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Sanctioned Development Bank Sees Profits Tumble 70 Percent

Published: August 17, 2014 (Issue # 1824)



  • VEB's net profits fell to about 3 billion rubles ($83 million) in the first half of this year, compared to nearly 10 billion rubles ($278 million) in 2013.
    Photo: Wikimedia Commons

The net profit of sanctioned state development bank Vneshekonombank, or VEB, fell 70 percent in the first half of this year against 2013 levels, according to the bank's second-quarter report.

VEB's net profits fell to about 3 billion rubles ($83 million) in the first half of this year, compared to nearly 10 billion rubles ($278 million) in 2013.

The drop was linked to a 12.3 billion rubles ($342 million) loss from foreign currency operations and the revaluation of foreign currencies, according to the report.

VEB was struck by both United States and Europe Union sanctions in July as the West sought to pressure Russia into ceasing support of separatist rebels in eastern Ukraine. The measures effectively barred VEB from buying or selling equity or debt with a maturity period of longer than 90 days on Western capital markets.

The bank at the time said the sanctions would not have a significant impact on its operations.

Some economists argued that striking VEB would create a financial ripple effect, ultimately damaging far-flung corners of the Russian economy. Although often classified as a development bank, VEB is in effect a state corporation that funds infrastructure projects and supports Russian industry and small business.

In targeting VEB, the sanctions struck close to the top of Russia's chain of command: Prime Minister Dmitry Medvedev himself is chairman of VEB's supervisory board, whose other members include Russia's finance minister and economic development minister.

The apparent losses this year may also be the natural consequence of a strong first half in 2013, when, according to the report, the bank profited from "the revaluation of financial instruments and revenues from the sale of securities."





 


ALL ABOUT TOWN

Sunday, Nov. 23


Get in the holiday spirit at today’s Winter Bazzar at the Astoria Hotel. Featuring gifts from around the world such as French eclairs, Dutch cheeses and Indian jewelry, the annual event organized by the International Women’s Club will feature 18 international stands and raise money for charity through the sales of a diversity of products that further illustrate the city’s international connections.



Monday, Nov. 24


Dr. Axel Schulte, Department Head at Fraunhofer Institute for Material Flow and Logistics in Dortmund, Germany, is the featured speaker at the SPIBA Industrial Committee lecture on “The Fourth Industrial Revolution: Digitalization of the Supply Chain.” The event begins at 4 p.m. at the Graduate School of Management at 3 Volkohvsky Pereulok and registration is required by Nov. 21 either by emailing office@spiba.ru or calling 325 9091.



Tuesday, Nov. 25


Tag along with AmCham during their “Industrial St. Petersburg” Tour program today. This incarnation of the ongoing series will visit Philip Morris Izhora and include an Environmental Health and Safety Committee meeting.


Find out how to expand your business east during the “Business With China” forum beginning today and concluding tomorrow at the Lenexpo convention center. The largest Russian forum dedicated to business with the Asian giant, topics that will be discussed include logistics, customs clearance, trade financing and many more.



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