Photo: Andrey Rudakov/Bloomberg

Before the end of the spring session, a bill may be submitted to the State Duma, according to which the Russian Export Center (REC) will be separated from Vnesheconombank, and on the basis of this structure, in turn, the Export Bank of Russia (ERB) will be created. Kommersant writes about this with reference to a source familiar with the situation.

According to the publication, VEB may transfer $1.25 billion to the balance sheet of the REC group, which includes EXIAR and Roseximbank. In addition, according to the document, the EDB is proposed to be given the right to conduct international settlements and act as an agent of the government, in particular in debt management transactions and use of funds from the National Welfare Fund. These functions currently fall under the powers of VEB.

Kommersant’s interlocutor at the Ministry of Finance heard about the initiative, but it has not yet been discussed in the ministry, he emphasized, the Ministry of Economic Development is dealing with this. As Deputy Finance Minister Sergei Storchak told the newspaper, his ministry does not consider it advisable to transfer VEB’s agency functions to another structure. “It makes sense for VEB to focus on large infrastructure projects, and on the basis of the REC to create a kind of specialized factory to support small and medium-sized exporters,” Vladimir Dmitriev, the former head of VEB and current vice-president of the Chamber of Commerce and Industry, told the newspaper. The VEB press service declined to comment, and the publication was unable to find out the opinion of the head of the REC, Pyotr Fradkov, and the deputy head of the Ministry of Economic Development, Alexey Likhachev.

The State Duma is already considering a bill to separate the Russian Direct Investment Fund (RDIF) from VEB ; it passed its first reading at the end of April. However, the bill on the EDB is “much broader in scope”; it concerns not only the creation of one export institution, another source told Kommersant. “The document describes state support measures within the framework of the program for the development of non-resource exports, as well as the functionality of the federal bodies involved and the infrastructure, which, in fact, includes the EDB,” he explained.

The authorities are discussing two ways to form capital for the state bank. As Kommersant notes, one of them involves the purchase of VEB’s assets at the expense of the budget by transferring federal loan bonds, and the second involves a gratuitous transfer to the Federal Property Management Agency. If VEB decides to transfer the loan portfolio of exporters to the bank, its capital could increase from the current 52 billion rubles. up to 140 billion rubles, the publication notes. It is not yet clear whether the state bank will receive a license from the Central Bank; the bill only states that it will be subject to a special supervision procedure, which involves, in particular, control of credit operations by the regulator.

As Dmitriev emphasized in a comment to the newspaper, the decision on the EDB will facilitate access to market funding for projects aimed at supporting exports. Vnesheconombank is currently under sanctions from the United States and the European Union. Before their introduction in 2014, it borrowed money largely from foreign investors and banks and accumulated about $20 billion in external debt by mid-2015. In 2016 alone, VEB must repay $3 billion .

Kommersant announced plans to spin off a new bank from VEB