VEB to Help Belarus to Build Nuclear Power Plant (NPP) and Host the 2014 Ice Hockey World Championship

Belvnesheconombank’s project number one is to participate in funding the construction of a nuclear power station in Belarus. Moreover, the Bank will become an active and interested player in the retail service market. The Bank also plans to participate in Minsk’s preparations for the 2014 World Ice Hockey Championship.

In his interview to the Interfax-West News Agency Vnesheconombank Chairman Vladimir Dmitriev told about Belvnesheconombank’s performance and ambitious plans of VEB’s subsidiary bank.

-How does the core shareholder assess the preliminary performance of its subsidiary bank in Belarus for this year and for the past years in terms of qualitative and quantitative indicators?

-We view them as pretty successful. Despite well-known rather complicated macroeconomic conditions, this year Belvnesheconombank retained the position of a leader in the banking sector of Belarus in terms of its performance dynamics.

For example, in terms of authorized fund amount the Bank retained third place among Belarusian banks and sixth place – in terms of assets and customers’ credits. And in terms of capital adequacy ratio moved from 4^th top 3d place and in terms of equity capital – from 6^th to 5^th place.

From January to October 2011, Belvnesheconombank’s assets increased by 2.5 times, its loan portfolio – by 3.4 times, capital adequacy ratio by 1.5 times. The Bank’s equity capital rose due to internal sources (profits and the Bank’s funds) as well as due to the subscription to additional shares conducted in August with Vnesheconombank’s direct participation. The subscription increased the authorized fund by 25% or by 154 billion Belarusian rubles. I’d like to say that only few Belarusian banks managed to increase their authorized fund.

As far as Belvnesheconombank’s qualitative indicators are concerned, during January-October the Bank increased its profits by 1.6 times from the same period last year.

Since its inception Belvnesheconombank has been one of the largest banks in the Republic servicing the real economy and specializing in servicing foreign economic activity of private and government economic entities. The Bank’s performance allows us to arrive at a conclusion that the fact that Vnesheconombank became its strategic investor provided Belvnesheconombank with an additional impetus for development. For a pretty short period of time Vnesheconombank participated in three subscriptions to the Bank’s shares and contributed 307 million US dollars to the Bank’s authorized fund which was highly instrumental in increasing it by 31 times.

-Does Belvnesheconombank meet forecast parameters provided for by its development strategy? Has this strategy been adjusted?

-OJSC Belvnesheconombank’s development strategy was developed for 2011-2015 and was approved by the Bank’s Supervisory Board in February of 2011. Actual performance indicators (as of October 1, 2011 and those projected for January 1, 2012 demonstrate that all the forecast parameters provided for by the Bank’s development strategy for the current year were met taking into account the devaluation of the Belarusian ruble.

Nevertheless, Vnesheconombank’s and Belvnesheconombank’s specialists are developing Belvnesheconombank’s development strategy for a period of up to 2015 taking into account changes that took place in the Republic’s economy and monetary sector. The concept sets forth the Bank’s development goals, key lines of its strategy implementation including competitive activity, business management, cooperation with subsidiary banks of Vnesheconombank’s Group, development of Russian-Belarusian integration ties. The concept also identifies means to achieve the set goals.

-What main risks have emerged this year and what measures has Vnesheconombank taken to reduce them?

-This year a rather complicated situation has developed in the Belarusian economy. Belvnesheconombank together with Vnesheconombank’s specialists are assessing and stress testing main risks of the Belarusian Bank with due regard to the emerging macroeconomic situation. They include credit, interest-rate, currency and liquidity loss risks. Their mutual influence on capital adequacy ratio is also being assessed.

So, integration of risk management into business processes became one of Belvnesheconombank’s main lines of activity in 2011.

As of now we can pinpoint the following competitive advantages of Belvnesheconombank:

-         stable positions in the banking system;

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-         extensive network of territorial subdivisions:

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-         extensive correspondent network: more than 600 banks in 77 countries;

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-         application of advanced banking information technologies;

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-         top-quality loan portfolio: problem loans accounted for only 0.1% as of 01.11.2011.

We are considering the possibility of increasing the share of state-run enterprises in the customer base and developing retail business as potential lines of the Bank’s further development and growth.

-What prospects for Belvnesheconombank’s development does the Russian investor see?

-Belvnesheconombank and Vnesheconombank are planning to play a key role in implementing joint projects of Belarus and Russia. These projects provide for exports of Russian and Belarusian industrial equipment, products and services, development of communications and electro-energy and transport sectors of Belarus, modernization of the road network, creation of logistics centers etc. The projects are also designed to help raise foreign investments for the Republic of Belarus.

Prospects for Belvnesheconombank’s development should be to position the Bank as Vnesheconombank’s partner in implementing interstate and other projects of Belarus and Russia funded through Vnesheconombank and position it as an expert in analyzing project proposals and in funding these projects together with Vnesheconombank. The Bank’s activity in promoting Belarusian-Russian economic cooperation is designed to reduce costs of both sides and boost financial investments efficiency. The Bank is to act as a consultant to Vneasheconombank in the course of privatization.

