Report: Russia's VEB to get by without state support for Jan–Mar

MOSCOW, Jan 13 (PRIME) -- Russia's ailing state development bank VEB (Vnesheconombank) can honor its debt repayments for the first quarter of this year without additional state support, three government and banking sources said, Reuters reported late on Tuesday.

But the bank, which has been hit by Western sanctions over Moscow's role in Ukraine, will definitely require a large injection of capital from the government sooner or later, the sources told Reuters.

The government has been considering support for VEB worth 1.2 trillion rubles (U.S. $15.64 billion) to help it deal with bad loans and repay external debt, but has for now opted for more modest support measures.

"This (measures taken so far) fully resolves the issue with capital and liquidity for at least half a year or a year," said one senior government official. "But this is not a systematic decision but rather a stabilization of the situation."

Four sources said that the agreed support package, which has yet to be disclosed in absolute figures, would buy time but that, in time, a capital injection would be needed.

The government did not agree on a full support package before the end of 2015, ordering an extension of the terms of deposits held by the National Wealth Fund (NWF) and the country's central bank at VEB instead. It also cut interest rates on those deposits.

"VEB is capable of paying off its debts in the first quarter, thanks also to a sharp reduction in NWF deposits rate, which are almost close to zero," one senior official involved in negotiations on VEB said. The interest rate on NWF deposits has been cut to 0.25%.

The central bank has not disclosed any new terms.

VEB is due to pay off Eurobonds totaling 500 million Swiss francs ($499.90 million) on February 17, according to Thomson Reuters data. A source at VEB said the bank would not require extra state support to pay off that Eurobond.

VEB, together with its subsidiaries, must also pay off another Eurobond worth $400 million on May 27 as well as a loan totaling $500 million on September 28, according to Thomson Reuters data.

VEB, which said earlier in January recent decisions would help it honor covenants on some of its debts, declined immediate comment.

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