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Headquarters in Moscow
|Vneshtorgbank of the USSR|
|Founded||18 August 1922|
|Sergei Gorkov (chairman)|
|Total assets||$61.1 billion (2016)|
Vnesheconombank, or VEB (Russian: Внешэкономбанк (ВЭБ)), is a Russian government-owned development bank, meant to provide funding for projects aimed at developing the Russian economy. It is not involved in retail banking activities. Translated to the English language, its name means "Bank of Foreign Economic Activity," though it is commonly called the "Russian Development Bank," and it refers to itself as "the state corporation Bank for Development and Foreign Economic Affairs.”
From 2005 to 2006, both the assets and liabilities of the bank doubled from around $6 billion to $12 billion, and the income rose from $239 million to $301 million. VEB has suffered massive losses in 2014-2015, leading to a 330 billion rubles government bailout in 2015, followed by 150 billion rubles in 2016 and a similar amount planned for 2017. VEB has been subject to U.S. economic sanctions since July 2014 over Russia's annexation of the Crimea.
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In 1922, Swedish financier Olof Aschberg established the Soviet Union's first international bank, Roskombank (Роскомбанк; "Russian Commercial Bank"), which in 1924 was renamed Vneshtorgbank (Внешторгбанк; "Foreign Trade Bank of the USSR"), a joint stock bank. It was renamed Vnesheconombank ("Bank for Foreign Economic Affairs of the USSR") in 1988.
In 2002, Vnesheconombank was restructured and it stepped up its efforts in servicing government programs, reduced the scope of its commercial business and gave a higher priority to supporting the government's structural reforms.
In April 2002, VEB was appointed Vnesheconombank agent for investing temporarily free Pension Fund's assets in securities denominated in foreign currency, and in January 2003, a special structural subdivision to handle pension funds was formed; VEB was appointed the "State Trust Management Company" responsible for investing Russia's pension funds.
In April 2007, Russia's State Duma passed the federal law "On Bank for Development," which regulated VEB's legal conditions and made it a state bank. By law, the bank's board chairman became the Prime Minister of Russia. Vladimir Putin increased lending when he became the bank's chairman in 2008.
In 2010, Alex Shnaider sold half of his ownership in the Zaporizhstal steel mill to buyers financed by VEB, who were then themselves acquired by VEB. Shnaider used proceeds from the sale to partly meet cost overruns at his Toronto Trump Tower.
In 2010, the bank's director visited the United States Chamber of Commerce to announce an agreement with the Export–Import Bank of the United States. In 2013, a VEB subsidiary acquired Boeing 777s it then leased to Aeroflot in a $500 million deal guaranteed by the U.S. Export-Import Bank. In 2014, the U.S. Export-Import Bank guaranteed a similar $700 million deal.
In July 2014, the United States Department of the Treasury imposed economic sanctions that prohibited U.S. persons from providing doing business with VEB after the 2014 pro-Russian unrest in Ukraine. Between 2014 and 2017, the Russian Ministry of Finance spent $10 billion on the bank.
In 2016, Evgeny Buryakov, who posed as a banker in VEB's Manhattan office and who attempted to recruit Trump advisor Carter Page, pleaded guilty in U.S. district court to having acted as a secret agent of the Russian Foreign Intelligence Service. Buryakov's lawyers were paid by VEB.
In March 2016, the bank was promised a $2.2 billion bailout from the Russian government. Sergey Gorkov, a former senior executive at Sberbank, was appointed to lead VEB and come up with a turnaround strategy, which included the sale of non-core assets.
In March 2017, Ukraine imposed sanctions on Vnesheconombank (and other Russian state-owned banks operating in Ukraine) as part of its continued sanctions on Russia for its annexation of Crimea and involvement in the War in Donbass. After that, the bank tried to sell its Ukrainian subsidiary; as of August 2017[update] unsuccessfully.
In 2017, the bank's debt was $17 billion, including $14.2 billion in Ukraine. In January 2017, Gorkov released the bank's "Strategy 2021," which predicted relief from sanctions, resuming borrowing in the United States, and shifting risks to the government's budget. According to a report the New York Times published in May 2017, 40% of the bank's loans were at risk of default.
The Russian government uses VEB to support and develop the Russian economy and to manage Russian state debts and pension funds. It is a part in the government's plan to diversify the Russian economy, and to do so receives funds directly from the federal state budget.
The bank has been used to fund industrial and infrastructure projects, as well as off-budget spending on government projects such as the 2014 Sochi Winter Olympics. Another one of its unofficial functions has been to act as a rescue fund for failing businesses.
Sergey Nikolaevich Gorkov has been Chairman since February 26, 2016, when he replaced Vladimir Dmitriev, who had been in the role since 2004. Gorkov was previously the deputy chairman of the board at Sberbank, Russia's largest state-owned bank. Gorkov had earlier worked at the Yukos oil company and Sberbank after graduating from the Russian Federal Security Service's university in 1994.
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