Install

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

. Last Updated: 07/27/2016

Putin Lets Kostin Take a Vacation

Government.ruPutin meeting with Kostin on Thursday. Kostin said VTB has increased lending by 2 percent monthly in the first half.

Prime Minister Vladimir Putin on Thursday gave VTB head Andrei Kostin permission to take a week’s vacation after the banker said he was on track to meet and surpass an order to boost the lender’s loan portfolio by 100 billion rubles ($3.14 billion) in three months.

“In July, our portfolio’s growth for the month was 6.4 percent, or 84 billion rubles. That is, we completed 84 percent of the quarterly assignment in July,” Kostin said in comments posted on the government web site. “In August, of course, the pace won’t be like that … but by early September we’ll meet and exceed the plan, and then continue on.”

Kostin said VTB was helped by a slow revival in several sectors, including metals and coal, and that the bank was ready to further increase lending. “In the first seven months, we managed to increase lending by 2 percent monthly and we’ll try to keep in line with it till the year’s end,” he said.

The banker warned, however, that VTB might take losses this year because of all the problem assets — including oil and gas reserves, developments in Moscow and land in the Moscow region — on its balance sheet, but that many of the assets could become profitable “in the next few years.”

Putin also asked about complaints of high interest rates, specifically from engine maker Saturn, which was nationalized after the prime minister visited the indebted plant in December.

Kostin said VTB had lowered interest rates for Saturn by 3 percentage points and assured Putin that “we will further develop this trend.”

The government has been driving lenders to push down interest rates to stimulate the real economy, and the Central Bank has cut its benchmark interest rates five times in the past four months, most recently on Aug. 7.

In June, Putin told a meeting of ministers and the heads of the five largest state-controlled banks — Sberbank, VTB, Gazprombank, VEB and Rosselkhozbank — that the lenders must issue at least 150 billion rubles in loans by Aug. 1, with another 150 billion rubles by Sept. 1, and 100 billion to 200 billion rubles more by Oct. 1.

He then told Kostin and Sberbank’s German Gref to make sure they did not take vacations until they set the work in motion to reach those targets.

After hearing Kostin’s report on the new lending Thursday, Putin quipped, “So you mean you’re ready for a vacation, that the process is under way?”

Kostin said that if Putin gave his permission, he would “take a quick week. I probably wouldn’t plan on any more.” Putin approved the request.

The two also discussed VTB’s situation with bad debt. Kostin said his bank, Russia’s second-largest lender, estimated that its amount of problem assets would not exceed 8 percent by year-end, “although that’s still a lot for a bank with a loan portfolio of $100 billion.”