VEB.RF

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VEB.RF
Native name
ВЭБ.РФ
Formerly
Vnesheconombank, VEB
Development corporation
IndustryInvestment
Founded1922 (as bank), 2007 (as development institute)
Headquarters,
Key people
Igor Shuvalov (chairman)
BrandsVEB.RF, VEB
₽40.7 bn[1] (March 31, 2019)
₽17.6 bn[2] (March 31, 2019)
Total assets₽3253.5 bn[3] (March 31, 2019)
Total equity₽331 bn[4] (March 31, 2019)
RatingBaa3 (Moody's)[5]
Websiteveb.ru/en

VEB.RF, or VEB (Russian: ВЭБ.РФ (ex-Vnesheconombank)), is a Russian state development corporation. It was founded in 2007 as a development institute. Today VEB.RF is one of the largest investment companies[6] and main development institute in Russia. It has financed more than 300 projects. The corporation's total assets were $50,3 billion, total liabilities were $45,2 billion, loan portfolio is $31,3 billion.

Activities[edit]

It's a non-political organisation. VEB.RF supports and develops the Russian economy. In partnership with commercial banks, it provides financing for large-scale projects to develop the country’s infrastructure, industrial production and social sphere, strengthen its technological potential and improve the quality of life[7]. VEB.RF plans to invest in the country's economy about 45 billion dollars in five years.

VEB.RF is validly existing under Russian law in the legal form of “non-profit organization”. It is not owned, nor directed by the government or political party[8].

History[edit]

Bank for Foreign Economic Affairs (1922-2007)[edit]

In 1922, Swedish financier Olof Aschberg established the Soviet Union's first international bank, Roskombank (Роскомбанк; "Russian Commercial Bank").

In 1924, the bank 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.[9]

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.[9]

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.[9]

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.[10]

Bank of Development (2007-2018)[edit]

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 development bank.[11][12] By late 2009 VEB quadrupled its assets to nearly 2 trillion rubles ($65 billion)[13], it was seen by the government as an off-budget fund, used to put off budget expenses.[13]

Vladimir Putin increased lending when he became the VEB's chairman of its supervisory board in 2008.[14][a] By late 2009, VEB quadrupled its assets to nearly 2 trillion rubles ($65 billion),[13] it was seen by the government as an off-budget fund, used to put off budget expenses.[13]

In July 2014, the United States Department of the Treasury imposed economic sanctions that greatly restricted U.S. persons and entities from providing doing business with VEB after the 2014 pro-Russian unrest in Ukraine.[15] Between 2014 and 2017, the Russian Ministry of Finance spent $10 billion on the bank.[14]

VEB has suffered massive losses in 2014-2015, leading to a 330 billion rubles government bailout in 2015,[16] followed by 150 billion rubles in 2016 and a similar amount planned for 2017.[17][18] VEB was the main lender for the 2014 Winter Olympics, and many of the loans originating from the games missed original returns forecasts, or had to be restructured.[19]

In March 2016, the bank was promised a $2.2 billion bailout from the Russian government.[20] 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.[21] The government originally offered the position to German Gref, who turned down the job.[13]

In March 2017, Ukraine imposed sanctions on Vnesheconombank (and other Russian state-owned banks operating in Ukraine: Sberbank, VTB Bank, VS Bank, Prominvestbank, and BM Bank) as part of its continued sanctions on Russia for its annexation of Crimea and involvement in the War in Donbass.[22][23][24] After that, the bank tried to sell its Ukrainian subsidiary; as of August 2017 unsuccessfully.[22] At Sochi in February, 2018, Vnesheconombank's Sergey Gorkov said they hoped to sell its Ukrainian subsidiary, Prominvestbank, by May 2018.[25]

In 2017, the bank's debt was $17 billion, including $14.2 billion in Ukraine.[14] 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.[14] According to a report the New York Times published in May 2017, 40% of the bank's loans were at risk of default.[14]

State Development Corporation (from 2018)[edit]

In May 2018, Igor Shuvalov replaced Gorkov as VEB’s new chairman.[26] In July 2018, the bank requested a further $16 billion bailout from the Russian government.[26] In October 2018 the bank announced plans to rebrand, changing its denomination into 'National Development Institute', and confirming it would be granted 600 billion rubles ($9.1 billion) in subsidies from the federal budget by 2024, in addition to the 125 billion rubles received in 2018.[27]

The net profit for the 2018 amounted to 3.85 billion rubles after a loss to 200,4 billion rubles a year earlier[28]. The net profit for the first quarter of 2019 17.6 billion rubles[29].

