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

HOST: A meeting of G20 countries development banks, the so-called D20, was held in Rome. Vnesheconombank Chairman Vladimir Dmitriev in his interview to our channel told about themes of discussionб Olympic facilities as well as prospects for Russian aircraft exports.

Maria BONDAREVA: Good afternoon Vladimir Alexandrovich.

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

Maria BONDAREVA: We can see here new aircraft - a sort of joint venture between Russia and Italy. VEB also participates in this project. Are you happy about cooperation with Italians?

Vladimir DMITRIEV: I can’t help being happy about cooperation with Italians because a part of my working and sometimes personal time is devoted to performing my functions as a Co-Chairman of the Russian-Italian Forum-Dialogue within the Framework of Civil Societies which is designed to enhance contacts and cooperation in various sectors including economy. This of course expands my mission as the Chairman of Vnesheconombank whose objectives include providing support for Russian industrial exports as well as enhancing international investment cooperation. In this respect, I am happy about the way our relations are developing with our Italian partners.

Maria BONDAREVA: Let’s get back to the aircraft as we are standing against the backdrop of them. Vnesheconombank lends to Mexican Interjet for it to purchase our Superjets and engages to this end other foreign creditors. To what extent is it difficult to do itunder the conditions when economic sanctions against Russia might be expanded?

Vladimir DMITRIEV: It is always difficult to maintain effective financial and banking cooperation because we should offer our customers the most favorable terms and conditions. Competition is fierce. But in terms of promoting SukhoiSuperjet 100 to international markets we are glad that we are cooperating with foreign banks and above all with Italian and French banks. The SukhoiSuperjet 100 is a product of cooperation between three countries: Russia, France and Italy. And we also happy about the relations we are developing with such state insurance agencies as Italian SACE and French COFACE.

I would also like to thank our Russian partners, which are involved in the scheme for promoting SukhoiSuperjet 100 to international markets. They include such members of Vnesheconombank Group as the Export Insurance Agency of Russia (EXIAR) and VEB-Leasing – a company that offers leasing services to foreign buyers of these planes.And as of today, three aircraft are ready to be supplied – the first two aircraft are practically complete and the third one is being completed.

Maria BONDAREVA: Eight are already flying.

Vladimir DMITRIEV: Eight are already flying in Mexico. It is here where the whole aircraft’s interior is completed. About 200 job were created in the facilities that had been used earlier for other purposes but as a result of the phase-out people lost jobs.And by means of our SukhoiSuperjet 100 we create additional jobs both here and in Russia as well because some production facilities are located in Russia.

So, we are certainly happy about the way we are cooperating with our Italian and French partners. And I’d like to stress it once more that this is a result not only of Vnesheconombank’s efforts but also of its subsidiaries.

Maria BONDAREVA: Vladimir Alexandrovich, how much money is Vnesheconombank ready now to lend to foreign buyers?

Vladimir DMITRIEV: It’s a matter of hundreds of millions of dollars. In this respect, I’d like to stress that supplies of SukhoiSuperjet 100 for Interjet – the second largest Mexican carrier are being made on the basis of comprehensive support for Russian industrial exports where as I said Vnesheconombank’s subsidiary institutions are involved as well as a mechanism for subsidizing interest rates which made it possible for us to offer the Mexican company terms and conditions that are rather market-oriented and competitive.And as you have said as many as eight aircraft are flying in Mexico.And the daily mileage is about 8 hours. The planes do not stand idle; they are always in the air. Customers are happy. And it is for this reason we hope that besides 20 aircraft that are firmly contracted, another 10 aircraft might be purchased by our Mexican partners.

Maria BONDAREVA: Mexico buys, Italy equips and Russia manufactures and extends credits. And as a whole is this scheme affected by notorious economic sanctions the United States and Western partners are constantly talking about?

Vladimir DMITRIEV: As far as this project is concerned, we are not feeling any pressureor negative attitudes of our foreign partners. Ingeneral, I should say that the sanction regime, more specifically, the reaction by a whole number of foreign banks to the global situation and above all the pressure from the American Administration is tangible. Many Russian banks failed to refinance their credits and had to search for special resources to settle with their creditors. But on the other hand, recent placements in Eurocurrencies by Gazprombank, Alfa-Bank and Sberbank show that the market is open for us. Evidently, Russian banks do not make borrowings in dollars they make placements on European markets and feel rather comfortable.

