ANNUAL REPORT 1999 ANNUAL REPORT 1999 ANNUAL REPORT 3 CONTENTS ADDRESS OF THE CHAIRMAN OF VNESHECONOMBANK __________________________________ 4 BOARD OF DIRECTORS __________________________________________________________________ 6 1. Commercial Activities ______________________________________________________________ 7 1.1. International Settlements ________________________________________________________ 7 1.2. Internal Settlements ____________________________________________________________ 10 1.3. Customer Base Expansion, Perfecting the Arrangement and Profile of Customer Service______________________________________________________________________ 10 1.4. Credit and Guarantee Operations ________________________________________________ 15 1.5. Operations in Financial and Money Markets ____________________________________ 16 2. Agent for the Government of the Russian Federation ____________________________ 19 2.1. Sovereign Foreign Debt Management ____________________________________________ 19 2.2. Raising Credits under the Guarantees of the Government of the Russian Federation ____________________________________________________________________________ 24 2.3. Ensuring Recoverability of Credits Extended by the Former USSR and the Russian Federation____________________________________________________________________ 25 3. Corporate Structure Development ________________________________________________ 27 3.1. Technological, Information and Other Support Facilities ______________________ 27 3.2. Foreign Representative Offices __________________________________________________ 30 3.3. Public and Social Activity ______________________________________________________ 32 3.4. Aims and Objectives of the Bank’s Development for the Years 2000-2001 ____ 32 4. Financial Records of the Year 1999 ________________________________________________ 35 4.1. Tax Payments ____________________________________________________________________ 35 4.2. Balance of Payments, Income and Expenses, Profit ____________________________ 35 ANNUAL REPORT 4 Ladies and Gentlemen! the elections, realignment of I encourage you to devote a few forces in the country was criti- minutes to the following pages cally changed. Finally, the first where Vnesheconombank’s senior President of Russia, Boris Yeltsin, managers who are leading the unexpectedly resigned with charge on key elements of our a transfer of power to Vladimir strategy will share their views on Putin, a new Russian President the Bank’s performance in 1999. to come to the office. Under To begin with, it would be but rea- those circumstances, it was hard sonable to recall the political and to present a coherent develop- economic challenges Russia was ment strategy and a comprehen- faced with on the eve of a new sive economic programme. But century and a new millennium. demonstrating strong political In the wake of the devastating resolve, we nevertheless suc- financial crash in August 1998 ceeded in keeping the situation the greatest immediate danger under control. for Russia was to plunge into The complicated domestic set- oblivion. Against the backdrop up was further aggravated by of a complicated and fragile a no less difficult international political situation in the coun- environment. Following the try economists and market ana- default on its foreign debt, Rus- lysts had every ground to pre- sia was inevitably faced with dict that. loss of investors’ confidence, Remarkably, these predictions growing competitive pressures never materialised. On the con- and, hence, an unfavourable trary, in 1999 Russia’s economy global financial climate. performed better than expected Notwithstanding all the chal- and is well on track for recovery lenges, Russia still weathered in 2000. Though sometimes the the storm and emerged from the signs of economic growth crisis in a position of relative appeared to be tentative and strength with a ray of hope for lacking sustainability, they are new positive changes. From nevertheless reflective of greater a historic perspective, the year social stability and political 1999 might be viewed as innovation dynamics in the a springboard for Russia’s sus- country. tained economic growth and Looking back to the past we now future prosperity. come to realise how fast things As a specialised state bank, developed and the political sit- Vnesheconombank was always uation evolved: first, there was a driven by the strategic priorities constant reshuffling of the Gov- of the country’s development, as ernments and Prime Ministers well as by the key objectives set followed by stark confrontations by the Government of the Russ- throughout the Parliamentary ian Federation. Therefore, it was campaign, then, as a result of invariably seeking to foster the ANNUAL REPORT 5 favourable