VEB.RF, or VEB (russian: ВЭБ.РФ (ex-Vnesheconombank)), is a Russian state development corporation. It was founded in 2007 as a development institute. VEB.RF is an investment company and development institute in Russia. It has financed more than 300 projects. The corporation's total assets were $50.3 billion, total liabilities were $45.2 billion, loan portfolio i $31.3 billion
Activities
It's a non-political organisation. VEB.RF supports and develops the Russian economy. In partnership with commercial banks, it provides financing for large-scale projects to develop the country's infrastructure, industrial production and social sphere, strengthen its technological potential and improve the quality of life.
VEB.RF is validly existing under
Russian law
The primary and fundamental statement of laws in the Russian Federation is the Constitution of the Russian Federation.
Hierarchy
Constitutionism
Adopted by national referendum on 12 December 1993 with 54.5% of the vote, the Constitution took ...
in the legal form of “
non-profit organization
A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...
”. It is not owned, nor directed by the
government
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
or
political party
A political party is an organization that coordinates candidates to compete in a particular country's elections. It is common for the members of a party to hold similar ideas about politics, and parties may promote specific political ideology ...
.
On 22 February 2022, President Joe Biden announced that the US and its European allies will impose sanctions against the bank in response to the
2021–2022 Russo-Ukrainian crisis
In March and April 2021, Russian president Vladimir Putin ordered the Russian military to begin massing thousands of personnel and equipment near its border with Ukraine and in Crimea, representing the largest mobilization since the annex ...
.
History
Vneshtorgbank (Foreign Trade Bank) of the USSR (1922–1988)
18 August 1922, Swedish financier
Olof Aschberg
Olof Aschberg (July 22, 1877 – April 21, 1960) was a Swedish banker of Jewish descent who served as head of the Stockholm bank Nya Banken. From August 18, 1922 on he served as Director-General of Roscombank, which was later transformed into ...
established the Soviet Union's first international bank, Roskombank (; "Russian Commercial Bank") and its charter was approved by a Decree of the Council of Labor and Defense on 19 October 1922.
7 April 1924, the bank was renamed
Vneshtorgbank
VTB Bank (; formerly known as ''Vneshtorgbank'', , lit. 'International Trade Bank') is a Russian majority state-owned bank headquartered in various federal districts of Russia; its legal address is registered in St. Petersburg; as of 2022 ...
(; "Vneshtorgbank of the USSR" or "Foreign Trade Bank of the USSR"), a joint stock bank.
Vnesheconombank (Foreign Economic Affairs Bank) of the USSR
In 1988, it was renamed Vnesheconombank of the USSR ("Bank for Foreign Economic Affairs of the USSR").
17 December 1991, Vnesheconombank accounts were frozen because of lack of funds.
For approximately seven years during the 1990s, the Kremlin's ''obshchak'' ( «общак») or black cash was stored in the vaults of Vnesheconombank (VEB) because
Viktor Gerashchenko
Viktor Vladimirovich Gerashchenko (russian: Ви́ктор Влади́мирович Гера́щенко; born 21 December 1937 Leningrad, Soviet Union), nicknamed ''Gerakl'' (the Russian version of Heracles, or sometimes of debacle), was the Gos ...
stated that in 1992 VEB became an agency for the return of the state debt of the USSR due to a decree by the
Supreme Soviet
The Supreme Soviet (russian: Верховный Совет, Verkhovny Sovet, Supreme Council) was the common name for the legislative bodies (parliaments) of the Soviet socialist republics (SSR) in the Union of Soviet Socialist Republics (USSR) ...
: "Vnesheconombank does not have a central banking license. It does not need it, since it does not conduct any commercial operations." He also added, "Due to the lack of a license, this is the only Russian bank that the Central Bank does not check – it does not have the right."
In 2002, Vnesheconombank was
restructured
Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons ...
and it stepped up its efforts in servicing government programs, reduced the scope of its commercial business and gave a higher priority to supporting the government's structural reforms.
In April 2002, VEB was appointed Vnesheconombank agent for investing temporarily free Pension Fund's assets in
securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
denominated in
foreign currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
, and in January 2003, a special structural subdivision to handle pension funds was formed; VEB was appointed the "State Trust Management Company" responsible for investing Russia's
pension funds
A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.
