RU

2.

THE RUSSIAN EXPORT CENTER GROUP (REC)


The state has used an array of incentives to stimulate exports. The instruments that were available before 2015 were somewhat fragmented, which prevented the potential exporters from making maximal use of them. Meanwhile, the exporters had other issues to focus on, besides financing, such as initiation and consulting, i.e. issues not directly related to financing.

510

number of exporters supported by the REC

8,9

billion USD worth of exports supported by the REC



2.1

Strategic objectives

The state has used an array of incentives to stimulate exports. The instruments that were available before 2015 were somewhat fragmented, which prevented the potential exporters from making maximal use of them. Meanwhile, the exporters had other issues to focus on, besides financing, such as initiation and consulting, i.e. issues not directly related to financing.

As the result, in 2015 the Russian government made a decision to create a unified efficient development institution to act as a bridge between the businesses and all the existing export support instruments at all stages of the export cycle. Thus, in December 2015 the main areas of focus and the plan for the development of the Russian Export Center (REC) were adopted.

The main strategic objective of the REC is to ensure an increase of Russia’s non-commodity exports through the establishment and development of the required infrastructure.



STRATEGIC INITIATIVES OF THE REC

DEVELOP THE INFRASTRUCTURE OF THE EXPORT ENVIRONMENT

Create the ideal regulatory environment and the exports infrastructure for Russian exporters

MAINTAIN AND INCREASE THE VOLUME OF RUSSIA’S NON COMMODITY EXPORTS

Directly support the exporters and Russian investors abroad, facilitate the implementation of non-commodity exports projects

DEVELOP THE EXPORT CULTURE

Increase financial awareness and shape the export culture in Russia with the view to expand the list of potential Russian exporters with a special focus on smaller-scale enterprises

CREATE A DEMAND FOR RUSSIAN GOODS AND SERVICES

Work with the existing and potential consumers of Russian exports, and promote Russia’s image abroad

DEVELOP THE INSTITUTIONS OF THE REC

Facilitate internal organizational change aimed at ensuring high service quality standards and the e ectiveness of REC’s activities as a development institution, and achieve financial stability

2.2

Integration of the REC Group


STRUCTURE OF THE REC GROUP

a

EXIAR
Insurance protection

b

EXIMBANK OF RUSSIA
Loans and guarantees

c

Russian Export Center
Coordination and non-financial support

а b c

In February 2016 the process of functional integration between REC, EXIAR and Eximbank of Russia was launched as part of implementing the single-window system. The primary aim of the integration was to improve the quality of the services, to broaden the scope and coverage by the Group’s services, as well as to accelerate its business development.

At the moment, the REC Group enables the exporters to get state support, both financial (loans, insurance, guarantees) and non-financial (legal, information, training, advertising support).

The integration made the cooperation between the companies of the REC Group and their clients much easier. There is no need to deal with three different organizations, since the REC is a single point of contact for all customers that ensures uniform service standards. The customer contacts a single front office with a question or issue of any kind and receives the required services in the relevant front office of the companies of the REC Group. The process has become more transparent and efficient: the exporters no longer need to obtain three nearly identical sets of documents to get various kinds of support. This reduces the transactional costs of both the customers and the REC Group itself, since the data is obtained from and stored in a single database.

KEY AREAS OF FOCUS OF THE RUSSIAN EXPORT CENTER

1

Financial, insurance, guarantee and other kinds of export support

2

Information and consultation support of exporters, Russian investors abroad, their foreign contract partners, and Russian and foreign banks financially

3

Supporting fairs and other marketing activities abroad aimed at promoting Russian products

22
years the experience of Eximbank of Russia in supporting Russian exports

2.3

Strategic benchmarks of the Bank


The State Specialized Russian Export-Import Bank (Joint Stock Company)1 was established in 1994 to facilitate the implementation of the state policy aimed at promoting and supporting the exports of engineering products.

The Bank acts as an agent of the Russian government for ensuring the state support of non-commodity exports by providing specific loan and guarantee products. In 2016 Eximbank of Russia JSC became part of the financial branch of the REC Group. The key priority for the Bank’s development within the REC Group is to increase the amount of credit transactions in coordination with EXIAR.

