Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

State Drops 100 Billion Ruble Loan for VEB

Vneshekonombank deputy chairman Mikhail Kopeikin said Monday that the government would recapitalize the state development bank by just 130 billion rubles ($3.7 billion), dropping a plan to provide the lender with an additional 100 billion rubles as a subordinated loan.

"Earlier, it had been discussed that 130 billion rubles would be directed toward recapitalization and 100 billion rubles would come as a subordinated loan. Now, in the interests of saving money, they've settled on the 130 billion ruble figure," Kopeikin said at a Russian economic forum in Zurich, RIA-Novosti reported.

A Finance Ministry official confirmed that VEB had been denied the subordinated loan to help preserve state resources, saying the bank "met the decision with understanding."

Another VEB deputy chairman, Sergei Vasilyev, said the refusal meant that the state corporation would have to cut back on financing for infrastructure projects. "The subordinated loan money was long-term money that we were planning to use for our investment work," he said.

Kopeikin also said VEB would issue a $5 billion state bond as planned. "We've researched it and think that's the minimum amount that will be demanded by the market," he said.

The only thing left to finalize was the release date, he said. Initially, VEB had planned to issue the bond in February, and now it is looking at late April because the bank still has not finished registering the issue, Kopeikin said.

Nikolai Podguzov, an analyst at Renaissance Capital, said pushing back the issue date wouldn't matter to the market. "Of course, the motivation to keep cash in foreign currencies is weakening for banks, but market participants aren't hurrying to sell their foreign currency," he said.