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Andrei Kostin: I would like to inform you about VTB’s development plans in Russia and abroad.

Banks belonging to the VTB Group are already working in 13 countries besides Russia today. Over the next year-and-a-half, we plan to increase the number of countries in which VTB has a presence to 21, in accordance with the Supervisory Council’s decisions that were approved by the Government. The main focus here will be on the CIS countries, but we also plan to expand into Asia, into China, Vietnam and India. Another of our plans is to take the currently separate banks in Western Europe and transform them into a unified holding with its headquarters in London. This holding will be given the name VTB Europe. The objective is to consolidate the work of these banks and achieve the capital growth we need to create a strong financial institution that will be able to attract investment into Russia and provide services for the Russian corporations that are now entering the western-European market in ever greater numbers. This is our objective and it will set a precedent in creating a VTB Group with such a large number of banks. Our plan is to play an important part as a European bank.

Vladimir Putin: So this is the plan for Western Europe, for Europe in general, making use of the banks formerly operated by the Russian Central Bank abroad, but what will be new here once VTB joins in this work?

Andrei Kostin: What will be new is that we are looking today to position these banks in a new niche. These banks began operation during the Soviet years, but their work mostly consisted of fulfilling clear functions within the framework of a centralised economy. Life has changed today and the niche that we are looking at now is above all about creating an investment bank with a strong component in Russia in order to attract investment from the capital markets, and London is at the centre of these markets, and to help Russian companies enter Western markets. Today, this niche is filled chiefly by Western banks, and Russian companies find themselves having to turn to the services of Western rather than Russian banks.

Vladimir Putin: Am I correct in understanding that you seek to help the Russian economy change the direction of its development and give it more of an innovative foundation?

Andrei Kostin: That is absolutely right, Vladimir Vladimirovich.

Vladimir Putin: What does the bank plan to do in this respect, in particular through its branch network abroad?

Andrei Kostin: VTB today is a universal bank and we are working in all the different segments. We are now making mortgage loans of a total of 2.5 billion roubles a month. This figure is doubling every year. We are working on the national project and on major projects in housing construction, for example, and we have projects worth a total of up to 100 billion roubles planned over the coming three years. We are working today in the area of innovation technology and, in particular, we plan to take part in the creation of a venture fund to attract money precisely into new technology. But we also want to work on the development of new banking technology, including the investment business, which is considered the most complex type of banking business related to the securities market. Russian banks are not currently involved in this market and so the whole business is currently in the hands of foreign banks. Through our base in Western Europe, we want to take this business into our own hands and create what will be Russia’s first big investment bank with a headquarters in London.

Vladimir Putin: Coming back to the venture fund, how do you plan to organise its work?

Andrei Kostin: We will take part in the tender organised by the Economic Development and Trade Ministry at the beginning of next year. We are setting up the fund right now and we hope to win this tender and to add our money, and the money of our clients, to the money that the state is allocating. So our hope is that the VTB venture fund will be up and running from the start of next year. We already have projects and we have long since been working with the Academy of Sciences and the Industry and Energy Ministry on these programmes. We are making loans today, but lending has already entered a more advanced stage now. Lending is a difficult process in terms of banking technology at the initial stage, and this is why a special venture fund is needed to take on the different types of risk associated with these kinds of operations, because you can have a situation where out of ten projects, eight are loss-making, but the other two have to be so successful that not only do they cover all the costs but also contribute to progress in a whole area.