Recapitalization of VEB via OFZ remains issue despite NWF deposit extension - Ulyukayev
BEIJING. Jan 18 (Interfax) - Extending the term of deposits from the National Welfare Fund (NWF) at Vnesheconombank (VEB) does not rule out the possibility of recapitalizing the VEB via federal loan bonds (OFZ), Economic Development Minister Alexei Ulyukayev told journalists in Beijing.
"Naturally, the OFZ issue continues to be discussed. Extending the NWF deposits: this is a solution to the liquidity problem, but the main problem for VEB is the capital problem," Ulyukayev said when asked whether the OFZ topic is still being discussed.
It was reported earlier that the government approved a resolution drafted by the Finance Ministry that would enable the government to extend for five years, under separate decisions, the term of the subordinated deposits of NWF money at VEB, with the interest rate simultaneously reduced from LIBOR+2.75%/3.00% to 0.25% annually with no interest payments due for up to three years. The extension of the discount terms applies to FX deposits.
The measure will enable VEB "to receive additional earnings for use in increasing its capital," according to the explanatory note attached to the draft resolution.
At the end of December, the Finance Ministry submitted to the government a plan for rescuing VEB requiring more than 1 trillion rubles to replenish capital and repay external debt.
The plan contains proposals on recapitalization needed to meet all of VEB's obligations to creditors, as well as measures for supporting liquidity. There are also proposals on sanitizing the balance sheet and improving the statutes regulating VEB operations as a development institution, the Finance Ministry said, without providing more detail.
The Finance Ministry failed to agree the proposals with the Central Bank and the other ministries and government bodies before submission, and the parties concerned have differing views on a number of the plan's key points, sources in the economic wing of the government told Interfax. These include the fate of VEB's "toxic" assets and allocation of resources to carry out development bank functions.
Loans to so-called special projects that VEB has issued by decision of the supervisory board and that are not currently producing income are the main source of the bank's problems. Among the measures being discussed are recapitalizing VEB via OFZ and transferring its problem assets to the state.