A Memorandum of Understanding between Vnesheconombank and the KfW on the Possible Establishment of such a Fund was signed in Hannover on July 19, 2011 in the course of the 13^th round of Russian-German Interstate Summit Consultations.

Making a presentation of the project, Board Member, Vnesheconombank Deputy Chairman Mikhail Kopeikin stressed that Russia’s and Germany’s interests on this issue coincided as Russian companies’ increased investment demand created new opportunities for German exports.

The Fund is planned to provide support for small and medium-sized enterprises (SMEs) both through target funding of Russian banks (taking into account a significant shortage of long-term liabilities in the banking system) and through direct funding of dynamically advancing medium-sized enterprises.

The Fund’s structure proposed by consultants and comprised of several tranches differing on the level of risk and profitability will make it possible to divide risks taking into consideration demands of all investors and ensure attractive cost of funds for funding recipients. The Fund’s financial model developed in the course of research substantiated such structure’s operational capability and great demand for funding terms and conditions that the Fund will be able to offer ensuring at the same time a high level of profitability for investors.

Mikhail Kopeikin also stressed that the proposed scheme for establishing and managing the Fund provides for a clear-cut motivation system for all participants in the investment process as well as ensures a high operational transparency of the Fund in line with international standards.

KfW Vice President Ronald Ziller said that the Fund’s structure and its instruments were in line with the practice of the world’s leading development institutions including KfW.

After the presentation, Russian Economic Development Deputy Minister Alexei Likhachev backed Vnesheconombank’s and KfW’s proposal to establish the Fund and offered to agree upon main parameters of the Fund with KfW and other potential investors, hold necessary corporate procedures for approving participation in the Fund within a four-month period and report results of work at the next meeting of the Russian-German Strategic Working Group scheduled for September of 2012.

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Under the agreement HSBC is to provide Vnesheconombank with credit resources worth 47.5 million US dollars to fund contracts of the Bryansk Meat Company (LLC) with a number of Australian exporters of cattle in 2012-2013 against insurance coverage of Australia’s Export Finance and Insurance Company (EFIC) for a period of up to 10 years.

This credit agreement is the second agreement signed by Vnesheconombank with HSBC and EFIC to implement the project in the Bryansk region. The first agreement was concluded in August of 2011, its current value is 42.34 million US dollars.

HSBC Bank Plc (HSBC) is part of the HSBC Group, which is a holding company comprising banks, insurance and investment structures. In Great Britain, HSBC ranks 2^nd in terms of the total assets. The HSBC Group has an extensive network of branches and subsidiaries abroad, including OOO HSBC Bank (RR). In Russia, HSBC offers a wide range of corporate and investment banking products to companies and financial institutions.

Export Finance and Insurance Corporation (EFIC) is Australia’s state-owned export credit agency, whose goal is to support  Australian producers and exporters in global markets.

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Vnesheconombank is supposed to provide the Baikal Mining Company (LLC) (the company was specially established to develop the Udokan copper deposit) with no more than 300 million US dollars to implement a preliminary stage for a period of no more than 3 years.

The project provides for developing the copper deposit, building a mining and concentration complex and creating a high-tech industrial production facility for manufacturing cathode copper, copper wire rod and precious metals (silver and gold) on the basis of the Udokan copper deposit in the Kapar district of the Zabaikalye Territory, 23 km to the South of railway station of Novaya Chara of the Baikal-Amur trunk line. The project also provides for the construction of infrastructure facilities including a coal CHP with a capacity of 400 megawatts, a housing community, motorways and railway branches.

The Udokan deposit is among the first five largest copper deposits in the world ( under B+C1 category ore reserves confirmed by the State Commission on Mineral Reserves are 924.5 million tons, copper – 14.4 million tons).

This project’s implementation would contribute to the socio-economic development of the Zabaikalye Territory. The project provides for creating 4 thousand new jobs.

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The Reserve Fund

The aggregate amount of the Reserve Fund was 1 825.28 billion rubles, which is equivalent to 62.16 billion US dollars. The amounts of balances in separate accounts to record funds of the Reserve Fund were:

•  27.42 billion US dollars
•  21.45 billion euros;
•  3.88 billion pounds sterlings.

The aggregate calculated income from placing funds of the Reserve Fund in foreign currency accounts of the Bank of Russia recalculated in dollars for a period from January 15 to April 30, 2012 was 0.13 billion US dollars, which is equivalent to 3.94 billion rubles. The exchange rate difference from recalculating balances of funds in the said accounts for a period from January 1 to April 30, 2012 was a negative value of (-)76.61 billion rubles.

The National Wealth Fund

In order to co-finance the formation of pension savings of insured persons who paid additional insurance premiums on a funded portion of their labor pension in 2011, a part of the National Wealth Fund’s financial resources in the foreign currencies in the Bank of Russia’s accounts, namely, 0.06 billion US dollars, 0.04 billion euros and 0.01 pounds sterlings was sold for 3.86 billion rubles and the funds received was placed into the account to record funds of the federal budget.

The aggregate amount of the National Wealth Fund was 2 .619.52 billion rubles which is equivalent to 89.21 billion US dollars including:

1)     In separate accounts to record funds of the National Wealth Fund with the Bank of Russia:

•  27.66 billion US dollars;
•  24.15 billion euros;
•  4.39 billion pounds sterlings;

2)     437.02 billion rubles and 6.25 billion US dollars were deposited with Vnesheconombank.

In April of 2012, incomes from placing the National Wealth Fund’s financial resources on Vnesheconombank’s deposits in the amount of 7.66 billion rubles which is equivalent to 0.26 billion dollars were transferred to the federal budget. The aggregate income from placing the Fund’s financial resources on Vnesheconombank’s deposits was 15.10 billion rubles or 0.50 billion US dollars from January to April of 2012.

The aggregate calculated income from placing funds of the National Wealth Fund in foreign currency accounts of the Bank of Russia recalculated in dollars for a period for a period from January 15 to April 30, 2012, was 0.17 billion US dollars, which is equivalent to 4.96 billion rubles. The exchange rate difference from recalculating balances of funds in the said accounts from January 15 to 30 April of 2012 was a negative value of (-) 153.32 billion rubles. The exchange rate difference from recalculating funds placed on Vnesheconombank’s deposits was a negative value of (-) 17.72 billion rubles.

Indicators of the aggregate amount of the Reserve Fund and the National Wealth Fund as well as of calculated incomes from placing funds of the Reserve Fund and the National Wealth Fund were calculated on the basis of official exchange rates of foreign currencies set by the Bank of Russia as of the date prior to the reporting date and of cross rates calculated on the basis of the said exchange rates.

Detailed statistics on transactions with funds of the Reserve Fund and the National Wealth Fund is posted on the Internet site of the Russian Finance Ministry in the following sections: “The Reserve Fund” and “The National Wealth Fund” in appropriate subsections in Russian and English, the statistics is updated on a regular basis.

Origin: Press Service of Russia’s Finance Ministry

The payment was made in a single currency.

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The said growth in the financial resource base was brought about by the increase in the following components: credits raised from banks increased for 2011 by 228 billion rubles (by 10%), funds received from placing debt securities – by74 billion rubles (by40%), customers’ funds - by 62 billion rubles (by 21%) and the growth was caused by the increased amount of time deposits.

Due to negative results on transactions in foreign currency and diminished yields on securities caused by the stock market’s negative dynamics during 2011, the profit for 2011 was 7.48 billion rubles.

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On behalf of Vnesheconombank the Memorandum was signed by Board Member, Vnesheconombank Deputy Chairman Mikhail Kopeikin.

The Memorandum aims to establish long-term partner relations to build and develop an innovation territorial cluster to manufacture auto components in the Republic of Tatarstan.

The parties agreed to work out a joint action program aimed at developing an auto parts manufacturing sector in the Republic of Tatarstan for a period of up to 2020. The program provides for creating innovation auto parts production facilities on the basis of the Alabuga special economic zone including small and medium-sized enterprises as well as a unified science and technology center to develop modernized and principally new engineering solutions in manufacturing auto components.

Taking into account Vnesheconombank Group’s available mechanisms for supporting SMEs, Vnesheconombank is ready to consider projects of small and medium-sized enterprises participating in the auto components cluster.

In the course of the Kazan Venture Fair Vnesheconombank’s representatives also acted as moderators and speakers at the Fair’s plenary session and key workshops.

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The transaction on purchasing ordinary shares was conducted under a shareholder agreement made between Vnesheconombank and T-Platforms in December of 2011. Under the agreement, financing in the form of share participation in the company’s capital is to be used for developing and creating new supercomputer technologies and for exporting them to the international market.

The agreement’s implementation will boost competitive edge of Russia’s supercomputer technologies.

A decision to enter into T-platforms’ charter capital was taken earlier by Vnesheconombank’s Supervisory Board.

T-Platforms is an international developer of supercomputers and a supplier of a full range of solutions and services for high performance computing. The company has already implemented more than 200 multipurpose projects, 5 of which are included in Top500 World Supercomputers Rating.

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On behalf OF Vnesheconombank the memorandum was signed by Vnesheconombank Chairman Vladimir Dmitriev and on behalf of OJSC AVTGOVAZ – by its President Igor Komarov.

Under the Memorandum Vnesheconombank explores the possibility of its participation in funding investment projects under the Program of AVTOVAZ Development up to 2020.

The Program provides for implementing projects in developing and manufacturing new models, upgrading production lines and developing power plants, introducing new technical and technological competences.

The Program’s implementation will help increase volumes of output and sales of cars and technological retooling of production facilities in Togliatti and Izhevsk.

OJSC AVTOVAZ is one of Europe’s largest automakers. At present, its production facilities make it possible to manufacture 800 thousand cars per years. Since 1970 AVTOVAZ has produced more than 26 million cars. The plant manufactures mass production cars in a price range of 200-500 thousand rubles.

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On behalf of VEB-Leasing the Agreement was signed by proxy by Vnesheconombank Chairman Vladimir Dmitriev and on behalf of Transaero Airlines by its CEO Olga Pleshakova.

Under the Agreement VEB-Leasing is to act exclusively as an organizer and manager of the project aimed at funding the purchase of four new Airbus A380 aircraft to transfer the aircraft on a long-term lease to Transaero Airlines. The total value of the project is 1 billion 576 million US dollars in catalogue prices.

The Agreement’s implementation will help to renew and modernize the fleet of Russian companies’ aircraft and allow Transaero to become the first Russian carrier to operate the world’s largest Airbus passenger aircraft.

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