Sovereign Guarantees

Pursuant to paragraph 2, part 5, Article 18 of Federal Law No. 415-FZ “On the Federal Budget for 2017 and the Planning Period of 2018 and 2019” dated 19 December 2016, and in accordance with the regulations of the Government of the Russian Federation, Vnesheconombank acts as an agent of the Government of the Russian Federation regarding the provision of sovereign guarantees of the Russian Federation, maintenance, administration and performance of provided sovereign guarantees of the Russian Federation, in particular, regarding analytical accounting of provided sovereign guarantees of the Russian Federation, obligations of principals, their sureties (guarantors) and other persons relating to the provision and performance of sovereign guarantees of the Russian Federation, analysis of financial condition of, and recovery of debt from, the following persons:

  1. for credits or bond-secured loans raised by legal entities selected in the manner determined by the Government of the Russian Federation, for the implementation of investment projects or for other purposes specified by the Government of the Russian Federation (regulation of the RF Government dated 14 August 2012 No. 825, dated 14 December 2010 No. 1017, dated 5 March 2010 No. 128);
  2. for credits raised by legal entities registered and pursuing its main statutory activity in the territory of the North Caucasian Federal District, for the implementation of investment projects in the territory of the North Caucasian Federal District (regulation of the RF Government dated 4 May 2011 No. 338);
  3. for credits or bond-secured loans raised by legal entities registered and pursuing its main statutory activity in the territory of the North Caucasian Federal District, for the implementation of investment projects on the development of a tourism cluster in the territory of the North Caucasian Federal District (regulation of the RF Government dated 14 October 2016 No. 1046);
  4. for credits raised by defence industry entities for the implementation of projects to be realized under the Federal Targeted Program “Development of the Defence Industry Complex of the Russian Federation in 2011-2020” (regulation of the RF Government dated 6 February 2013 No. 97);
  5. for bond-secured loans raised by United Engine Corporation, Joint-Stock Company for financing the organization of series production of parts for engines and nacelles of advanced engines for commercial aviation;
  6. for credits or bond-secured loans raised by subsidiaries or affiliates of the state corporation for the furtherance of the development, manufacture, and export of high-tech industrial products Rostec, as well as subsidiaries and affiliates of such legal entities for the purposes of purchasing the shareholdings in Russian joint-stock companies or participatory shares in limited liability companies held by ROSNANO, JSC;
  7. for credits or bond-secured loans raised by ROSNANO, Joint-Stock Company for the implementation of investment projects in the sphere of nanotech industry, financing of nanotechnology investment funds, and repayment of credits or bond-secured loans raised by ROSNANO, JSC earlier for the purposes indicated in the Articles of Association of ROSNANO, JSC (regulation of the RF Government dated 10 September 2010 No. 709);
  8. for obligations of importers to pay for industrial products (goods, work, services) delivered under export contracts with Russian exporters (regulation of the RF Government dated 1 November 2008 No. 803);
  9. for obligations of Russian exporters or importers under credits (regarding repayment of the principal and(or) payment of interest on the credit) (regulation of the RF Government dated 1 November 2008 No. 803);
  10. for obligations of foreign states under the sovereign guarantees provided by such foreign states as a security for the performance of obligations of importers either under export contracts with Russian exporters or under credits raised by importers for the performance of their obligations under export contracts with Russian exporters (regulation of RF Government dated 1 November 2008 No. 803);
  11. for obligations of JSC EXIMBANK OF RUSSIA under credits raised for the support of export of industrial products (goods, works, services) (regulation of the RF Government dated 1 November 2008 No. 803);
  12. for obligations of Russian exporters of industrial products (goods, works, services) to satisfy subrogation claims of Vnesheconombank or JSC EXIMBANK OF RUSSIA arising from the performance of bank guarantees provided by Vnesheconombank or JSC EXIMBANK OF RUSSIA for obligations of Russian exporters (regulation of the RF Governmentdated 1 November 2008 No. 803);
  13. for obligations of Vnesheconombank or JSC EXIMBANK OF RUSSIA under bank guarantees provided for obligations of Russian exporters of industrial products (goods, works, services) (regulation of the RF Government dated 1 November 2008 No. 803);
  14. for credits raised by legal entities selected in the manner determined by the Government of the Russian Federation for the purposes of project financing (regulation of the RF Government dated 11 October 2014 No.1044);
  15. for credits raised by defence industry entities for the purposes of performance (filling) of the Government defence order (regulation of the RF Government dated 31 December 2010 No. 1215);
  16. under credits raised by organizations selected in the manner determined by the Government of the Russian Federation for the purposes of its primary production activity and capital investments, and repayment of credits and bond-secured loans of such principals, which they raised earlier for the purposes of its primary production activity and capital investments (regulation of the RF Government dated 14 February 2009 No. 103);
  17. for the bond-secured loan raised by United Aircraft Corporation, Open Joint-Stock Company for the repayment of credits (repayment of the principal and(or) payment of interest on the credit) raised by United Aircraft Corporation, Open Joint-Stock Company or its subsidiaries and affiliates earlier from Joint-Stock Commercial Savings Bank of the Russian Federation, Open Joint-Stock Company, VTB Bank, Open Joint-Stock Company and State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” for the financing of its investment and primary production activity (regulation of the RF Government dated 13 September 2010 No. 721);
  18. for credits raised by Concern VPO “Almaz-Antey”, Open Joint Stock Company for the construction of new factories (regulation of the RF Government of 30 December 2011 No. 1224);
  19. for the bank guarantee provided by State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” in 2012 as a security for the performance of obligations of the Russian Agency for Export Credit and Investment Insurance, Open Joint-Stock Company under contracts of insurance, reinsurance or coinsurance of export credits and investments from business and/or political risks (regulation of the RF Government dated 29 November 2012 No. 1233);
  20. for the bank guarantee issued by State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” as a security for the performance of obligations of Vnesheconombank’s subsidiary under the bank guarantees issued by the subsidiary as a security for the performance of obligations of Russian medium-sized businesses operating in the sphere not involving extraction and processing of mineral resources, under credits raised in Russian banks for the implementation (realization) of investment projects in the Russian Federation (regulation of the RF Government dated 28 December 2012 No. 1451);
  21. for the credit raised in 2013 by Kinostudiya Lenfilm, Open Joint-Stock Company from a Russian bank for the implementation (realization) of the Lenfilm film studio renovation project (regulation of the RF Government dated 18 March 2013 No. 224);
  22. for credits or bond-secured loans raised by United Engine Corporation, Joint-Stock Company (regulation of the RF Government dated 3 June 2015 No. 544);
  23. for credits and bond-secured loans raised by Housing Mortgage Lending Agency, Open Joint-Stock Company for the purchase of dwelling houses and residential properties for subsequent lease (regulation of the RF Government dated 25 August 2001 No. 628);
  24. for the credit raised by TRANSAERO Aviation Company, Joint-Stock Company for financing of its primary production and operating activity (regulation of the RF Government dated 24 December 2014 No. 1477);

