16:36 GMT +323 February 2019
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    Development Bank to be launched in 2H07 - economics minister

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    MOSCOW, December 14 (RIA Novosti) - A state-run Development Bank, which the Russian government is planning to form by merging three banks, will start its work in the second half of 2007, the economics minister said Thursday.

    The new bank is designed to become the main financial tool of state support for exports and borrowing in non-mineral sectors. It will be formed by restructuring Vnesheconombank, and the equity capital of Roseximbank and the Russian Bank for Development will also be transferred to the state corporation.

    "We would like the bank to start functioning in the second half of the year," German Gref told a government meeting, presenting a corresponding draft law.

    The minister said he hoped the State Duma, parliament's lower house, will pass the bill in the first quarter of 2007, and that all legal procedures to restructure Vnesheconombank into the Development Bank will be launched in the second quarter.

    The minister also said that forming the new company will take nine to ten months after the law is approved by lawmakers.

    Under the bill, which the government has approved, the bank will only finance long-term projects, with timeframes of not less than five years, and will assist infrastructure projects and financial projects to support small business and exports.

    Gref said the new bank, whose authorized capital was earlier expected to exceed $2 billion after the transformations, must not push financial institutions out of the market, or compete with private banks.

    The bank, which will be controlled by the government via a supervisory board, will also be accountable to the Central Bank. The president will appoint the bank's chairman.

    Prime Minister Mikhail Fradkov, speaking at the meeting, proposed that the bank should not pay income taxes.

    He also endorsed a proposal made earlier in the month by Finance Minister Alexei Kudrin, that the reserves of the Investment Fund, which the government established to finance large-scale infrastructure projects, could be transferred to the Development Bank's authorized capital.

    The Investment Fund is expected to reach 69.7 billion rubles ($2.6 billion) by the end of the year, the economics minister said last week.

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