Updated April 4, 2008

   Supervisory board of Bank for Development and Foreign Economic Affairs (Vnesheconombank or VEB)

has approved the development strategy of the state corporation for 2008-2012 period. According to the document, by this period end the bank loan portfolio would increase four times – to RUR 850 billion "due to state investment projects participation in the financing". VEB would need its own regional chain

for their realization.

And the bank intends to create it already by 2010.

   VEB supervisory board headed by the Prime Minister Viktor Zubkov has considered one of the key documents for Bank for Development – "VEB Strategy for 2008-2012 period". It comprises the basic directions and financial activity parameters of "the state institution development", in which VEB has been reorganized at the beginning of July, 2007 after coming into effect of the corresponding law. As the government press-service reported, "the decision to approve the strategy presented by VEB and to complete particular mechanisms of its realization with the account of the stated comments has been taken at the meeting".

   According to the document, the bank strategic guidelines comprise the increase of the loan portfolio to RUR 850 billion by 2012 "due to state investment projects participation in financing", assets growth to 2% of GDP, provision of the capital profitability at the level not lower than 5% (the commercial banks' index is usually around 25%). Moreover, within 5 years VEB intends to increase the stake of projects financed on the principles of state-private partnership in its portfolio "to the level not lower than 30%".

   VEB would require its own regional chain to realize these scale tasks.

As it was indicated in the strategy, at the first stage – in 2008-2009 – it is planned to open the chain of the bank representative offices within the country. By this year-end VEB intends to open seven representative offices, including the Far East, North Caucasus, and Volga region.

The other priorities comprise "the transport-logistic and production points of the South of Russia", the cities of Siberia and Ural, and also "the new areas of growth on the basis of primary resources development" (European North, Sakhalin, Lower Angara region, Yakutia) and "exploitation areas around new infrastructural projects" (North Siberia, East BAM (Baikal-Amur Mainline), new mainlines). At the second stage – by 2010 – VEB branches would be established on the basis of the most effective representative offices.

It is expected that within the nearest three years 28 regional VEB offices would be established.

   We will mark that VEB has never had its own branch chain.

Last summer the Central Bank came forward with

the initiative to attract VEB to solve the problem of small regional banks capitalization through the participation in their capital. The bank supported it and declared that it would be therefore able to create the own infrastructure in regions.

However, the VEB approach to the activity in the regions has definitely changed. As the VEB deputy head Sergey Vasilev declared, this idea had been reflected in the strategy: "Capitalization of regional banks is not our task".

   The partner of Vegas-Lex law firm Albert Eganyan considers that VEB required the real presence in the regions.

" VEB, as well as other participants of the state-private partnership system, has general-country problem – there is only around 20 large projects left in the country.

These projects go both to the investment fund and to VEB.

And to reach them one has to go to the regions and establish representative offices there", he says.