Russia looks to renew relations with EBRD in six months

By bne IntelliNews July 6, 2016

Russia's ministries of finance and economy hope to restore cooperation with the European Bank for Reconstruction and Development (EBRD) and renew financing of Russian projects aided by the bank within six months, Deputy Finance Minister Sergei Storchak said on July 6.

The comments ring optimistically after indications earlier this year that the lender could cut back its operations in Russia if international sanctions are renewed. Many of the bank's projects have slowed or stopped since the sanctions were imposed in July 2014 over Moscow's actions in Ukraine, with their renewal now expected for a further six months.

"Currently the institution [EBRD] lacks the opportunity to participate in providing loans to Russian enterprises due to its political leadership. The Finance Ministry and the Economic Development Ministry are assuming measures to reverse the situation. Hopefully we will be able to do this within half a year," TASS quoted Storchak as saying.

He added that up to mid-2014 - before the European Union prohibited the EBRD and the management of the World Bank from carrying out operations with Russia - these were the two most active institutions on the foreign direct investment market. 

"For 20 years, the EBRD accumulated Russian projects worth $25bn, and without the participation of the government, without any government guarantees, on market conditions only," Storchak said.

Russia currently participates in the activities of 11 development banks, the most important of which are the New Development Bank (NDB), created by the BRICS countries, and the Asian Infrastructure Investment Bank (AIIB), the deputy minister added.

In May, Storchak said the EBRD's management showed interest in working again with Russia and is ready to return to the market there as soon as political conditions improve.

Jonathan Charles, EBRD managing director, communications, told bne IntelliNews in April: "We are committed to servicing our existing portfolio in Russia. The question of whether the bank can resume investing in new projects in Russia remains a matter for our shareholders."

However, sources in the bank said at the time that the resumption of full operations was far from assured.

"Some senior figures at the bank want us to wind up," an EBRD insider told bne IntelliNews in April. "There's been some in-fighting about it because management on the ground in Moscow want to carry on. If the sanctions are renewed in June, we will have to cut down on our staff numbers in Russia."

The G7 countries have already said they will renew the economic measures against Russia for another six months, with the EU expected to follow after its member state envoys reportedly agreed on the step in June.

The EBRD was set up in 1991 by Western governments to help former communist countries make the transition to capitalism. In 2014, the bank said it was halting all projects in Russia because of the Kremlin's actions in Ukraine, and in accordance with EU recommendations stopped its investments in the Russian economy in the summer of that year. Russian authorities said the move was politically motivated.

In June 2015, the EBRD sold 17,833,000 GDRs, or 25% of its holding, in Lenta, one of the largest retail chains in Russia, and 5.18% stake in Enel Russia

2015 was the first full year in which the bank brought no new projects to Russia – once the largest recipient of its annual funding. The bank's portfolio currently stands at just over €5bn. In April, the EBRD took a loss of more than $100mn when it sold its 9.245% stake in Russia's TransContainer.

According to the EBRD's website, it implemented 788 projects worth €25.097bn in Russia since it started work in the country.

Related Articles

RBI doubles net profit y/y in Q1 as Russian business recovers

Raiffeisen Bank International (RBI), the second largest bank operating across Central and Eastern Europe by assets, reported that net profit almost doubled year-on-year to €220mn in the first ... more

World Bank forecasts a 0.4% y/y decline in Belarus's GDP for 2017

The Belarusian economy will decline by 0.4% year-on-year in 2017, followed by a modest growth of 0.7% in 2018 and 1.2% in 2019, the World Bank forecasts in its Belarus Economic Update published on ... more

EIB and Belarus sign Framework Cooperation Agreement

The European Investment Bank (EIB) and Belarus inked the Framework Agreement on Cooperation on May 15, which paves the way for the lender to invest up to €200mn in Belarusian projects, the Foreign ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss