Russia’s state-owned development bank and its biggest lender, Vnesheconombank [VEB], is reportedly in need of a bailout. The Russian government has been struggling to find new sources of funding for the economy since it was hit by sanctions over Moscow’s 2014 annexation of Crimea from Ukraine. 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 Sochi ballooned leaving the bank with the equivalent of $2.9bn overdue loans on its books. The sanctions following the country’s annexation of Crimea 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. Late last month the government said it would provide aid worth $2.2bn, around half the amount analysts estimate is the minimum amount of relief the bank will need this year.
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 Sochi ballooned leaving the bank with the equivalent of $2.9bn overdue loans on its books. The sanctions following the country’s annexation of Crimea 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. Late last month the government said it would provide aid worth $2.2bn, around half the amount analysts estimate is the minimum amount of relief the bank will need this year.