Page 69 - RusRPTDec18

after the appointment of Igor Shuvalov, ex-Deputy Prime Minister and trusted Kremlin bureaucrat, secured up to $22bn in various forms of state support. In January-September 2018 overall VEB still remained in red, posting a loss of RUB70bn, albeit shrinking from RUB109.5bn for the same period of last year. At the same time, analysts surveyed by Vedomosti believe that net profit in the third quarter is to be mostly attributed to volatile income from financial operations, and not main operational activities. Non-interest income jumped to RUB15.8bn profit (from RUB8.7bn loss a year ago), due to currency gains, while net interest income declined in January-September from RUB63.4bn to RUB47.9bn. Previously Shuvalov asked for a subsidy that will allow VEB to issue investment loans to the real sector cheaper than competing commercial banks. He estimated that discount needed at RUB350bn for the target RUB3 trillion loan portfolio. VEB also argued that it could raise 3- to 4-fold more loans given syndications with Russia's largest banks, such as Sberbank, VTB, Gazprombank, and others. First such syndication for an Arctic railway project was closed in November.
VEB capitalization talks move forward. Vnesheconombank’s (VEB) supervisory board met on November 2 with the government to discuss the state-owned bank’s recapitalization. The relevant draft law, prepared by the Ministry of Finance, will be considered at a cabinet meeting the next day. Shuvalov is moving to unite all development functions under VEB's policy umbrella, a move that will have considerable bearing on investments related to Eurasian integration (Shuvalov's old portfolio). Tellingly, the 600bn rubles ($9.1bn) discussed to pay foreign debts perfectly parallels the loan VEB received from China in June. The loan required full repayment on a very short turnaround. This is evidence that further infrastructure development is likely under a functional freeze for now.
● The government plans to extend 300bn rubles ($4.6bn) in budgetary funds to VEB with the goal of building the bank’s loan portfolio to 3 trillion rubles ($45.6bn) over the next five years.
● The government will also allocate 600bn rubles ($9.1bn) to repay VEB’s foreign debts by 2024.
● Reflecting VEB’s new role as a state-owned development corporation that finances and coordinates national projects, the bank will be renamed VEB.RF.
Russia's debt before Ukraine’s second biggest lender Oschadbank will grow by $97,000 daily in case of delay in compensation of $1.3bn for losses caused by the illegal military annexation of Crimea in 2014, according to the lender's head Andriy Pyshny. Ukraine's state-owned lender Oschadbank filed a lawsuit in August 2016 with claims for the recovery of lost assets and remuneration for the lost of business and payable interest caused by Russia’s take over of the peninsula. The move followed another Oschadbank lawsuit worth UAH15bn ($589mn) filed in 2015. Earlier, the Ukrainian leadership urged all Ukrainian state-owned companies to follow the example of Oschadbank and recover damages for the annexation of Crimea and the loss of Ukrainian property. The ruling makes Oschadbank the first fully state-owned company to have won compensation from Russia owing to its military aggression against Ukraine, the bank highlighted, calling upon other state and private entities to follow in its path, the lender said in a statement on November 26.
The National Bank of Ukraine (NBU) has declared the Ukrainian operations of Russia's state-owned VTB Bank insolvent following weeks of a snowballing liquidity crisis, the regulator said in a statement published on
69 RUSSIA Country Report December 2018 www.intellinews.com