In 2019, after a long period when VEB.RF instead of financing new projects was engaged in servicing distressed assets, new investment projects appeared in the portfolio of the state corporation. In the framework of VEB.RF went into the development of the Udokan's copper deposit ($490 million), the production of sulfuric acid at the "KuibyshevAzot" and capacity expansion of "Shchekinoazot" for the production of methanol (the total participation of the corporation 8.5 billion.)[30]. VEB.RF started financing the project of construction of six large-tonnage vessels at the Zvezda super-shipyard near Vladivostok. Also VEB.RF, Gazprombank and Sberbank announced the funding of the development of the Talitsky area of the Verkhnekamsk potash deposit in Perm[31]. VEB.RF and Sberbank will provide a syndicated loan for the modernization of Novaport group's regional airports in six cities of Russia, and together with Rockwell Capital will build the largest pulp and paper mill in Siberia.

Organisation[edit]

Chairman of VEB.RF is Igor Shuvalov (since May 2018)[32]. He was first deputy Prime Minister of the Russian Federation from 2008 to 2018. The highest governing body of VEB.RF is the Supervisory Board, it chaired by the Russian Prime Minister[33].

VEB.RF coordinates development institutions of Russia: Russia export center, Corporation for small and medium business, the integrated housing development institution "DOM.RF", The monotowns development fund, Far East Development Fund etc[34].

Ex-chairmans of Vnesheconombank: Andrey Kostin (1996-2002)[35], Vladimir Dmitriev (2004-2016)[36], Sergey Gorkov (2016-2018)[37].

See also[edit]

Notes[edit]

  1. ^ By law in 2008, the Russian Prime Minister is VEB's chairman of its supervisory board.[14]

References[edit]

