London

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STATE CORPORATION BANK FOR DEVELOPMENT AND
FOREIGN ECONOMIC AFFAIRS (VNESHECONOMBANK)
Vnesheconombanks role in the Development of the
Transport Infrastructure and Private-Public
Partnerships in Russia
London November 21, 2007
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KEY MILESTONES IN VNESHECONOMBANKS DEVELOPMENT
Rating upgrade by Fitch and SP to BBB. Upgrade
to Baa2 by Moodys. VEB successfully closes its
debut US500 Million Syndicated facility.
Federal Law On Bank for Development ? 82-FZ
was signed by the President of the Russian
Federation.
Predecessor bank, Vneshtorgbank of the
USSR founded.
Appointed as Agent of the Government of the
Russian Federation.
Vneshtorgbank of the USSR renamed to
Vnesheconombank (VEB).
Purchase of 94.6 of Eximbank of
Russia. Appointed State Trust Management Company
to handle pension savings funds.
Rating upgrade to BBB by Fitch and SP. VEB
ensures an early repayment of the debut
US500 Million Syndicated facility and enters
into a US800 Million Syndicated facility.
Status of a State Corporation Equity
fully owned by the State Development functions
as a key focus Full range of investment
banking services Supervised by the Government
of the Russian Federation
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VNESHECONOMBANKS POSITION IN THE RUSSIAN BANKING
SYSTEM (PRIOR TO MAY 17, 2007)
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RATINGS
Foreign LT Bank Deposits
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FINANCIAL DATA AS OF YEAR-END 2006
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ASSETS
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KEY ELEMENTS OF THE FEDERAL LAW ON BANK FOR
DEVELOPMENT 17.05.2007 ?82 - FZ
According to the Federal Law the new entity was
founded on the basis of Vnesheconombank of the
USSR State Corporation Bank for Development
and Foreign Economic Activities
(Vnesheconombank), followed by a merger with
EXIMBANK of Russia and Russian Bank for
Development.

• Mission
• To ensure Russian economy growth by means of
  stimulating investment activity, development of
  infrastructure, support of innovative
  technologies and Russian industrial export.
• Goals and targets
• Ensure banking support for federal programmes,
  commercial projects of national importance,
  cross-border large scale projects of Russian
  companies
• Support regional, infrastructure projects and
  development of high-tech industries
• Enhance Russias export capability (especially
  in the field of export of high-value added
  goods)
• Support of import substituting industries in
  Russia.
• Focus on
• Infrastructure and innovative projects
• Development of special economic zones
• Russian industrial (non-natural resources)
  export support
• Financial support for small and medium size
  enterprises
• Environment protection.

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MAIN FOCUS AND CORE ACTIVITIES

• Main focus areas of Vnesheconombank
• Industrial and high-tech products export
  promotion
• Support of strategic sectors of economy
• Support of regional development
• Development of public-private partnerships.
• Core activities of Vnesheconombank
• Project finance
• National projects
• Infrastructure projects
• Support of Russian companies activities abroad
• Large-scale investment projects
• Innovation projects.
• Support of national export
• Financing of export projects
• Implementation of state policy for guarantee
  support
• Insurance of export credits.
• SME financing
• Financial advisory services
• Expert assessment of investment projects

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FINANCIAL MEMORANDUM OF THE BANK FOR DEVELOPMENT
FOR 2007-2010
Principles of activities Absence of
competition with commercial financial
institutions Environmental responsibility
Priority is given to the PPP mechanism
Transparency Projects recoupment Major
areas of investment activities Removal of
infrastructure restrictions impending economic
growth Enhancing the efficiency of natural
resources utilization Support of
innovations Development of SME
enterprises Support of industrial production
export
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PROJECT SELECTION CRITERIA
Compliance with major areas of
Vnesheconombanks investment activities
Compliance with specified investment areas
Loan tenors, as a rule, exceed 3 years Criteria
for selection of projects SME
financing amount shall not exceed RUR 150 mln
SME loan tenors over 2 years
Payback period
Over 5 years
Total cost of project
Over 2 bln. RUR
Vnesheconombank participation
Over 1 bln. RUR
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FINANCIAL MEMORANDUM OF THE BANK FOR DEVELOPMENT
FOR 2007-2010
Functions Expert evaluation of investment
projects, advisory services Extension of
loans and other forms of financing Issuing of
guarantees and sureties, including exports
guarantees Participation in charter capital
of legal entities Export credits
insurance Range of services extended
Syndicated loans Structured finance Debt
finance Project finance Equity
participation Advisory services
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FINANCIAL MEMORANDUM OF THE BANK FOR DEVELOPMENT
FOR 2007-2010