Pension funds typically have large amounts of money to invest and are the major investors in listed and priva ...
.
From 2005 to 2006, both the
assets
In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
and liabilities of the bank doubled from around $6 billion to $12 billion, and the income rose from $239 million to $301 million.
Bank of Development (2007–2018)
In April 2007, Russia's
State Duma
The State Duma (russian: Госуда́рственная ду́ма, r=Gosudárstvennaja dúma), commonly abbreviated in Russian as Gosduma ( rus, Госду́ма), is the lower house of the Federal Assembly of Russia, while the upper house ...
passed the federal law "On Bank for Development," which regulated VEB's legal conditions and made it a state development bank.
Vladimir Putin
Vladimir Vladimirovich Putin; (born 7 October 1952) is a Russian politician and former intelligence officer who holds the office of president of Russia. Putin has served continuously as president or prime minister since 1999: as prime min ...
increased lending when he became the VEB's chairman of its supervisory board in 2008. By late 2009, VEB quadrupled its assets to nearly 2 trillion rubles ($65 billion), it was seen by the government as an off-budget fund, used to put off budget expenses.
In July 2014, the
United States Department of the Treasury
The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and t ...
imposed
economic sanctions
Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may ...
that greatly restricted U.S. persons and entities from providing doing business with VEB after the 2014 pro-Russian unrest in
Ukraine
Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inv ...
. Between 2014 and 2017, the Russian
Ministry of Finance A ministry of finance is a part of the government in most countries that is responsible for matters related to the finance.
Lists of current ministries of finance
Named "Ministry"
* Ministry of Finance (Afghanistan)
* Ministry of Finance and Eco ...
spent $10 billion on the bank.
VEB has suffered massive losses in 2014–2015, leading to a 330 billion rubles government bailout in 2015, followed by 150 billion rubles in 2016 and a similar amount planned for 2017. VEB was the main lender for the
, and many of the loans originating from the games missed original returns forecasts, or had to be restructured.
In March 2016, the bank was promised a $2.2 billion bailout from the Russian government. Sergey Gorkov, a former senior executive at
Sberbank
PJSC Sberbank (russian: Сбербанк, initially a contraction of russian: сберегательный банк, translit=sberegatelnyy bank, lit=savings bank, link=no) is a Russian majority state-owned banking and financial services compan ...
, was appointed to lead VEB and come up with a turnaround strategy, which included the sale of non-core assets. The government originally offered the position to
German Gref
Hermann Gräf (russian: Герман Оскарович Греф, translit=German Oskarovich Gref, born February 8, 1964), better known as Herman Gref, is a Russian politician and businessman. He was the Minister of Economics and Trade of Russi ...
, who turned down the job.
In March 2017, Ukraine imposed sanctions on Vnesheconombank (and other Russian state-owned banks operating in Ukraine: Sberbank, VTB Bank, VS Bank, Prominvestbank, and BM Bank) as part of its continued sanctions on Russia for its annexation of Crimea and involvement in the
War in Donbass
War is an intense armed conflict between states, governments, societies, or paramilitary groups such as mercenaries, insurgents, and militias. It is generally characterized by extreme violence, destruction, and mortality, using regular ...
UNIAN
The UNIAN or Ukrainian Independent Information Agency of News ( uk, Українське Незалежне Інформаційне Агентство Новин, УНІАН, translit=Ukrayins'ke Nezalezhne Informatsiyne Ahentstvo Novyn) is a ...
(29 July 2017) At Sochi in February 2018, Vnesheconombank's Sergey Gorkov said they hoped to sell its Ukrainian subsidiary, Prominvestbank, by May 2018.
In 2017, the bank's debt was $17 billion, including $14.2 billion in Ukraine. In January 2017, Gorkov released the bank's "Strategy 2021," which predicted relief from sanctions, resuming borrowing in the United States, and shifting risks to the government's budget. According to a report the ''
New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'' published in May 2017, 40% of the bank's loans were at risk of default.
State Development Corporation (from 2018)
In May 2018,
Igor Shuvalov
Igor Ivanovich Shuvalov ( rus, И́горь Ива́нович Шува́лов, p=ˈigərʲ ɪˈvanəvʲɪtɕ ʂʊˈvaləf; born 4 January 1967) In July 2018, the bank requested a further $16 billion bailout from the Russian government. In October 2018 the bank announced plans to rebrand, changing its denomination into 'National Development Institute', and confirming it would be granted 600 billion rubles ($9.1 billion) in subsidies from the federal budget by 2024, in addition to the 125 billion rubles received in 2018.
