Vnesheconombank Chairman Vladimir Dmitriev’s Interview to the TV Channel VESTI

The TV Channel Vesti 24. VESTI
22.04.2009, 13.35

HOST: And we are getting back to one of the main themes and we’ve got a chance to listen to what they are talking about at the All-Russian Forum on Small and Medium-sized Enterprises. I’d like to remind you that today members of the government, executives from line ministries and departments are discussing financial, legislative and organizational issues with businessmen and representatives of non-government organizations. Now Vnesheconombank Chairman Vladimir Dmitriev is talking live on the air with our studio. Good afternoon Vladimir Alexandrovich!

Vladimir DMITRIEV, Vnesheconombank’s Chairman: Good afternoon Margarita!

HOST: Vladimir Alexandrovich, the state commits a lot of money to support small business. An issue of financing is now one of the most sensitive ones. Your Bank is active in extending credits to businessmen. Nevertheless, they have mentioned several times today that a small enterprise has problem obtaining a loan. Why?

Vladimir DMITRIEV: I think there are still insurmountable problems associated with collateral, bureaucratic red tape and other barriers that prevent representatives of small and medium-sized enterprises to obtain required credit resources. It is for this reason that the state’s program of supporting small and medium-sized business has been now updated and expanded including the one being implemented through Vnesheconombank. We hope that more and more businessmen will be able to receive credit resources, at least, through regional banks we are cooperating with. And under the last year’s program 9 billion rubles were committed to support small and medium-sized enterprises through regional banks. All in all, about 70 regional banks participated in this program. We expect that this year, a thirty- billon-ruble program of lending to small and medium-sized enterprises implemented through Vnesheconombank would cover even more regional banks. In our opinion, about 130 banks across the country would be involved in this program of lending to small and medium-sized enterprises

HOST: Vladimir Alexandrovich, today they have discussed energetically an issue of interest rates in commercial banks, they are very high and sometimes so high as to make it impossible for a small businessman to take a credit. Is there any chance today to make banks reduce interest rates or the situation can’t be improved so far?

Vladimir DMITRIEV: Unfortunately, the current situation on the market is not likely to change for the better, at least, in the coming months. It is for this reason the program of providing state support for small and medium-sized enterprises is being implemented at quite preferential interest rates for small and medium-sized enterprises. As a whole, the last year’s 9- billion-ruble program aimed at supporting small and medium-sized enterprises was being implemented at interest rates of about 16-17 percent and we are sure that we’d be able to maintain this level implementing the expanded program worth 30 billion rubles in 2009.

HOST: This means that you would maintain 16-17 interest rates on credits, did I get that right?

Vladimir DMITRIEV: We’ll try to maintain this level for the end borrower. And a guarantee of increasing credit resources and maintaining interest rates at a level acceptable for small and medium-sized enterprises is the government’s decision to increase Vnesheconombank’s equity and contribute additional funds as a property contribution which would make it possible to finance small and medium-sized enterprises in the amount of 30 billion rubles.

HOST: Vladimir Alexandrovich, as far as banks are concerned, they also need credits. How can the situation on the interbank market be improved and what problems is this market facing now?

Vladimir DMITRIEV: Unfortunately, the common problem faced by commercial banks is the lack of long money in the economy. But I am convinced that this problem will be resolved in the near future taking into account high priority our country’s leadership is giving to it and I take seriously our country’s leaders’ statements on the need to reduce rates of lending to the real sector of the economy and maintain interest rates at the levels allowing to secure profitability and credit collectability.

HOST: Vladimir Alexandrovich, what else can the state do to boost lending in Russia besides the measures that are being already taken?

Vladimir DMITRIEV: I believe that the state made strenuous efforts to finance the real economy. But being responsible for promoting interests of Vnesheconombank which is not only a development institution but also the state trust management company responsible for trust management of the funded portion of pension funds, I think that this resource has not been used to the full in terms of lending to the real sector of the economy and at rates that are far lower than the current market rates. And in this respect, I and many real sector companies, above all, companies with state participation are looking forward to amendments being introduced to the law in order to expand Vnesheconombank’s investment declaration thus making it possible for pension funds to work for the real sector of the economy in the case that companies implementing major projects that require significant credit resources for long periods of time would issue bonds in which Vnesheconombank as the state trust management company would invest pension funds. We expect these bonds’ yields to be higher than inflation rate ensuring security of would-be pensioners’ funded portion of pension funds.

HOST: Vladimir Alexandrovich thank you for your answers, I’d like to remind you that we have talked to Vnesheconombank Chairman Vladimir Dmitriev who is now at the All-Russian Forum on Small and Medium-Sized Enterprises; we are going to get back to this theme again today.