VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Mr Putin's opening address:
Good afternoon, colleagues,
At this meeting of Vnesheconombank's Supervisory Board we are going to discuss the bank's part in mortgage lending. We are going to talk about the financing of mortgages programmes today, and we're not going to say a word about football.
We will discuss ways in which VEB can promote the financing of housing construction in Russia. Despite the problems created by the economic crisis, mortgages remain one of the most effective and affordable means of buying housing in many countries. Russians also took advantage of the opportunities presented to them by mortgage loans.
The volume of mortgage lending has grown severalfold since 2005, when we launched the programme, from 60 billion roubles in 2005 to 630 billion roubles ($22 billion) in 2008.
Of course, the crisis has changed the situation. The volume of mortgage loans has diminished considerably and the terms of mortgage loans have deteriorated since the autumn of 2008. In fact, mortgage loans have become unaffordable for an absolute majority of Russians.
In this situation, our priority goal was to support those who encountered financing problems and could not repay loans. Eighty thousand families have used the so-called maternity capital to fully or partially pay off their mortgage loans. As you know, we decided that maternity capital could be used from January 1, 2009, rather than from 2010 as planned.
We also made it possible for people to postpone payments on mortgage loans. This project involved the Agency for Housing Mortgage Lending and private banks, which received government assistance.
However, while addressing routine tasks, we should also think about post-crisis development, especially since we already see a gradual revival of people's interest in applying for mortgage loans.
Banks have started reviving this business; they are lowering the size of down payment and loan interest.
Of course, 14.5% - an average interest rate on mortgage loans - is too high for many people. Incomes in Russia are not high enough to meet these loan requirements. For mortgage to become affordable for a broad range of people, we should lower the interest rate to 10%-11%.
This cannot be done with orders from above because this is an economic process, but we should do something to ensure this. I suggest that today we discuss ways to support the nascent trend for lowering the mortgage loan interest.
You know that pension funds are used in all countries as an instrument and a source of long-term loans, which is crucial for mortgage lending.
Given the volume of saving, including the funds managed by Vnesheconombank, we could think about using these instruments in Russia, although very carefully and with maximum guarantees.
VEB is currently managing 690 billion roubles ($24 billion) of pension accruals.
A month ago, the Government approved a new strategy for investing pension accruals managed by VEB. Up to 20% of these funds, or some 100 billion roubles ($3.5 billion), can be invested in mortgage bonds of Russian banks.
Consequently, banks will be able to issue new mortgage loans to this amount at a more attractive interest and for a longer term. VEB, which will finance these loans, will do what it has been designed to do - act as a development bank.
I know that the state bank has a divided attitude to this issue because it cannot earn much this way, but still, it is a key function of this lending institution.
I propose we discuss our options in this respect and the practical steps VEB can take to implement these plans.
We will also address some other routine issues. Let us start with the issues on our agenda.
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Vnesheconombank (VEB) Chairman Vladimir Dmitriyev spoke at a news conference after a meeting of the bank's Supervisory Board.
Vladimir Dmitriyev: The main issue on the agenda of this regular meeting of the Supervisory Board was expanding our mortgage programme. And in this context, we believe our bank could be a major source of credit for mortgages.
As of November 1, the bank's investment programme and declaration have been extended, and now the bank has an opportunity to invest pension assets into mortgage securities that are not backed by the state.
VEB could invest a considerable sum of the 470 billion we currently manage in mortgages. We also expect another tranche from the Pension Fund in the first quarter of next year. In our estimate, we will be able to manage about 690 billion roubles, taking into account the restrictions on investing in certain types of securities. For instance, we cannot invest funds into more than 70% of the securities of one and the same issue, or spend more than 20% of our investment portfolio on one issuer.
We believe that the amount of credit VEB, as a state-owned asset management company, can offer for mortgages will increase substantially. Additionally, we considered the possibility of using funds from the National Welfare Fund for the same purpose.
This is also a major source of funding which will allow us not only to increase mortgage lending considerably but also reduce interest rates substantially, which will make mortgages more attractive to more people.
Question: What will be the requirements for redeeming mortgage securities?
Vladimir Dmitriyev: We will discuss this question with the Mortgage Agency and the banks that are actively involved in mortgage lending. On the one hand, interest rates will be close to the market value, but will also be affected by the funds I mentioned. We will be able to make interest rates considerably more attractive than interest rates on the open market.
Question: Your interest rates on pension savings are not great. Will they be further reduced?
Vladimir Dmitriyev: Naturally, we believe that the money from the Pension Fund, or, to be exact, from the people who have not chosen a trusted asset management company to transfer their pension savings to, will be invested not only into mortgage securities but also into other high-yield assets. We will be able to guarantee profits by diversifying our portfolio, and we hope to receive a much bigger return on our investment.
Question: Did you discuss VEB's participation in the RUSAL IPO at the Hong Kong Stock Exchange, and did you arrive at any decisions on this issue?
Vladimir Dmitriyev: We discussed this issue and made certain decisions, but I would like you to understand that all information pertaining to RUSAL's IPO is confidential. At any rate, according to the rules and traditions of the capital market, no investor can make use of any information that would give him or her an advantage over other investors.
Therefore, any information regarding the initial public offering of RUSAL shares in Hong Kong, if said information were to become public, has nothing to do with VEB or any of its affiliates.
Since the initial public offering is approaching, all information about it is confidential.
Question: So you are not going to confirm that you will purchase 3% of the RUSAL shares?
Vladimir Dmitriyev: Let me repeat that any information on VEB's participation or non-participation in the initial public offering of RUSAL's shares is confidential.
