ANNOUNCEMENT 27 Nov 2014In November 2014, the government of the Russian Federation announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
With Decree 1245 of November 27, 2014 was approved a state intervention with the purpose to "enhance the stability of the banking system and the preservation of the volume of lending to the domestic economy.' Here the recipient of state support is"Gazprombank" (Open Joint Stock Company) -- one of the largest universal financial institutions in the Russian Federation. Among the clients of "Gazprombank" are 4 million individuals and about 45 thousand of legal entities. The Bank currently owns seven subsidiaries and affiliated banks in Russia, Belarus, Armenia, Switzerland and Luxembourg, with offices in Astana (Kazakhstan), Beijing (China), Ulan Bator (Mongolia) and New Delhi (India).
The details of this financial scheme are:
The Deputy Chairman of the Management Board of "Gazprombank", Mr. Alexander Sobol, has commented the likely effects of the state intervention as follows:'We welcome the Government's decision to convert the deposit from Vnesheconombank into preference shares. Otherwise, the subordinated debt would be gradually amortised from the regulatory capital starting from 2016. The conversion will enhance the capital structure of the Bank and will facilitate its business growth amidst the limited access to the international capital markets'.
The GTA includes state guarantees and other financial incentives thatare likely to affect the restructuring and performance of firms facinginternational competition, whether from imports, in export markets, andfrom foreign subsidiaries.