Rosselkhozbank, which has not previously worked with the military-industrial complex, plans to attract part of its liabilities from this sector

View of the head office of Rosselkhozbank (Photo: Ivan Gushchin/TASS)

Rosselkhozbank plans to attract part of the funds of the military-industrial complex into liabilities, increasing the funds of enterprises to 640–785 billion rubles. by 2020, according to the bank’s updated strategy for the next four years. “ As a new direction, the bank plans to intensify work on servicing the state defense order. Efforts will continue to attract clients working in the military-industrial complex to serve them ,” the bank’s release said.

According to the reports of the Russian Agricultural Bank under IFRS for the nine months of 2015, the bank’s liabilities amount to 1.1 trillion rubles, the largest share comes from funds of individuals - 421 billion rubles. There are no defense industry funds in the bank's liabilities. After citizens’ deposits, a significant part of the money raised consists of funds from state and public organizations - 280 billion rubles, pension funds - 123 billion rubles, and the industrial sector - 69 billion rubles. By 2020, the bank plans to increase client liabilities to 1.6–1.9 trillion rubles.

According to the reports of the Russian Agricultural Bank, agricultural funds in the bank amount to only 57 billion rubles. According to Fitch senior analyst Alexander Danilov, the specificity of agricultural enterprises is that they are not inclined to save due to the short business cycle. “While industrial enterprises may have free money for a long time, agricultural enterprises do not have it due to cyclicality,” says Danilov.

This turn of strategy may be due to the fact that the bank currently has no access to external financing, and existing obligations will have to be repaid, Danilov suggests. “In view of the state status of the Russian Agricultural Bank, it can count on placing funds of state-owned companies in its accounts, especially considering the state’s intention to support the bank, confirmed by last year’s capital injection,” says Danilov.

According to NRA senior analyst Karina Artemyeva, there is currently no state-owned bank in the Russian banking sector that is close to the military-industrial complex, and it is not surprising that a large state-owned bank has been chosen to store funds from defense enterprises. “This is very useful for Rosselkhozbank, because the funds of the physicists, despite the low rates of the Rosselkhozbank, are more expensive than the funds of the legal entities,” she notes.

As for the loan portfolio, loans to corporate clients amount to 1.4 billion rubles in the bank, and loans to individuals - 283 billion rubles. According to the strategy, the bank plans to increase its loan portfolio to 2.2–2.5 trillion rubles, of which the balance of debt on loans to the agricultural and industrial complex will amount to 1.4–1.6 trillion rubles.

Rosselkhozbank decided to attract money from the defense industry