The net profit for the 2018 amounted to 3.85 billion rubles after a loss to 200.4 billion rubles a year earlier. The net profit for the first quarter of 2019 17.6 billion rubles.
In 2019, after a long period when VEB.RF instead of financing new projects was engaged in servicing distressed assets, new investment projects appeared in the portfolio of the state corporation. In the framework of VEB.RF went into the development of the Udokan's copper deposit ($490 million), the production of sulfuric acid at the "KuibyshevAzot" and capacity expansion of "Shchekinoazot" for the production of methanol (the total participation of the corporation 8.5 billion.). VEB.RF started financing the project of construction of six large-tonnage vessels at the Zvezda super-shipyard near Vladivostok. Also VEB.RF,
Gazprombank
Gazprombank (russian: Газпромбанк), or GPB (JSC), is a private-owned Russian bank, the third largest bank in the country by assets. Since November 2014, Yuri Shamalov's Gazfond is its largest shareholder.
The bank’s principal busine ...
and
Sberbank
PJSC Sberbank (russian: Сбербанк, initially a contraction of russian: сберегательный банк, translit=sberegatelnyy bank, lit=savings bank, link=no) is a Russian majority state-owned banking and financial services compan ...
announced the funding of the development of the Talitsky area of the Verkhnekamsk potash deposit in Perm. VEB.RF and
Sberbank
PJSC Sberbank (russian: Сбербанк, initially a contraction of russian: сберегательный банк, translit=sberegatelnyy bank, lit=savings bank, link=no) is a Russian majority state-owned banking and financial services compan ...
will provide a syndicated loan for the modernization of Novaport group's regional airports in six cities of Russia, and together with Rockwell Capital will build the largest pulp and paper mill in
Siberia
Siberia ( ; rus, Сибирь, r=Sibir', p=sʲɪˈbʲirʲ, a=Ru-Сибирь.ogg) is an extensive geographical region, constituting all of North Asia, from the Ural Mountains in the west to the Pacific Ocean in the east. It has been a part of ...
.
In February 2022, due to Russia's invasion of Ukraine, together with its subsidiaries, it was included in the US sanctions list, SDN, which provides for the maximum possible restrictions and a complete freeze of assets. The bank was also disconnected from the SWIFT interbank payment system. Included in the sanctions list of Singapore.
Organisation
Chairman of VEB.RF is
Igor Shuvalov
Igor Ivanovich Shuvalov ( rus, И́горь Ива́нович Шува́лов, p=ˈigərʲ ɪˈvanəvʲɪtɕ ʂʊˈvaləf; born 4 January 1967)Supervisory Board
In corporate governance, a governance board also known as council of delegates are chosen by the stockholders of a company to promote their interests through the governance of the company and to hire and fire the board of directors.
In civil s ...
, it chaired by the
Russian Prime Minister
The chairman of the government of the Russian Federation, also informally known as the prime minister, is the nominal head of government of Russia. Although the post dates back to 1905, its current form was established on 12 December 1993 f ...
.
VEB.RF coordinates development institutions of Russia.
Ex-chairmans of Vnesheconombank:
Tomas Alibegov
Tomas Ivanovich Alibegov (in russian: Томас Иванович Алибегов; born June 18, 1937, Moscow, Soviet Union) is a Russian banker, Director General of Eurobank in Paris (1982–1987), Deputy Chairman of Vnesheconombank (1989–199 ...
- First Deputy Chairman and acting Chairman (1989–1997),
Andrey Kostin
Andrey Leonidovich Kostin (russian: Андрей Леонидович Костин; born September 21, 1956) is a Russian banker who is chairman of the VTB Management board since June 10, 2002.
Education and career
In 1973, Kostin began stud ...
(1996–2002),
Vladimir Dmitriev
Vladimir Alexandrovich Dmitriev (russian: link=no, Влади́мир Алекса́ндрович Дми́триев; born August 25, 1953, Moscow) is a Russian businessman and former chairman of Vnesheconombank
VEB.RF, or VEB (russian: ВЭ ...