Vnesheconombank Chairman Vladimir Dmitriev’s Interview to the TV Channel Russia 24

HOST: A question of Vnesheconombank’s additional capitalization remains open. Vnesheconombank’s management and the Government have been in talks since last year about providing VEB with 200 billion rubles. Vladimir Dmitriev told our channel about it as well as about other things. Watch an interview of EvelinaZakamskaya with VEB’s Chairman as part of the Saint Petersburg Economic Forum right now.

EvelinaZakamskaya: Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Chairman of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’: Good afternoon, Evelina.

EvelinaZakamskaya: We are happy to welcome you in our pavilion in Saint Petersburg, Vladimir Alexandrovich. What’s the difference between this Petersburg Economic Forum from all the previous ones? Do you feel the international pressure, in which Russia has been living in recent months here at the Forum?

Vladimir DMITRIEV: Your second question is an answer to your first one. It differs this way from all the previous ones. The main thing isthat our partners make no secret that our cooperation is developing in an extremely unfavorable international situation with a constant threat of sanctions and their increased scale. But it is important that our business partners stress that that they are not going to change their plans for continuing cooperation with Russia.As a Chairman of the Russian-Italian Forum-Dialogue within the framework of civil societies,I could clearly see it 15 minutes ago at our business breakfast. All leading top managers of the largest Italian companies stressed the need to further advance cooperation and expand their presence on the Russian market because they view Russia as their strategic partner and their plans are long-term ones.

And in this respect, Italy is not the only exception in the business community. There is no doubt that a strong pressure is being exerted on many companies. Some major representatives of European business failed to come to the Petersburg Economic Forum as opposed to previous years. But our middle-level partners stress that foreign companies’ presence on the Russian market is permanent and here they mean trade-economic and investment cooperation.

EvelinaZakamskaya: You’ve pronounced the word “long-term” several times and it is here on the Forum’s margins that many companies voice their concern that now it’s becoming more difficult to build a long-term dialogue for many years to come because our partners are expecting the third wave of sections, which is likely to be the most powerful one and could affect specific economic sectors.

Vladimir DMITRIEV: It’s not a secret that Russia has established close relations with most western European countries and western European business has been present in our country for decades. And here I mean both foreign companies and joint ventures created in Russia. We are all aware that even a potential threat of sanctions is not able to destroy things that have been formed for decades. Of course, there are threats, andthere are also considerable risks. Nevertheless, we all hope that this turbulent period won’t last for a long time and that in the long runwe’ll start to cooperate againand business will be optimistic about the future.

EvelinaZakamskaya: How do political difficulties with the West influence your relations with eastern partners?On the one hand, they are ready to cooperate and there is a great potential there because of growing markets but on the other hand this enables them to exert additional pressure on Russia and choose more favorable conditions for themselves.

Vladimir DMITRIEV: If you follow formal logic this might be true. But there are also long-term interests here and they have been forming for decadeswhen political events and economic conditions put us to the test.

I came back from China the day before yesterday. We opened financial company VEB Asia in Hong Kong. And at the opening ceremony in the course of formal presentation we could clearly see again that the business community in Hong Kong and this is not only Chinese business but also international business regarded Russia, despite the current situation, as a reliable and long-term partner.

Investments go to Russia. The Far East is a region, in which business of Asian-Pacific region countries is ready to invest. And a clear evidence of it is a great number of epoch-makingagreements signed in the course of President Vladimir Putin’s visit to Shanghai. Our Bank also signed major agreements including China’s Eximbank credit worth 500 million US dollars and its terms and conditions are rather market ones. They are not aimed atgaining additional advantagesin the current situation. This is also the case for major contracts, which were signed by Gazprom, Rosnneftand other Russian companies.

EvelinaZakamskaya: How is the current business situation influencing Vnesheconombank’s performance and forecasts for this year?

Vladimir DMITRIEV: It goes without saying, that we can’t help taking into account the current economic situation. We announced publicly that we had to early repay a syndicated loan without waiting for its refinancing. We raised this loan three years ago. Major east European financing institutions participated in it. The terms of refinancing offered to us proved unfavorable for us. And we found it possibleto repay this syndicated loan. And this did not impact our performance seriously.

As we view borrowings in terms of conducting our active transactions and funding our core activity, the current conditions are sure to influence our relations with our customers. We’ll have to adjust our plans and this will not affect painfully our activity and our relations with Russian borrowers.

EvelinaZakamskaya: We have received the news todaythat the Government has allegedly refused to additionally capitalize Vnesheconombank. I mean the National Wealth Fund’s financial resources worth 200 billion rubles that are placed on Vnesheconombank’s deposits. What does this news mean for you? First, has this news been confirmed? And how will it affect the Bank’s performance in the future?

Vladimir DMITRIEV: Frankly speaking, this news came as a surprise to me. A dialogue and discussions in the Government do not confirm this news. We have submitted all required documents for consideration by the Government. We are expecting relevant budgetary amendments. It is important to stress here that it’s not only a matter of the Bank’s additional capitalization, it’s a matter of the state’s support for the Bank. As opposed to commercial banks and public financing institutions, which can place their shares on the market an raise capital through additional issues, our main and single source of increasing our capital is the state’s monetary contribution because our Bank is a non-profit institution. Andmeasures of the state’s support including conversion of National Wealth Fund deposits in two-tier capital are caused by the need to further step up Vnesheconombank’s operations. They are well aware of it in the Government. Without the state’s support measures, the Bank’s activity will have to be scaled down. Nobody wants this to happen as the Bank was, is, and will be the largest financial development institution, the role of which in the current situation is becoming increasingly important.

EvelinaZakamskaya: When do you think a decision on additional capitalization will be made?

Vladimir DMITRIEV: We hope that in the course of autumn session ((I mean a parliamentary session) all necessary amendments will be passed. And until the end of the year, the Bank is sure to receive the state’s support to step up its business.

EvelinaZakamskaya: I wish you every success. Thank you very much Vladimir Alexandrovich.

Vladimir DMITRIDEV: Thank you Evelina.