• Priority areas
• Aerospace
• Shipbuilding
• Electronic and high-tech industry
• Nuclear industry, including nuclear energy
• Transportation
• Power engineering industry
• Metallurgy (production of special steels)
• Wood processing industry

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FORECAST
Source Ministry for economic development and
trade by 2010 Credit
portfolio to be increased up to RUB 770 bln (USD
30.9 bln) from RUB 140 bln (USD 5.6 bln) in
2007 Borrowings from international and
domestic capital markets to be increased up
to RUB 469 bln (USD 18.8 bln).
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VNESHECONOMBANK A NEW PRIVATE-PUBLIC
PARTNERSHIP INSTRUMENT IN THE RUSSIAN FEDERATION

• Instruments of cooperation between the State and
  business in Russia
• Special economic zones
• State Investment Fund
• Concession mechanism
• State institutions for development
• Creation of engineering implementation parks
• Innovation venture funds.

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ADVANTAGES OF PPP MECHANISM IMPLEMENTATION IN
RUSSIA

• Possibility to implement socially important and
  relevant projects, unattractive for
• traditional forms of private investments
• Increase of efficiency of the projects due to
  partnership with private business
• Decrease of Government risks due to
  reallocation of project risks to private
• investors
• Possibility to engage best management
  personnel, technology and engineering
• Decrease of the budget burden by means of
  private investments and partial reallocation
• of total project costs and expenses of the
  project operator

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ADVANTAGES OF VNESHECONOMBANK IN FACILITATING PPP
Extensive experience in cooperation with
international, development banks, financial
institutions and ECAs
Expertise in large-scale investment projects
analysis and project finance
Administrative leverage (cooperation with federal
and regional authorities)
Excellent business reputation and credit history

• To support PPP mechanisms in Russia
  Vnesheconombank together with its foreign
  partners provides consultancy services to
  investors
• in identifying joint projects that qualify as
  PPP in the framework of the Concession Law
• in advising the sponsors on various structures
  of financing of PPP projects
• in developing a bankable funding plan for PPP
  projects
• in developing a financing and security
  structure for PPP projects
• in arranging joint financing for PPP projects
  etc.

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AGREEMENTS ON COOPERATION FOR ASSESSMENT AND
FURTHER DEVELOPMENT OF LARGE-SCALE INDUSTRIAL AND
INFRASTRUCTURE PROJECTS

• Key Federal government bodies (Ministry of
  Transportation of Russia, Federal
• Ministry for Industry, Agency for Special
  Economic Zones)
• More than 22 Russian regional authorities
  (Government of Chechnya, Tatarstan,
  Bashkortostan, Kabardino-Balkariya and Chuvash
  Republics Administrations of Krasnoyarsk,
  Krasnodar, Irkutsk, Kirov, Kurgan, Orenburg,
  Sakhalin, Ulyanovsk, Murmansk,Voronezh, Ryazan,
  Tver, Sverdlovsk, Amur, Stavropol, Novosibirsk
  and Samara regions)

