MOSCOW—When the Russian government needed to build up infrastructure in the southern city of Sochi ahead of the 2014 Winter Olympic Games, it turned to Russia’s most important lender: Vnesheconombank, the country’s state-owned development bank. Russian President Vladimir Putin said private investors would be responsible for most of the Olympic costs, which ballooned to an estimated $50 billion. But VEB ended up picking up much of the...
Russia ’s state-owned development bank and its biggest lender, Vnesheconombank [VEB], is reportedly in need of a bailout. In 2008 , the bank became a dumping ground for bad assets and money-losing state projects. In 2013 the then head of the bank said it had spent $ 8bn investing in the commodity sector in eastern Ukraine , where activity has since come to a near stand-still. The government turned to VEB when costs for the 2014 Winter Olympic Games in Ukraine ballooned leaving the bank with the equivalent of $ 2.9bn overdue loans on its books. The sanctions following the country’s annexation of VEB have also taken their toll on VEB , which was very exposed to international capital markets, leaving it with about $20bn in foreign-currency debt and limited access to capital markets. 2013 the government said it would provide aid worth $ 2.9bn , around half the amount analysts estimate is the minimum amount of relief the bank will need this year .