The Bank provides financial support that is organizationally and economically accessible for a wide range of exporters. Supporting smaller-scale businesses has always been a priority for the Bank. The competitiveness of Russian high value-added goods and services abroad largely depends on such support. These days, a company equally owes its success in external markets to the quality of its products and to the financing terms and conditions of the export contract. This especially applies to companies of the non-commodity sector, whose products may be internationally competitive.

VALUABLE CONTRIBUTION TO THE ECONOMY BY EXIMBANK OF RUSSIA JSC

1

An increased number of national exporters and the states that import their products

2

Support for the international competitive position of Russian companies

3

New import substitution industries

4

Domestic job creation

5

Inflow of foreign investment to Russia

KEY GOALS OF EXIMBANK OF RUSSIA JSC

1

Ensure access to finance for Russian exporters or export-oriented companies and create the relevant conditions for providing financial support to secure a competitive position for Russian products in the external markets

2

Loan and guarantee support for Russian exporters

3

Facilitate the growth of Russia’s noncommodity exports by increasing the export volume

KEY SEGMENTS FOR THE DEVELOPMENT INSTITUTION IN TERMS OF PROVIDING FINANCIAL SUPPORT

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2.4

Senior executives of the Bank





We value our people as a major asset and a key resource that is essential for achieving the strategic goals of the Bank and entire REC Group. This is why the Bank has prioritized human resources management and development.

THE BOARD OF DIRECTORS AS OF 31 DECEMBER 2016

Chairman of the Board of Directors

Petr M. Fradkov

Members of the Board of Directors

  • Stanislav S. Voskresensky
  • Konstantin V. Vyshkovsky
  • Georgy V. Kalamanov
  • Artyom G. Konstandyan
  • Andrey S. Polyakov
  • Oleg V. Teplov
  • Aleksei A. Tiupanov

THE MANAGEMENT BOARD
AS OF31 DECEMBER 2016

Chairman of the Management Board

Andrey S. Polyakov

Members of the Management Board

  • Deputy Chairman of the Management Board Roman Y. Smagin
  • Deputy Chairman of the Management Board Viktor A. Solomin

Chief Accountant/h3>

Natalia A. Bondaryuk (as of 31 December 2016)

2.5

A bank for Russian exporters


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In the year under review the Bank reported positive financial results in a number of areas

At 2016 year-end, all the company-wide target performance indicators were reached

36.2
billion RUB Total volume of export support loans (target exceeded by 3.3%)
3.2
billion RUB amount of loans provided as part of SME support (against the target of RUB 2 billion)
62%
share of supported exports of high tech products and services as part of the special program of the Eximbank of Russia JSC and the Russian Ministry of Industry and Trade (against the target of 60%)
248
export contracts received loan support (against the target of 100 contracts)
355
billion RUB net profit at year-end (break-even business was ensured)

EXPORTS SUPPORTED IN 2016, BY REGION, %

1.5 % Africa 10.5 % Latin America 10.2 % Western Europe 14.3 % Eastern Europe 19.7 % Asia 43.8 % CIS, Georgia

The Bank’s portfolio includes the various segments of exportoriented businesses. The products of chemical industry and related enterprises, as well as of metal industry, account for the two largest parts of the portfolio (20.3% and 19.5%, respectively), followed by projects in the sphere of the ground transportation (15.7%). More recently, the Bank has received multiple applications from CIS states in relation to special purpose vehicles (for ministries of emergency situations and other similar structures).

Exports supported in 2016, by sector

Sector Worth of exports supported, USD mln % of total amount
Railway transportation, trackside equipment 0.09 10.4 %
Light industry, textile materials and products 0.02 2.4 %
Air and space craft 0.11 12.7 %
Metallurgy 0.17 19.5 %
Food products 0.01 1.2 %
Animal and plant products 0.00 0.3 %
Products of chemical and related industries 0.18 20.3 %
Other industries, works and services 0.01 1.3 %
Electronics and electrical goods 0.02 2.2 %
Agricultural machinery 0.05 5.5 %
Ground transportation vehicles 0,14 15,7 %
Construction and finishing materials 0,00 0,2 %
Construction 0,06 6,8 %
Fuel 0.00 0.0 %
Heavy engineering 0.01 0.6 %
Energy engineering and electric engineering 0.01 1.0 %
Итого 0.88 100.00 %


880
million USD total amount of support provided for non-commodity exports by the Bank in 2016

Key Russian exports projects supported by Eximbank of Russia in 2016



RM RAIL
Cuba
500

MLN RUB

In April 2016 Eximbank of Russia JSC opened a credit line of RUB 500 million for RM Rail. The loan was provided under the product “Financing the costs related to the export contract”.

