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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

Monday, Oct. 20


Amateur pictures from World War I are on display for only one more day at Rosphoto’s exhibition “On Both Sides,” chronicling the conflict through the eyes of observers on both sides of the trenches. The price of entrance to the exhibition is 100 rubles ($2.50).



Tuesday, Oct. 21


The Environment, Health and Safety Committee of AmCham convenes this morning at 9 a.m. in the organization’s office.


Take the chance to pick the brains of Dmitry V. Krivenok, the deputy director of the Economic Development Agency of the Leningrad region, and Mikhail D. Sergeev, the head of the Investment Projects Department, during the meeting with them this morning hosted by SPIBA. RSVP for the event by emailing office@spiba.ru before Oct. 17 if you wish to attend.


Improve your English at Interactive English, the British Book Center’s series of lessons on vocabulary and grammar in an informal atmosphere. Starting at 6 p.m., each month draws attention to different topics in English, with the topic for this month’s lessons being “visual arts.”



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