In this sense, I go along with Economic Development Minister Alexei Ulyukayev who said that we were ready for various turns of fortune. And you know that in the near futurewe’ll launch a new scheme for funding through the Central Bank to extend long-term investment credits for economic development of Russia. In this sense, our domestic resources are being mobilized so that economic development does not stop.

Maria BONDAREVA: Are you somehow getting ready for a further expansion of sanctions? There appeared some information that your Export Insurance Agency might be indirectly hitif a third package of sanctions is imposed.

Vladimir DMITRIEV: You know if sanctions are imposed and Vnesheconombank is among companies to be hit by them, it goes without saying, that all our subsidiary institutions will be influenced by this sanction regime. It remains to be seen… It is important to continue funding the Russian economy. And to this end, as I have said the Central Bank, the Government and ministries are ready to counter the expansion of sanction regime.

Maria BONDAREVA: You are going from here to Rome to participate in D20. What issues are you going to discuss there and what agreement are you going to sign?

Vladimir DMITRIEV: In fact, we’ll hold a regular meeting of Group of Twenty countries’ development institutions. It was Vnesheconombank’s initiative to hold such meetings. We held such a meeting last year in Moscow. The meeting showed that development institutions had a high stake in discussing issues in the G20 format, which are of interest for development institutions. And these are issues of searching for long-term credit facilities, providing support for small and medium-sized enterprises and regulatory rules because development institutions are specialized institutions – they differ from commercial banks. So, we want regulators to treat us in a different way because our objective is to raise long-term credit facilities to extend credits on preferential terms.

Maria BONDAREVA: Are you succeeding with it?

Vladimir DMITRIEV: Yes, we are. And it is important that as part of this dialogue we are moving to discuss joint projects. In the past, our Western partners – development banks of France, Italy and Germany placed main emphasis on searching for joint credit facilities to fund infrastructure projects in Europe. Now they are open for discussing issues associated with long-term funding of various projects in Russia. This is of great interest for us.

So, tomorrow’s meeting is sure to be very interesting. It will be held under the auspices of our partners from Australia.But the European Investment Bank acted as an organizer. We hope that this meeting would be highly instrumental in reaching further agreements.

We are not planning to sign any agreements as part of D20 except for a communique setting forth our common objectives of funding infrastructure, providing support for small and medium-sized enterprises and offering regulators conditions for treating development banks in a special way. But outside of this meeting we hope to sign several agreementswith our Italian partners that are determined to raise credit facilities from Italian banks to implement joint projects in Russia.

Marina BONDAREVA: Vladimir Alexandrovich I wish you a good trip. Finally I’d like to ask you one more question. There appeared information that Vnesheconombank which had extended credits worth 248 billion rubles to fund the construction of Olympic facilitieshoped for government compensation in case of its borrowers’ bankruptcy. Allegedly, VEB requested the Government to allow for a limit in the budgets for 2015 and 2017. Is this true?

Vladimir DMITRIEV:We are not departing from terms and conditions agreed upon with the Government and investors. The moratorium on debt repayment is in force until 2015. So, we do not insist on interest and principal repayment with regard to projects that were funded through using Vnesheconombank’s funds.

With the liquidation of Olympstroy, there arises a question of how we are going to address this problem because Olympstroy’s surety is still valid. Given its liquidation, Vnesheconombank is not capable of compensating for potential losses.

So, we do not require the state to compensate us for something in full right away. Our Bank the state and investors should look for ways of addressing this problem. As it is known that some projects are planned loss-making ones. We took time intentionally and imposed moratorium in order to see how in a period of two years apartments and hotels will be operated and sold and if a cash flow will be sufficient to settle with Vnesheconombank. This work is underway.

Maria BONDAREVA: How do you size up the situation?

Vladimir DMITRIEV: So far, with a cautious optimism, because some private individuals, a number of companies and ministries became interested in purchasing certain facilities. But I’d like to say it once more that our optimism is cautious. The year 2015 is not far off (time flies) and in any case we should be ready for various scenarios. But I’d like to stress it once more that Vnesheconombank, investors and the Government should work together. In my letter to our Prime Minister I proposed to consider various options ranging from providing direct support for Vnesheconombank to subsidizing investors’ interest rates for us to be able to restructure debts to reduce their debt burden. I think that in the long runwe’ll be able to find an optimal solution which is acceptable for the state, investors and Vnesheconombank.

Maria BONDAREVA: Thank you very much for your interview.