RM Rail is an integrated manufacturer of specialized freight rolling stock for rail roads. It is a part of the Russian Machines Corporation.

Under the export contract, 363 freight railcars will be delivered to Cuba. The financing provided to the company enabled it to produce a batch of railcars for exports at the Ruzkhimmash facility within short timeframes. In July 2016 the first batch of 59 railcars was delivered to the customer, Empresa Proveedora General del Transporte (TRADEX).

BALTKRAN
Europe
50

MLN RUB

In 2016 Eximbank of Russia JSC opened a credit line for Baltkran, a Kaliningrad-based company, for the supply of lifting equipment (container cranes that unload and stack containers at railway stations) to the countries of the EU.

MONOCRYSTAL
China, Korea
4.6

MLN USD

Monocrystal LLC obtained financing for its trade with foreign buyers for the supply of synthetic monocrystalline sapphire.

RUSAVTOPROM
Belarus
45

MLN RUB

Rusavtoprom LLC obtained a direct loan from Eximbank of Russia JSC for the purchase of CKD assemblies for road transport vehicles, produced by Russian Buses, a company within the GAZ Group LLC.

KALININGRAD MOTOR VEHICLES MANUFACTURING PLANT
Europe
13

MLN RUB

Eximbank of Russia JSC provided financing to the Kaliningrad Motor Vehicles Manufacturing Plant LLC for the supply of motor towers to Lithuania, which enabled the enterprise to enter new European markets, and in 2017 – to enter the US and Canadian markets.

EXIMBANK OF RUSSIA JSC SETS NO MINIMUM LIMITS FOR ITS LOANS AND IS EQUALLY OPEN FOR COOPERATION WITH LARGE-SCALE AND SMALLER PROJECTS.




SKAD PLANT
Germany
820

THOUSAND USD

SKAD Casting and Mechanical Plant LLC obtained a loan from Eximbank of Russia JSC for the supply of alloy wheels to Germany. As the result, exports worth USD 11 million were supported.

MMPZ GROUP (MIORI ROLLING MILL)
Belarus
51.9

MLN EUR

Under the loan agreement signed by Eximbank of Russia JSC and the Miory Metal Rolling Mill (MMPZ Group LLC, Belarus), the finance that the Bank provided as part of its ‘direct loan to a foreign buyer’ product, will be used for the construction of a tin plate and cold-rolled milled products plant. Russian exporters MetPromStroy LLC and MetPromTeh LLC will take part in the two-staged project in the Republic of Belarus.

BPC ENGINEERING
Belarus
2.3

MLN USD

Eximbank of Russia JSC signed a loan agreement with Goznak Paper Mill of the Department of State Notes of the Republic of Belarus for the supply of turbine generators manufactured by a Russian BPC Engineering Group.

TRANSTEKHSNAB
Uzbekistan
50

MLN RUB

Transtekhsnab LLC obtained two loans from Eximbank of Russia JSC for the supply of diesel generators to Uzbekistan

TOGLIATTI TRANSFORMER PLANT
Mongolia
380

THOUSAND USD

Eximbank of Russia JSC provided financing to the Trade and Development Bank of Mongolia. The loan amount was used to pay for the supply of a TDC- 125000/110 power transformer under the contract signed between one of the largest developers and manufacturers of electrical equipment in Russia and CIS – BPZ Engineering Togliatti Transformer LLC – and a Mongolian company Garnet Brilliant.

Eximbank of Russia offers solutions for Russia’s large as well as small and medium exporters that will enable them to enter global markets.

2.6

A credit of trust

The Russian Export Center offers a package of measures and instruments of financial and non-financial support for the Russian export-oriented companies. The support provided by Eximbank of Russia JSC is supposed to increase the supply of solutions available in the market with a view to maximize the potential of non-commodity exports.