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KEY TRANSPORTION AND INDUSTRIAL INFRASTRUCTURE
PROJECTS

• Transportation Infrastructure Projects
• Construction of Western High-Speed Diameter,
  St. Petersburg (99,9 bln. RUR / 3.9 bln. USD)
• Construction of Moscow-Saint-Petersburg toll
  road (15-58km), Moscow (54,9 bln. RUR / 2,2 bln.
  USD)
• Construction of Orlovsky tunnel under Neva
  river, St. Petersburg (31,7 bln. RUR / 1,3 bln.
  USD)
• Construction of a new connection to the Moscow
  Ring Road of the M1 Moscow-Minsk Federal
  Highway, Moscow (17,3 bln. RUR / 0,7 bln. USD)
• Construction of the Kyzil-Kuragino rail-way for
  the deveolpment of the Elegestskoe Coal Mine (12
  mln. annual production, 1.3 bln. USD)
• Construction of Volgo-Baltiysky waterway
  (North-West region) (8,0 bln. RUR / 0,3 bln.
  USD)
• Construction of transportation infrastructure
  for natural resources development in the
  south-east part of Chita region, Chita region
  (167,7 bln. RUR / 6,7 bln. USD).
• Industrial Infrastructure Projects
• Development of industrial facilities in the
  Lower Angara River region (complex of aluminium
  smelter, hydro-power station, pulp and paper
  plant, railway and auto roads, bridges),
  Krasnoyarsk region (213,9 bln. RUR / 8,6 bln.
  USD
• Construction of water supply and delivery system
  in the city of Rostov, Rostov region (22,1 bln.
  RUR / 0,9 bln. USD.

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TRANSPORTATION INFRASTRUCTURE PROJECTS
CONSTRUCTION OF MOSCOW-ST. PETERBURG TOLL ROAD
(15-58 KM)

• Construction of Moscow-St. Petersburg toll road
  represents one of the key transportation
  infrastructure projects in Russia as well as one
  of the most significant among toll roads
  worldwide. The first stage of the project
  (15-58 KM of the road) is expected to be
  constructed in 2010 substantially reducing Moscow
  regions traffic flows on this direction.
• Moscow-St. Petersburg highway is part of the
  federal M-10 road Russia, Pan-European
  transport corridor 9 and International transport
  corridor North-South, thus the functioning of
  the road makes a great impact not only on the
  transportation infrastructure of the central and
  northern regions of the country but also Russias
  international trade.
• The project is in-line with the Mid-term social
  and economic development program of Russia,
  Transport development strategy up to 2010 and
  Transport system renovation target program.
•  
• Vnesheconombanks role in the project
•  
• The Bank has been actively involved in the
  project since its starting point. One of the
  functions performed was consulting of the
  Ministry of transportation of Russia and
  preparation of an expert opinion for the
  Ministry
• Currently Vnesheconombank is considering to enter
  the project by means of financing the winner of
  the concession tender and/or equity financing.

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TRANSPORTATION INFRASTRUCTURE PROJECTS
CONSTRUCTIONOF A NEW CONNECTION TO THE MOSCOW
RING ROAD OF THE M1 MOSCOW-MINSK FEDERAL HIGHWAY

• The project is entitled to solve current traffic
  problems in the western part of the Moscow region
  and is aimed at
• enhancement of transport potential, capacity and
  transitional efficiency of Moscow regions part
  of the Pan-European corridor 2
  (Berlin-Minsk-Moscow-N.Novgorod)
• development of transportation infrastructure in
  order to increase population mobility, economy
  growth, Russias interstate and international
  business and trade relations.
•  
• Vnesheconombanks role in the project
•  
• The Bank pays a significant attention to the
  realization of the project, including elaboration
  of an expert opinion for the Ministry of
  transportation of Russia being its consultant
  regarding transportation projects in the field of
  PPP
• Currently Vnesheconombank is considering to
  provide financing to the winner of the concession
  tender and/or equity financing.

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VNESHECONOMBANKS MAJOR DEALS IN 2007
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VNESHECONOMBANKS MAJOR DEALS IN 2006-2007
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VNESHECONOMBANKS MAJOR DEALS IN 2006
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RECENT EXPERTISE IN TRANSPORTATION
INFRASTRUCTURE PROJECTS
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CONTACTS
Anatoly B. BalloMember of the Executive board
Vice Chairman Tel [phone]
21 E-mail Ballo_at_veb.ru9, Academic Sakharov
Ave., Moscow, 107996, Russia