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Meeting with VEB.RF State Development Corporation Chairman Igor Shuvalov

August 23, 2022, The Kremlin, Moscow

Chairman of the State Development Corporation VEB.RF Igor Shuvalov informed the President about the priority areas of the bank’s operations amidst the external sanction pressure.

President of Russia Vladimir Putin: Mr Shuvalov, Vnesheconombank is our most important development institution. The group has over 4 trillion in assets and its credit portfolio exceeds 1.5 trillion.

How is the group operating in today’s conditions?

Chairman of the State Development Corporation VEB.RF Igor Shuvalov: Thank you, Mr President.

The conditions today are challenging. Since February and the large-scale sanctions against the Russian banking sector, we essentially had to build the infrastructure for cooperating with banks and customers from scratch. But we succeeded. And I want to report that as of now, we have fully established cooperation with Russian and several foreign banks as well as with our clients.

It is no secret that clients often fear secondary sanctions. We managed to resolve this problem using the data transfer system provided by the Central Bank. We often provided services in dollars and euros, especially when transactions concerned export or import. Now we operate exclusively in rubles. We also operate with the currencies of friendly countries but we conduct no euro or dollar transactions.

There is great interest in the Central Bank’s data transfer system. By the way, even before the sanctions, we promoted this system, guided by the principles of partnership in the SCO’s inter-bank association when Russia presided in the  SCO. Several countries, including some members of the  EAEU, accepted the system.

What is currently going on with VEB’s business? In cooperation with the Government and the Central Bank, we took all the necessary decisions concerning regulations and capital provision. As per your instruction, the Supervisory Board decided to grant sureties worth 1.35 trillion rubles in favour of commercial banks. They have already received 860 billion and are now signing loan agreements with their borrowers. Loans amounting to a total of around 365 billion rubles have been issued to date.

These are real measures of support. This is how a development bank is supposed to function in a crisis. VEB and the Government are being rather flexible, repurposing some sureties that have been granted in order not only to replenish circulating capital or satisfy other needs but also to consider investment projects.

Moreover, speaking at the 25th St Petersburg International Economic Forum, you said that it was important to support the Project Finance Factory and grant an additional 122 billion rubles of capital. These decisions have been made and right now, we are having discussions with the Government and the Economic Development Ministry on which new projects to launch in order to support the investment cycle in Russia in these difficult circumstances.

First of all, we will deal with new industry projects. We are now living with completely different demands – for example, when it comes to our aviation equipment. The market demands a quantity of aviation equipment that requires the expansion of our current capacities.

Vladimir Putin: It will be to our advantage.

Igor Shuvalov: Yes, this is exactly what we are working on. This is why we are getting fully engaged at the Government’s request, to expand aircraft and engine production capacities. We see it as our priority.

The projects that we planned earlier will be completed as envisioned. They include an upgrade of electric public transport, housing and utilities. You covered this topic as well. We are working with Deputy Prime Minister Marat Khusnullin.

In cooperation with DOM.RF, we are considering joint opportunities and ways to build more square metres of new and modern housing for Russian families.

Our current priority is everything related to technological sovereignty. You constantly talk about this. We now regard this as one of our main tasks.

Consequently, we are fully involved in the work that has much to do with urban living – I am referring to waste treatment, clean water, city transport, and major industries – and we will go on with this work.

We faced certain capital market challenges and thought that these challenges were set to last for a long time. But I must tell you, Mr President, that we have managed to float 60 billion rubles in bond-secured loans on the Russian market, and the terms are good. It was a fine test for us to see how we will be able to work in the ruble zone. We regard this as a success. Of course, we are cautious about this. We will not place bond-secured loans for huge sums, we will only draw funds for projects that require liquid assets.

But there is the Finance Ministry to help us with liquid assets and we are working according to the National Wealth Fund’s funding rules. So, we can both borrow on the market from commercial banks – commercial banks treat us as a reliable partner – and float bonds for the benefit of corporate clients.

Vladimir Putin: Do you manage to find projects that require support, while, on the other hand, are liquid in their own right?

Igor Shuvalov: Yes, Mr President. Right now, we are focusing on projects that are of interest to commercial banks but that cannot be fully served by commercial banks because of the new risk-related circumstances, which the commercial banks want to share with the Development Bank.

This concerns both copper production and the development of new batteries, which will be handled by Rosatom. All of these are repayable commercial projects. It is just that under these circumstances the commercial banks would like to share the risks with us. This is our main function and we will certainly work on this.

Vladimir Putin: Very well.


August 23, 2022, The Kremlin, Moscow