Export Support

Annual Report 2013
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# Export Support

An essential and necessary condition for the Russian economy to achieve rapid qualitative growth and become highly competitive is exploiting export potential and diversifying the national exports. Alongside increased sales geography and stepped-up exports, a far higher priority is placed on the launch of Russian complex manufacturing products in foreign markets.

Among Vnesheconombank’s priorities as a bank for development is active support for Russian hi-tech exports.

Notably, an integrated approach to accomplishing the tasks set is viewed by Vnesheconombank as a major success factor.

This includes additional directions and improved mechanisms of support for Russian manufacturers, including SMEs, and continuous support efforts throughout the product lifecycle – from designing and manufacturing export goods and services to after-sales services.

Vnesheconombank is steadily increasing the volumes of financial support for Russian industrial exports.

Over 2013, Vnesheconombank’s portfolio of loans extended to support Russian exports demonstrated a more than 1.5-fold increase and as at 01.01.2014 reached RUB 22.5 bn (01.01.2013 – RUB 14.64 bn).

Vnesheconombank’s portfolio of guarantees issued to support Russian exports demonstrated a more than 2-fold increase – from RUB 47.93 bn at the beginning of 2013 to RUB 99.57 bn as at 01.01.2014.

The major regions in the focus of Vnesheconombank’s export support efforts included the CIS countries, South and East Asia, Central and Eastern Europe, Latin America, North and Central Africa. The Bank’s export support priorities included aircraft building and rocket and space complex, nuclear and traditional power, transport machine building, defense industry, Russian hi-tech exports.

Besides, in 2013 Vnesheconombank in cooperation with Russian Ministry of Economic Development, Ministry of Industry and Trade and Ministry of Finance finalized the regulatory base and proceeded to practical implementation of the mechanism for granting by Vnesheconombank of export credits on preferential terms to foreign purchasers of Russian hi-tech goods using state subsidies. Applications for using subsidies under 4 export credits were sent by Vnesheconombank for consideration by the Russian Ministry of Economic Development and Ministry of Industry and Trade.

Development dynamics: export support activities (RUB, bn)

## Granting Export Support Loans

Export loans (those extended to foreign banks and foreign non-bank financial institutions, including authorized executive authorities of foreign countries) account for about 70% of Vnesheconombank’s gross portfolio of loans intended for export support. The remaining part of the portfolio consists of pre-export finance (loans to Russian non-credit institutions to manufacture export-oriented products).

In 2013, the amount of export loans demonstrated a 6-fold increase – from RUB 2.6 bn as at 01.01.2013 to RUB 15.7 bn as at 01.01.2014.

Export loans granted by Vnesheconombank in 2013 include:

- a USD 6.42 mn loan to finance the deliveries of Sukhoi Superjet 100 aircraft to Interjet (ABC Aerolineas, S.A. de C.V.), a Mexican airline company. The deliveries are made in compliance with the standing order agreement for purchasing 20 Sukhoi Superjet 100 aircraft and potential acquisition of 10 additional aircraft concluded in 2012 by Interjet with SuperJet International – a joint venture established by Alenia Aermacchi and Sukhoi Holding. The transaction is insured by SACE (Italian Republic) and Coface (French Republic) export credit agencies;
- a USD 4.71 mn loan to HIDROTOAPI E.P. (Republic of Ecuador) to finance the purchase of Russian power equipment for the construction of Sarapulio and Allurikin HPPs, as well as Toachi mini HPP (Toachi-Pilaton project). The transaction participants are Gazprombank OJSC, Gazprombank (Switzerland) Ltd and Russian Commercial Bank (Cyprus) Ltd. The project is implemented within the framework of a foreign trade contract between HIDROTOAPI E.P. and INTER RAO OJSC.

Alongside that, Vnesheconombank granted a USD 3.2 mn loan to Bank BelVEB (Belarus) to finance Vitebskenergo (Vitebsk, Republic of Belarus) for the purchase of Russian hi-tech power engineering products – high-pressure preheaters produced by EMAliance (Taganrog, Rostov Region, Russia). Vnesheconombank’s project risks are insured by EXIAR. This is a pilot project within the framework of organizing a system of export support using a one stop principle enabling Russian exporters and foreign buyers to make electronic filling and submission of primary documents.

As at 01.01.2014, the total amount of loans extended by Vnesheconombank under pre-export finance reached RUB 6.9 bn. The credit recipients are primarily enterprises of aircraft building and other machine building industries.

## Guarantees within the Framework of Export Support

Over 2013, Vnesheconombank extended 121 guarantees totaling RUB 69.11 bn as part of export support activities.

These include 59 guarantees for USD 1,894.78 mn, EUR 10.10 mn and INR 30.00 mn issued at the request of Russian exporters to secure their obligations towards foreign customers under contracts for the delivery of hi-tech industrial products.

Besides, the Bank issued guarantees for RUB 1.19 bn, USD 64.49 mn and EUR 101.09 mn to secure the obligations of EXIAR. As at 01.01.2014, Vnesheconombank’s portfolio of guarantees under EXIAR’s obligations was equivalent to RUB 8.54 bn.

At year-end 2013, the gross portfolio of guarantees extended by Vnesheconombank to support exports reached RUB 99.6 bn.

In total, at the end of 2013 Vnesheconombank issued guarantees for beneficiaries from 19 countries, including Asian, African, Latin American and CIS countries.

Due to optimization of Vnesheconombank’s guarantee mechanisms initiated in 2012 and simplified procedures of adopting decisions by Vnesheconombank’s governing bodies under specific guarantee operations, including those related to the support of Russian industrial exports, the Bank could substantially extend cooperation with a number of its counterparties.

## Integrated Approach to Export Support

In compliance with Directive by the Russian Federation Government No. DM-P13-14pr dated 11 March 2013, Vnesheconombank was designated as a coordinator of activities related to integrated support for exports of Russian goods, works and services that envisage, among other things, the one stop shop approach in processing of applications.

Pursuant to the Directive, the Bank started introducing the one stop shop system within the framework of export support that would enable Russian exporters to get integrated support by the VEB Group members.

One of the key elements of the system is EXIAR that is involved in insuring Russian exporters of goods and services, as well as Russian investments abroad against entrepreneurial and political risks.

On each insured transaction, EXIAR can cover up to 95% of losses in case of occurrence of a political risk and up to 90% - in case of a commercial risk.

Other Vnesheconombank’s subsidiary – ROSEXIMBANK – is also acting as an agent bank for extending state guarantees intended for supporting Russian industrial exporters.

Still another active export supporter is Vnesheconombank’s subsidiary VEB-Leasing engaged in deliveries of Russian products to foreign markets under leasing contracts.

In 2013, Vnesheconombank took further efforts to harmonize regulatory procedures governing the Bank’s export support activities. Specifically, Vnesheconombank’s Procedure for Partial Reimbursement of Costs Related to Supporting the Manufacture of Hi-tech Products was elaborated. Besides, the Bank in cooperation with EXIAR prepared and approved the procedure for providing financial and insurance support for the delivery of Russian hi-tech products to foreign markets.

In order to organize an integrated provision of information and consultative services to Russian exporters using the one stop shop approach, Vnesheconombank has elaborated and posted on the Bank’s website an automated Query Service for key export support priorities.

In 2013, to foster its export support activities, Vnesheconombank established a Project Group to optimize and develop business processes for providing export finance and a Working Group for developing and introducing the products of financing SME exports.

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