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. Last Updated: 07/27/2016

Development Bank Considers Expansion

The new state development bank is considering buying stakes in commercial banks to create a network of branches across the nation, a member of the bank's board said Thursday.

"We think this is very interesting, but calculations need to be made" before a decision is made, Sergei Lykov said during a banking committee meeting of the Russian Union of Industrialists and Entrepreneurs.

Lykov, former deputy chairman of Vneshekonombank, or VEB, the country's payment agency for foreign debt, was appointed to the development bank's board Thursday. The bank will draft an investment memorandum detailing its strategy by July 12 and submit it for the Cabinet's approval, according to Lykov.

The government this month created the development bank to operate under the VEB brand and direct funds into industries other than oil and gas extraction.

The development bank plans to increase its loan portfolio to 1 trillion rubles ($40 billion) to 1.5 trillion rubles by 2010 to channel money into shipbuilding, aviation, transportation infrastructure, power and high-technology industries.

The development bank's oversight council appointed nine VEB executives and senior managers to the development bank's board, including bank chairman Vladimir Dmitriyev; his first deputy chairman, Nikolai Kosov; Lykov, and Pyotr Fradkov. Prime Minister Mikhail Fradkov is Pyotr Fradkov's father.

"It's very important for the development bank not to compete with commercial banks," Alexander Shokhin, president of the RSPP, said during Thursday's meeting.

The development bank should avoid going after projects with a high rate of return because of its "closeness to the authorities," said Alexander Murychev, co-chairman of the RSPP's banking commission.

Murychev also urged the bank to stay away from unprofitable projects that are wholly financed with government money.