19 Nov 2009 12:06

Russia looking at various options to incorporate VEB

MOSCOW. Nov 19 (Interfax) - The Russian authorities are looking at various options for turning Vnesheconombank (VEB) into a joint-stock company, CB First Deputy Chairman Alexei Ulyukayev told reporters.

"Turning VEB into a commercial bank is just one of the options," he said.

It is for the state, which is the bank's owner, to decide precisely how it will be incorporated, he said.

Asked how the CB monitors VEB, Ulyukayev said: "We have an agreement to swap information. We know the state of its balance sheet, but we don't regulate the bank."

VEB might be restructured as a financial agency or joint stock company, he said.

State corporations have no future in their present forms, Russian President Dmitry Medvedev said in his address to the Federal Assembly last week. "I consider this form generally has no prospects in today's conditions," he said.

VEB, the Russian Technologies (Rostekhnologii) corporation and nanotechnology corporation (Rusnano) may be converted into stock companies as early as next year, presidential aide Arkady Dvorkovich told journalists on November 11.

Central Bank First Deputy Chairman Alexei Ulyukayev told reporters on November 16 that he thought corporatizing VEB would be a "very complicated process" that had be approached carefully.

"VEB is a financial organization with very many foreign economic ties. Mere talk of turning it into an OJSC could change the attitude of creditors, interest rates and whether credit agreements are approved," Ulyukayev said.

VEB chief Vladimir Dmitriyev said on November 14 that the bank would need an additional 1 trillion rubles or more in the way of recapitalization in order to fulfill banking legislation if it is to be corporatized.

"We're prepared to incorporate tomorrow, but we'd need more than 1 trillion rubles in extra capitalization to eliminate any distortions to do with exceeding limits per borrower and meet certain other Central Bank requirements," he said.

The Russian Finance Ministry has not yet received proposals on funding the cost of corporatizing Vnesheconombank (VEB), but thinks the 1 trillion rubles suggested earlier is too high, Deputy Prime Minister Alexei Kudrin, who is also the country's finance minister, told reporters on November 18.

"This funding hasn't been planned for next year, but I don't think that much will be needed," Kudrin said.