  1. ^ [https://veb.ru/files/?file=8b355d67c99341a1c5aeb5af5255daf8.pdf VEB.RF Group IFRS 1Q2019 Result]
  2. ^ [https://veb.ru/files/?file=8b355d67c99341a1c5aeb5af5255daf8.pdf VEB.RF Group IFRS 1Q2019 Result]
  3. ^ [https://veb.ru/files/?file=8b355d67c99341a1c5aeb5af5255daf8.pdf VEB.RF Group IFRS 1Q2019 Result]
  4. ^ [https://veb.ru/files/?file=8b355d67c99341a1c5aeb5af5255daf8.pdf VEB.RF Group IFRS 1Q2019 Result]
  5. ^ "Moody's affirms Vnesheconombank's long-term ratings at Ba1". Moodys.com. 13 February 2019. Retrieved 13 February 2019.
  6. ^ [https://veb.ru/files/?file=8b355d67c99341a1c5aeb5af5255daf8.pdf VEB.RF Group IFRS 1Q2019 Result]
  7. ^ "About us". xn--90ab5f.xn--p1ai. Retrieved 2019-08-06.
  8. ^ "VEB.RF" (PDF). Exhibit A to Registration Statement Washington.
  9. ^ a b c "History". Vnesheconombank. Retrieved 3 June 2017.
  10. ^ ""VEB Annual Report 2006"" (PDF). Archived from the original (PDF) on 2010-12-01. Retrieved 2008-01-24.
  11. ^ "VEB Profile". VEB. Retrieved 29 November 2014.
  12. ^ "Law on bank for development" Archived 2008-02-25 at the Wayback Machine, VEB
  13. ^ a b c d e Hobson, Peter (3 March 2016). "How Putin's Bank Became Russia's $20 Billion Problem". The Moscow Times. Retrieved 6 October 2018.
  14. ^ a b c d e f Protess, Ben; Kramer, Andrew E.; McIntire, Mike (5 June 2017). "Bank at Center of U.S. Inquiry Projects Russian 'Soft Power'". The New York Times. p. A1. Retrieved 5 June 2017.
  15. ^ U.S. Department of Treasury. "Announcement of Treasury Sanctions on Entities Within the Financial Services and Energy Sectors of Russia, Against Arms or Related Materiel Entities, and those Undermining Ukraine's Sovereignty" 16 July 2014.
  16. ^ "How bad is it really at Russia's VEB?". bne IntelliNews. Retrieved 12 April 2017.
  17. ^ "Russia's VEB chairman sees difficulties redeeming debt in 2017". Reuters. 10 November 2016. Retrieved 12 April 2017.
  18. ^ "Announcement of Treasury Sanctions on Entities Within the Financial Services and Energy Sectors of Russia, Against Arms or Related Materiel Entities, and those Undermining Ukraine's Sovereignty". United States Department of the Treasury. 16 July 2014. Retrieved 3 June 2017.
  19. ^ Voronova, Tatiana (19 December 2017). "Russia's VEB to transfer Globex to the state as it tackles Sochi..." Reuters. Retrieved 6 October 2018.
  20. ^ Kottasova, Ivana (30 March 2016). "The latest Russian bank bailout is not like all the rest". CNNMoney. Retrieved 27 June 2017.
  21. ^ "Kushner meeting shines spotlight on Russian bank". Financial Times. Retrieved 27 June 2017.
  22. ^ a b Ukraine blocks sale of subsidiaries of Russia's Sberbank, VEB – media, UNIAN (29 July 2017)
  23. ^ Пороше́нко, Петро́ Олексі́йович (March 15, 2017). "УКАЗ ПРЕЗИДЕНТА УКРАЇНИ №63/2017: Про рішення Ради національної безпеки і оборони України від 15 березня 2017 року Про застосування персональних спеціальних економічних та інших обмежувальних заходів (санкцій)"" [DECREE OF THE PRESIDENT OF UKRAINE No. 63/2017: On the decision of the Council of National Security and Defense of Ukraine dated March 15, 2017 "On the Application of Personal Special Economic and Other Restrictive Measures (Sanctions)"]. President of Ukraine website (in Ukrainian). Retrieved February 28, 2018.
  24. ^ Пороше́нко, Петро́ Олексі́йович (March 16, 2017). "Глава держави затвердив санкції щодо низки російських банків" [The head of state has approved sanctions against a number of Russian banks]. President of Ukraine website (in Ukrainian). Retrieved February 28, 2018.
  25. ^ Talant, Bermet (20 February 2018). "Russian state banks leaving Ukraine because of sanctions, attacks by nationalists". Kyiv Post. Retrieved 26 February 2018.
  26. ^ a b Pismennaya, Evgenia (3 July 2018). "Putin's Sanctions-Hit VEB Is Said to Plan Appeal for $16 Billion". Bloomberg. Retrieved 6 October 2018.
  27. ^ "Russia's Vnesheconombank revamped into VEB.RF, to get up to $22bn support". BNE Intellinews. 31 October 2018.
  28. ^ "Чистая прибыль ВЭБа по РСБУ в 2018 г - 3,85 млрд руб после убытка годом ранее". ПРАЙМ (in Russian).
  29. ^ "Чистая прибыль группы ВЭБ.РФ за первый квартал составила 17,6 млрд рублей". ТАСС. Retrieved 2019-08-09.
  30. ^ Ведомости (2019-06-10). "Как Шувалов за год изменил ВЭБ". www.vedomosti.ru. Retrieved 2019-08-09.
  31. ^ "«Акрон» привлек $1,7 млрд на свой крупнейший калийный проект". РБК. Retrieved 2019-08-09.
  32. ^ "Igor Shuvalov appointed Vnesheconombank Chairman". President of Russia. Retrieved 2019-08-07.
  33. ^ "About us". veb.ru. Retrieved 2019-08-07.
  34. ^ "Business networking area partners". forumvostok.ru. Retrieved 2019-08-07.
  35. ^ Lia. "ANDREY KOSTIN". www.finnews.am. Retrieved 2019-08-07.
  36. ^ "Sergei Gorkov appointed to chair board at Vnesheconombank". Банки.ру. Retrieved 2019-08-07.
  37. ^ "President of Russia". en.special.kremlin.ru. Retrieved 2019-08-07.

External links[edit]

Coordinates: 55°46′19.03″N 37°38′41.27″E / 55.7719528°N 37.6447972°E / 55.7719528; 37.6447972