21 Jul 2009 16:39

Six banks seeking subordinated loans, but Welfare Fund resources insufficient

MOSCOW. June 21 (Interfax) - Six banks want to receive subordinated loans based on the "one to three" plan but the National Welfare Fund does not have the necessary 410 billion rubles to satisfy their demands, Vnesheconombank (VEB) said in materials for a presentation by its chairman Vladimir Dmitriev in Moscow.

If applications from all six banks are approved under the "one to three" plan, the funds would have a deficit of 60.2 billion rubles, the materials said.

The amount available for the subordinated loan program from the National Welfare Fund was reduced to 410 billion rubles from 450 billion rubles after the government decided to provide the Agency for Home Mortgage Lending with a loan of 40 billion rubles.

VEB received 257.1 billion rubles from the National Welfare Fund on July 1, which it may hold on deposit until December 2019 at 7% annual interest. The money is earmarked for subordinated loans to banks.

President Dmitry Medvedev signed the law allowing banks to seek subordinated loans under the 1:3 scheme on July 17, 2009.

That scheme allows a bank to receive 3 rubles from the state for every ruble provided by shareholders or third parties.

Until now banks received the financing under the 1:1 scheme.

Gazprombank, Russian Standard , Alfa Bank , and Bank St. Petersburg have announced plans to raise the 1:3 subordinated loans.

Only banks that have received 1:1 loans are eligible for the 1:3 financing.

The interest rate on the 1:3 subordinated loans is 9.5%. The National Welfare Fund will receive 8.5% on the funds it provides for the loans. The 1:3 loans will be available until the end of 2010.

VEB will provide 1:1 subordinated loans until the end of 2009, at 8% annual interest. The National Welfare Fund will receive 7% annual interest on that money.

VEB has provided subordinated loans totaling 257.1 billion rubles to six banks. Its supervisory board approved subordinated loans totaling 19.23 billion rubles for another 10 banks in April. Since then the government has amended the terms for receipt of the loans. A bank's loan portfolio must now include an adequate volume of loans to organizations in key economic sectors and backbone enterprises. The loan maturities must be at least one year and the interest rates must not exceed the Central Bank's refinancing rate plus 3 percentage points. The lending to the enterprises must remain in force until the maturity date of the subordinated loan. Seven of the ten banks have already agreed those terms and signed credit agreements with VEB, Dmitriev said.

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