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. Last Updated: 07/27/2016

Vneshekonombank Gets $1.5Bln Credit

A credit of up to $1.5 billion, extended to Vneshekonombank by Italian merchant bank Mediobanca, has been earmarked for Italian companies who have invested in the real sector of the Russian economy, a Vneshekonombank spokeswoman said Wednesday.

"Italian firms will get the credits to set up production in Russia," Vneshekonombank press service chief Tatyana Golodets said in a telephone interview. "The Italians are paying their Italian firms."

A memorandum of understanding on the extension of between $1 billion and $1.5 billion in credit was signed in Milan by Vneshekonombank head Andrei Kostin and Mediobanca chairman Francesco Cignano during a visit by President Vladimir Putin.

Mediobanca said in a statement Wednesday that the document called for an "Italian manufacturing cluster" of mixed-capital companies.

The memorandum is also due to be signed by Ruggero Manciati, the chairman of Simest, an Italian government organization that supports Italian firms working abroad.

Simest will take equity interests in the Italian-Russian mixed-capital companies and provide discount financing of up to 90 percent of the capital contributed by Italian firms, the bank's statement said.

Golodets said 30 percent of the Mediobanca credit will be issued to the companies for use as direct investment, and 70 percent to serve as export credits.

The criterion to receive the credits - set at a minimum of $50 million each - is an orientation on exportable products or import replacements, Golodets said.

The list of companies to receive credits via Vneshekonombank will appear in a framework agreement due later this year, but a Fiat automobile-production joint venture with the GAZ automaker in Nizhny Novgorod and the Blue Stream project, a $1.8 billion Black Sea gas-pipeline construction project jointly run by Italian oil and gas firm ENI and Gazprom of Russia, have been mentioned as likely candidates.

In Milan on Tuesday, Kostin trumpeted the absence of Russian government guarantees in the memorandum.

But it will be insured by SACE, the Italian state insurance agency, which will participate with Vneshekonombank and Mediobanca in selecting credit recipients, Interfax reported.

The credit facility "does reflect an increase in trust in the Russian economy but one would expect governmental institutions operating in their national interests to make this sort of lending," Richard Hainsworth, Moscow representative for Thomson Financial BankWatch, said in a telephone interview. "It is a very large step to go from that sort of tied credit line to normal commercial risk-taking in a country."