In the capacity of an agent of the Government of the Russian Federation, Vnesheconombank has adopted for analytical accounting 729 sovereign guarantees of the Russian Federation issued within the period from 2005 to 2016, including 715 sovereign guarantees of the Russian Federation for 3,433.97 billion rubles, 13 sovereign guarantees of the Russian Federation for 12.21 billion US dollars and 1 sovereign guarantee of the Russian Federation for 3.96 million Euro.

As of 1 January 2017, Vnesheconombank has been keeping analytical accounting of 298 effective sovereign guarantees of the Russian Federation for 1,955.40 billion rubles, 10 sovereign guarantees of the Russian Federation for 11.91 billion US dollars and 1 sovereign guarantee of the Russian Federation for 3.96 million Euro.

Provision of Sovereign Guarantees of the Russian Federation

In the provision of sovereign guarantees of the Russian Federation, Vnesheconombank as an agent of the Government of the Russian Federation performs the following functions:

  • verification and analysis concerning:
    • compliance of the documents provided by principals and other persons with applicable requirements;
    • information about the absence of any overdue (outstanding) debt under financial obligations to the Russian Federation and under statutory payments to the budgets of the budget system of the Russian Federation;
    • information that the principal, in accordance with the laws of the Russian Federation on insolvency (bankruptcy), is not subject to insolvency (bankruptcy) proceedings and that the principal is not undergoing reorganization or liquidation;
    • terms and conditions of loan agreements and associated obligations for any provisions that might infringe the interests of the Russian Federation, in particular, following the assignment of creditors’ claims under loan agreements;
    • financial conditions of principals and other persons;
    • sufficiency and conformity of the proposed security for the performance of principals’ obligations with the provisions of the laws of the Russian Federation and its acceptability;
    • other imposed requirements, and presentation of corresponding opinions;
  • drawing up (including the signing by authorized officers of the agent of the Government of the Russian Federation on behalf of the Ministry of Finance of Russia based on a power of attorney issued by the Ministry of Finance) of guarantee agreements, guarantees, other documents associated with the provision of guarantees.

At the stage of maintenance of sovereign guarantees of the Russian Federation, Vnesheconombank as an agent of the Government of the Russian Federation provides, for and on behalf of the Ministry of Finance of Russia, in the manner specified in guarantee agreements, consents for making amendments in loan agreements, and prepares and sends to the Ministry of Finance of Russia motivated opinions regarding the withdrawal of a sovereign guarantee, and performs other functions set out in guarantee agreements.

Performance of Sovereign Guarantees of the Russian Federation

In the performance of sovereign guarantees of the Russian Federation, Vnesheconombank as an agent of the Government of the Russian Federation performs the following functions:

  • analysis of creditors’ claims filed against the Russian Federation represented by the Ministry of Finance of Russia seeking recourse under guarantees, and accompanying documents as to their validity and conformity with guarantee conditions, drafting and presentation to the Ministry of Finance of Russia of relevant opinions;
  • preparation and execution of transactions (agreements) concluded in connection with the performance of sovereign guarantees of the Russian Federation;
  • presentation of documents in support (confirmation) of claims of the Ministry of Finance of Russia, arrangement of repayment (discharge) or other settlement of principals’ and other persons’ debt under financial obligations to the Russian Federation, which have arisen out of the provision and performance of sovereign guarantees of the Russian Federation and transactions associated with them.

Ad Hoc Analytical Accounting of Sovereign Guarantees of the Russian Federation and Obligations Associated with the Provision or Performance of Sovereign Guarantees of the Russian Federation

In the analytical accounting of sovereign guarantees of the Russian Federation, Vnesheconombank as an agent of the Government of the Russian Federation performs the following functions:

  • keeping of ad hoc analytical accounting of issued sovereign guarantees of the Russian Federation and obligations, which have arisen out of the transactions (agreements) concluded in connection with the provision and/or performance of sovereign guarantees of the Russian Federation.
  • verification and analysis of financial condition of principals, legal entities that provide(d) security for the performance of principals’ obligations and presentation of corresponding reports to the Ministry of Finance of Russia.
  • presentation of accounting records on sovereign guarantees of the Russian Federation to the Ministry of Finance of Russia.