trends appearing in enhance the competitiveness of ted we have always encouraged Russia’s economy and to facili- domestic products in global mar- staff involvement in the Bank’s tate the country’s smooth inte- kets. Whenever possible, we performance and appreciated gration into the global econom- encouraged our economic part- commitment to excellence and ic community. ners to overcome the financial intellectual strength of our peo- By the start of the year under crisis and its after-effects ple. Strategically, their profes- review, Vnesheconombank was through offering them our market sionalism and insightful ideas are among few Russian banks which expertise and a wide range of a major source of future growth managed to successfully over- innovative banking services that and dynamics. come the financial crisis and its match the standards of major In Management’s opinion it was adverse repercussions. More- global financial institutions. clearly a good year. We recognise over, it gained in-depth market In 1999 the Bank stayed commit- that underpinning our success intelligence and perfected its ted to fulfilling its primary func- lie a set of values. As a bank, we execution capabilities. Mainly tion of a debt servicing agent. aspire to be distinguished by as a consequence, last year was Acting in close cooperation with responsible citizenship, integri- a watershed in our drive to gen- the Russian government and the ty, client focus and job dedica- erate better economic perfor- Ministry of Finance, it bolstered tion. Entering the third millen- mance and diversify revenue its efforts to effectively restruc- nium with «Shaping the future streams. ture the Soviet-era debt and today» as our slogan, we are Going into 1999, we were dedi- to further service the foreign holding a fundamentally opti- cated to galvanise all the debt of Russia. Seen from this mistic view to turn these aspira- resources available to rank perspective, the agreements tions into achievements. among Russia’s leading banks. reached with the London Club Our strategic aim was to attain creditors on a significant debt Andrey Kostin a bigger share of Russia’s bank- write-off could be regarded as Chairman of Vnesheconombank ing services market with a tight a real breakthrough. The main focus on investing into the real financial parameters of the sector of the economy. For our agreement were elaborated at perspective customers, of prime the end of 1999 and finalised in concern were the Bank’s credi- February 2000 to be legally com- bility, high-profile reputation pleted later on. and its impeccable record. They The year under review saw an could also benefit from Vneshe- increase in the Bank’s business conombank’s ability to effect activities with foreign partners credit and guarantee operations in Germany, Italy, Denmark, as under major international pro- well as with export-import jects against no guarantees banks of China, India, Hungary issued by the Government, as and the Republic of South well as to raise project finance, Korea. In April 1999, Vneshe- inclusive of syndicated loans. conombank’s Representative The Bank’s financial capabilities, Office resumed operating in in combination with the poten- China tial of Russia’s enterprises, could In 1999, the Bank I am honoured definitely promote the develop- to represent celebrated its 75th ment of national industry and anniversary. It should be admit- ANNUAL REPORT 6 BOARD OF DIRECTORS KOSTIN Andrey Leonidovich Chairman of the Bank DMITRIEV Vladimir Aleksandrovich First Deputy Chairman KOSOV Nikolay Nikolaevich First Deputy Chairman ZABAZNOV Anatoly Pavlovich Deputy Chairman ZAVYALOV Igor Nikolaevich Deputy Chairman LEVIN Vadim Olegovich Deputy Chairman SMIRNOV Aleksey Vladimirovich Deputy Chairman STORCHAK Sergey Anatolievich Deputy Chairman – Sovereign Debt Obligations Director CHERNUKHIN Vladimir Anatolievich Deputy Finance Minister of the Russian Federation AKINSHIN Aleksey Ivanovich Treasury Director GRUZINOV Aleksandr Sergeevich Security Director LEBEDEV Igor Aleksandrovich Administration and IT Director NOROV Erkin Rakhmatovich Strategic Development Director TITOV Vasily Nikolaevich Public Relations Director SHAPRINSKIY Vladimir Dmitrievich Chief Accountant ANNUAL REPORT 7 1. Through the year, foreign cur- national settlements through COMMERCIAL rency export earnings have cheques just as readily. ACTIVITIES grown 4.5 times to reach USD A chequebook for the Bank has 4.6 billion, with payments made been issued by Bank of New York, In 1999, Vnesheconombank rein- forced its leadership position in Volume of International Settlements, in dynamics, most sectors of Russia’s banking 1998-1999 [USD million] services industry, considerably Export Import improved its high-profile repu- tation and regained