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Tsekhomsky: VEB resembles now the China Development Bank of the 1990s

27 may 2016 года
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BEIJING, May 27 – RIA Novosti

Vnesheconombank - a development institution which is designed to fund long-term projects - resembles the China Development Bank of the 1990s as it can’t do now without the state’s support said VEB First Deputy Chairman Nikolai Tsekhomsky in his interview to RIA Novosti.

It strikes the eye that the securities market in China is very deep. Despite the fact that Chinese securities are bigger than ours by ten times in terms of a great number of indicators, their security market is bigger than ours by about 200 times”, said Mr. Tsekhomsky.

According to him, one of the Russian banking sector problems is our inability to raise funds with the help of instruments they use in China despite the fact that they also use a whole number of aggregations in order to promote their securities.

“Specifically, upon purchasing their securities by commercial banks, weight on capital equals almost zero. So, in terms of managing liquidity, commercial banks like these instruments very much because their weigh on capital is almost zero. So far, we haven’t had such instruments in Russia”, admitted Tsekhomsky.

Moreover, the China Development Bank (CDB) hasn’t sustained any losses in the past 44 quarters, it has a top quality portfolio and this forms a strong platform for its independent activity, VEB’s First Chairman said.

“In this respect, we are at a different stage, we resemble them in the late 1990’s when they wouldn’t have survived without the state’s support either. There are many similar characteristics here”, he noted.

In particular, CDB was active in funding special transactions – the ones that were somehow offered to it by the state, he explained.

Later on, this development institution changed its policy dramatically – now it is in a very close dialogue with the state but this dialogue must be mutual with a two-way street.

“We are sort of succeeding too. We are of the same opinion with our regulators that at a time when our financial resources are limited we should invest them in the most interesting projects which have the largest multiplication effect and are the most useful for our economy. Here both Chinese and our specialists want to simplify our model for it to be easy to understand for everyone, lest people ask the following question: “What is VEB like?” said Tsekhomsky.

He reaffirmed that VEB was not supposed to compete with commercial banks. “We position ourselves as an instrument for transferring government funds in the economy, above all, to restructure it and change its structure. We are not supposed to compete with commercial banks. In many cases, business model is not what you should do but also what you should not do. We must agree on what we should not do. This is very important and relevant for us”, said Tsekhomsky.
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