At the same time, as far as the domestic market is concerned, the support institution does not enter direct competition with the market; instead, it merely adds the required instruments while cooperating with its leading players. The support provided by the financial branch of the REC is aimed at closing the existing market gaps and ensuring that the available financing solutions are comparable to the solutions offered by foreign export credit facilities.

The product line of the Bank is based on the international experience of export credit agencies and international banks providing guarantee support to national exporters. When loan products are formed, much attention is given to ensuring their integration with the product range of the REC Group. The effort aimed at creating a line of complementary products was started in 2014. Following the successful integration of Eximbank of Russia JSC and EXIAR to the REC Group, Russian exporters may receive comprehensive financial support in issues related both to insurance and financing, in the single-window mode, where the specific combination of using different support solutions will be defined by the customer’s needs. Financial support will be provided throughout the customer’s export cycle.

Market gaps:

  • Non-availability of a specific solution in the market (product),
  • lower financing rates offered by foreign competitors;
  • complicated risk assessment.

In addition to the ‘standard kit’ of currencies traditionally used in international contracts (USD and EUR), the Bank offers loans in the currency of the residence country of the buyer of Russian goods and services.

FINANCIAL SUPPORT PROVIDED BY EXIMBANK OF RUSSIA JSC AT EVERY STAGE OF THE EXPORT CYCLE

PRE-EXPORT STAGE
  • Financing the beginning of export production
NEW EXPORT
  • Financing foreign buyers and banks
  • Financing the exporter’s costs
  • Providing guarantees covering the exporter’s obligations
ONGOING EXPORT
  • Financing the exporter’s accounts receivable
  • Providing transaction- products (settlement services, foreign exchange controls, conversion)

The main barriers preventing Russian small and medium-sized manufacturers from entering international markets are insufficient working capital and lack of affordable finance. Eximbank of Russia JSC offers Russian exporters the solutions that may help them to overcome these barriers.


FINANCIAL AND GUARANTEE EXPORT SUPPORT OFFERED BY EXIMBANK OF RUSSIA JSC

LOANS
  • Financing the costs related to the export contract
  • Financing the current export-related expenses
  • Financing the commercial loan of the exporter
  • Financing the trade with foreign buyers
  • Direct loan to the foreign buyer
  • Financing via a confirmed letter of credit
  • A loan to the bank of the foreign buyer
GUARANTEES
  • Tender guarantee
  • Advance payment guarantee
  • Performance bond
  • Payment guarantee
  • Tax payment guarantee
LOANS TO FOREIGN BUYERS

To support the exporters, we may either finance the supporters themselves, or their buyers. Loans to foreign buyers are the most logical and popular product that has helped to stimulate the national export across the world: a total of around 80% of the deals with state support use this tool.

However, financing the buyer in Russia remains problematic, since the majority of Russian exporters are focused on obtaining pre-export financing, whereas most of the commercial banks seem rather reluctant to assume the risks related to a foreign borrower. Eximbank of Russia JSC, together with EXIAR, is ready to assume such risks, and offers a loan and insurance product that will help stimulate the demand for Russian goods and services without increasing the already excessive loan burden on the Russian companies.

Availability of package solutions that include such options as financing the foreign buyer will increase the chances to win tenders and eventually lead to increased international competitiveness of the Russian companies. The buyers will then have a number of options to choose from: they may either obtain a loan directly from Eximbank of Russia, receive financing under a confirmed letter of credit, or obtain a loan from their ‘house bank’, that will be provided with funds by Eximbank of Russia.

EXPORTS WITH A BANK GUARANTEE

Bank guarantee is another important export support tool. The Bank offers a line of guarantee products covering the key areas (tender guarantee, advance payment guarantee and payment guarantee, etc.).

Since 2017 the Bank will, in its own name, provide a VAT refund guarantee to the exporters of services and non-commodity goods, which will speed up the tax refunds from the Federal Tax Service. The advantage of this product is that the company will be able to get a refund before the tax audit, that usually takes three months, has been completed. This will give the exporter the opportunity to quickly increase the working capital and remain active in the market. Quick VAT refund is especially important for smallersize exporters, where replenishing the working capital is absolutely essential for successful business operations.



