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President Vladimir Putin: Good afternoon, Vladimir Olegovich. I’m ready to listen to what you have to say.

Vladimir Potanin: Good afternoon, Vladimir Vladimirovich. I would like to share a few thoughts with you on the country’s economic development as seen through the companies that are part of our group. This could perhaps be a good illustration of the situation, given that we change as circumstances change. We now have new opportunities for making investments and one of the main features of the last few years is that the companies we created at the beginning of 2000 are gradually growing stronger and developing. The most successful among them are now going public. In particular, our company Open Investments, which works in the real estate sector, became a public company last year. Two more companies in our group will become public companies this year and next year. One works in the gold-mining sector and the other is Rosbank, which is also a part of our group. We hope that this will enable us to improve conditions for attracting investment to our companies. Talking about Rosbank in particular, I think this subject is close to you, as you met yesterday with bankers…

Vladimir Putin: Yes, the director of Rosbank was at the meeting yesterday.

Vladimir Potanin: I hope he didn’t let our group down.

Vladimir Putin: He had some good ideas and made concrete proposals.

Vladimir Potanin: Rosbank is actively developing its retail banking network at the moment so as to make banking services more accessible. We are also working actively on consumer loans. Consumer loans accorded now come to more than $1 billion, and around two million people have already taken out loans at Rosbank. Other banks are seeing this same trend. Our bank is one of the fastest in developing mortgage loans programmes for the population, although we have made loans for only $50 million so far. This is due to various legislative and other problems that we have set out for you in detail. I am not saying anything new here, but I simply wanted to tell you that we are interested in and committed to developing this sector and putting additional resources into it. I think therefore that if we manage to settle all the technical problems that come up, this will benefit our entire banking system by opening it up more so that the population can make use of the services it provides.

Vladimir Putin: At the meeting yesterday the banking community representatives were active in discussing and defending their position regarding different options for opening up our market to foreign banking capital. What is your view on this issue?

Vladimir Potanin: I think that strong companies, strong banks, are born through competition, and so we should not be afraid of opening our market. I think that the decision you supported yesterday, namely that we invite foreign banks to enter our market not through opening branches but through creating their subsidiaries here, is a very fair decision. Creating subsidiary banks would mean that the foreign banks establish a subsidiary company in Russia, give it the capital it needs and hire staff, and this will create new jobs and bring in new tax revenue. This is a normal situation and we will work with these new banks on the full scale.

Vladimir Putin: In other words, these subsidiaries will be Russian legal entities and will be subject to Russian legislation.

Vladimir Potanin: I think this is very important. To take the example of our group, I can say that our foreign partners have great respect for the rules that are being set here and are ready to follow them. Furthermore, the information they will have to provide must be stable and transparent.

Vladimir Putin: We already have a fair number of banks here with 100-percent foreign capital, and they feel quite at home here and are creating a normal competitive environment in the Russian market.

Vladimir Potanin: I think it is in our interests to develop a normal competitive environment. The decisions taken are entirely justified and have been understood correctly by our foreign partners.

Vladimir Putin: We will continue to support not only our own businesses working in the banking services sector, but also Western capital, foreign capital, that has been entering our market and working very successfully here for many years now. I hope that this will create precisely the competitive environment we need in order to develop this sector in general.

How is your business abroad progressing? I remember that you had some good projects.

Vladimir Potanin: Yes, the platinum metals production project with which we began our international activity in the United States is developing well and the company has approximately doubled its results since then. Our U.S. partners and the U.S. authorities have unexpectedly discovered that Russian investors can work quite well on the U.S. market and that we have all the tools required for normal work on this market. Our next objective is to develop our business in neighbouring countries, in particular in Kazakhstan and Uzbekistan. I would like to ask for your support on this issue because, although this is a completely commercial project, we feel more comfortable entering new markets, more assured somehow, when we know we have the state’s backing.

Vladimir Putin: In that case, set out the concrete details of your plans and what kind of support it is you need. I will, of course, speak with my colleagues, with the Presidents of Kazakhstan and Uzbekistan, and I am sure that they will react accordingly. In earlier conversations they both said they would be happy to see Russian business entering their economies.