There are plans to expand Belvnesheconombank’s role as an agent bank for the Belarusian Government in raising and implementing investment projects funded against government guarantees through using foreign banks’ credits including those of Vnesheconombank. Belvnesheconombank is supposed to help raise foreign investments for the Republic of Belarus.

For a long time Belvnesheconombank was seen as a bank for servicing corporate sector. Do you favor Belvnesheconombank’s plans to expand retail and small and medium-sized enterprises segments?

-Earlier Belvnesheconombank focused on supporting the country’s basic industries although it was called a universal bank. But given the changing market conditions, you have to diversify your business and offer what customers need at any given moment. And this involves not only corporate customers.

I’d like to remind you that Vnesheconombank participates in providing financial support for small and medium-sized enterprises through funding credit institutions and legal entities involved in supporting small and medium-sized enterprises.

We support Belvnesheconombank’s plans to expand its activity in this sector and excellent prospects for enhancing small and medium-sized enterprises in the Republic. Belvenesheconombank is developing a product line for small and medium-sized enterprises and natural entities.

Since Vnesheconombank became majority shareholder, Belvnesheconombank has been transforming into an active and interested player in the retail service market. And it has all it needs to achieve this goal: a network of territorial subdivisions and self-service terminals, highly qualified personnel, a wide range of retail services on offer including payments with the use of bank cards.

The Bank views its activity in the retail service market as a way to efficiently raise and place financial resources, diversify its income base and banking risks. In our opinion Belvnesheconombank’s main line of developing retail business in the coming years will be to move from offering individual banking products and services to customers to forming a comprehensive model of servicing customers. It will make it possible to meet most of their needs for financial services and to service a significant share of transactions.

The outrunning growth of retail markets and the use of new competitive advantages would create conditions for increasing retail business share in Belvnesheconombank’s active-passive transactions and bring this share closer to that of transactions with corporate customers.

-Is Vnesheconombank ready to support large-scale projects in the Belarusian economy and does it consider the possibility of providing resource support for the Belarusian government?

-As I’ve already mentioned Belvneshecnombank jointly with Vnesheconombank are planning to play a key role in implementing joint projects in Belarus and Russia. As far as large-sale projects are concerned strategic sectoral priorities for 2011-2015 have been identified. They include railway and air transport, power engineering, network facilities and smelting industry.

The railway sector is funded under the Government Program of Developing Railway Transport of Belarus for 2011-2015.

The projects in the aerospace industry include a project of the State Enterprise National Airport aimed at building the second runway and a passenger terminal worth 600 million US dollars, with Belvnesheconombank’s share being 48 million US dollars. As part of the project Belvnesheonombank offered to act as an agent for the Belarusian Government in servicing credits extended by the China Eximbank which is to fund the remaining cost of the project.

The Bank is exploring the possibility of its participation in setting up a joint venture on modernizing IL-76 aircraft between OJSC Airline Transaviaexport and Russia’s OJSC Ilyushin Aviation Complex in order to create a technical maintenance and repair center for IL-76 planes in the city of Minsk. The project is estimated at 250-300 million US dollars.

Moreover, Belvnesheconombank has offered to fund the purchase of short-haul planes by the National Airline Belavia in 2013-2015 and the technical re-equipment of the aero navigation and communications systems of Belaeronavigation State Enterprise.

The Bank is to carry on funding the investment project “the Construction of a Production Building to Assemble and Test Space Systems” at OJSC Peleng.

In the Belarusian power facilities sector the Bank’s project number one is to participate in implementing the project to construct a nuclear power station. OJSC Atomstroiexport was appointed as general contractor under the project.

Financing the network facilities including Minskenergo’s project on the comprehensive construction of substations and cable lines is inextricably linked to the energy saving program. The Bank expresses its readiness to provide funds worth about 40 million US dollars to Minskenergo.

Under the development program of the UN and the Global Ecological Fund “Removing Obstacles to Increasing Energy Efficiency at Belarusian State Sector Enterprises” the Bank participated in establishing an International Energy Center with a 52% stake in the authorized fund. As a principal shareholder the Bank plans to commit 120 million US dollars to fund energy saving projects including 75 million US dollars directly through the International Energy Center.

Under Minsk’s Investment Program for 2011, Belvnesheconombank participates in the preparations for the 2014 World Ice Hockey Championship in Minsk. The Bank is funding the construction of engineering transport facilities and provision of urban amenities by Gordorstroi.

Belvnesheconombank expressed interest in funding the purchase of underground carriages by the Minsk Metropolitan in 2012 in the amount of about 1 029.2 million Russian rubles.

Is VEB determined to recapitalize Belvnesheconombank taking into account that its capital decreased because of the devaluation?

For a period of 2007-2011 Vnesheconombank’s financial support in the form of contributions to the charter capital and credit lines exceeded 900 million US dollars including 130 million US dollars in 2011. In 2011, Vnesheconombank purchased shares of Belvnesheconombank’s additional issue for an amount of 30 million US dollars. The amount of documentary transactions with Vnesheconombank reached 250 million US dollars in 2011.

The concept of Belvnesheconombank’s development up to the year 2015 provides for increasing the bank’s charter capital in 2012 and 2014 by another by 70 million US dollars as well as for extending a subordinated loan to the Bank in 2015. Nevertheless, upon updating the concept these figures will be adjusted upwards.

Origin: interfax.by