USING NATIONAL CURRENCIES IN TRADE SETTLEMENTS

In view of the specific features and the vast geography of Russian exports, Eximbank of Russia JSC is currently exploring the possibility to enabling the settlements in national currencies. As to the existing loan portfolio, the Bank is settling payments in rubles, euros and US dollars. Meanwhile, the Bank is making efforts to extend the list of transaction currencies with a view to embrace the most promising markets, such as China, Egypt, Turkey, Vietnam, Turkmenistan, Latin America and the Middle East and thus broaden the options for the Russian exporters.

Enabling settlement in national currencies will make the business processes much easier for the Russian exporters and their foreign customers. Achieving an increase in the amount of settlements in national currencies is a major objective for Russia, in particular, in terms of security. When there is no need to make several transactions with the banks of the US or EU as part of a single deal, the payment procedure will become more secure and convenient.

SUPPORT OF HIGH TECH EXPORTS

Supporting high tech production and exports is one of the key objectives for Russia as a raw material-based economy. One of the state support measures in this field is the program for loan support of high tech exports launched in August 2015 as the result of joint effort by the Ministry of Economic Development, the Ministry of Industry and Trade and the Russian Export Center.

The program enables exporter companies and foreign buyers of Russian products and services to receive financing at rates that are comparable to those offered by foreign competitors. The loan application procedure remains practically the same, with only a questionnaire added to the usual package of documents.

As of 2016, the geographic priorities of the program are Belarus, Vietnam, Germany, Kazakhstan and Cuba.

The target performance indicator for loans issued for high tech export support set at RUB 3 million was more than two times exceeded — the total amount of loans issued as part of the high tech exports support program was RUB 6.4 billion.

22.4
Total amount of loans provided under the high tech exports support program
19
billion RUB amount of loans requested in the first month after the Bank for Banks program was announced

THE “BANK FOR BANKS” PROGRAM

The pilot “Bank for Banks” program was launched in 2016. Under the Program, Eximbnk of Russia JSC will be purchasing export loans of the businesses, with a focus on smaller-size companies. The exporters will then use the services of their ‘house banks’ in terms of their current business operations, and at the same time they will enjoy better terms offered by Eximbank of Russia JSC.

This program would be particularly welcome for smaller-size exporters based in the different regions of the country. The opportunity to do their banking locally will make the Bank’s products more attractive for regional exporters.

In addition, Eximbank of Russia may provide guarantee support to the exporters in relation to their loans from house banks, which will considerably simplify the structuring of lending transactions and resolve the issue of loan security. In its turn, the crediting bank will have the opportunity to refinance independently from the Central Bank of Russia.

The program has received much attention from commercial banks. So far, several pilot transactions have been completed for a total amount of over RUB 9 billion, with several other deals worth around RUB 2.5 billion still in progress. The amount of requested support (around RUB 19 billion) far exceeds the funds allocated for 2017 (RUB 10 billion).

TARGETED FINANCING OF PARTNER BANKS TO ENSURE EXPORT LENDING
  • Tailored loan programs in cooperation with financially secure regional and major multipurpose commercial banks certified by Eximbank of Russia JSC
PURCHASING LOANS FROM PARTNER BANK

  • Selective purchase of loans issued independently
  • Guaranteed purchase of loans provided in line with the standards of Eximbank of Russia JSC
GUARANTEE SUPPORT OF EXPORTERS
JOINT LENDING TO EXPORTERS
REFINANCING OF EXPORTERS’ LOANS

SEPARATION OF COMPETENCIES IN EXPORT LENDING

PARTNER BANK
  • Financing the current business operations and business areas not related to exports
  • Payment and cash services
  • Acting as paying agent in relation to the customer’s loans from Eximbank of Russia JSC
EXIMBNK OF RUSSIA JSC
  • Financing export operations through the buyout and refinancing of loans of the Partner Bank
  • Ensuring a secure source of proceeds on export contracts of the Partner Bank’s borrower, Eximbank of Russia JSC finances the foreign buyers (or their banks) to ensure payment under the export contract
  • Attracting new exporter customers