is manageable and that we have to look for solutions together with investors. We regularly hold meetings with investors, relevant ministries, and the regional authorities in order to maximally utilize the facilities built with Vnesheconombank’s support. These are hotels, administrative buildings and sports facilities.

V.PUTIN: And what about the Bank’s main projects?

V.DMITRIEV: As far as Vnesheconombank’s support for exports is concerned, we view the last year as a breakthrough because the comprehensive industrial exports support system started to operate at full capacity in the Russian Federation.

We made full use of all the instruments Vnesheconombank Group has at its disposal. They include the Bank itself, Russia’s Export-Import Bank, the Export Insurance Agency of Russia (EXIAR), and VEB-Leasing-our leasing company.

This mechanism is working particularly well now in funding foreign purchases of Russian high-tech products such as Sukhoi Superjet-100 aircraft. We have already taken all the necessary corporate decisions concerning supplies of the first 11 aircraft to Indonesia and Mexico. All of the organizations that I’ve just mentioned were involved in these transactions.

The important thing to note here is Sukhoi Superjet-100 aircraft are being supplied to Mexico with the support of foreign insurance agencies and above all such companies as Coface and SACE. All of the aircraft for foreign customers were made with the financial support of Vnesheconombank. And we can also say that the subsidy we received to subsidize interest rates was also used to the full extent.

V.PUTIN: How was it used?

V.DMITRIEV: It was used to bring down interest rates in order to make them competitive with other financing institutions, foreign institutions that are also ready to fund these projects.

V.PUTIN: So what is the interest rate on this credit?

V.DMITRIEV: It is a market rate at a level of 5.5 percent, depending of course on the buyer’s risk, because the system applies to credits extended to buyers of Russian industrial products.

V.PUTIN: Are the credits in foreign currency?

V.DMITRIEV: Yes. In this particular case, we are talking about Indonesia and a Mexican company that are buying our aircraft.

V.PUTIN: So, in fact this credit provides support for Russian industry?

V.DMITRIEV: Yes, there is no doubt about it.

Moreover, I’d like to say that 120 billion rubles extended by Vnesheconombank to fund Russian suppliers by granting performance guarantees (tender guarantees, advance payment guarantees) made it possible to ensure Russian exports worth 660 billion rubles. In other words, the effect is considerable.

And the insurance coverage provided by the Export Insurance Agency of Russia (EXIAR) made it possible to ensure Russian industrial exports worth around 70 billion rubles. These are substantial amounts and they have been growing over the last 18 months since we launched the exports support program.

V.PUTIN: Mr. Dmitriev, we should not forget that Vnesheconombank was established as a bank for development, and this function of a development institution rather than a commercial bank should be the core of Vnesheconombank’s entire activity.

V.DMITRIEV: Yes, this is our position too.