1 March 2004
In 2003, Vneshtorgbank started implementing a program intended to give financial support to small and medium-size businesses with easier loan-making arrangements. Subject to VTB`s strategic goals, lending portfolio for such customers is going to be close to US$1 billion in the current year.
Vneshtorgbank has been speeding up investment banking services. In 2003, VTB made a yet more active efforts in arrangements and underwriting of securities offerings from Russian issuers by taking part in 19 securities offeringsounted to over 29 billion roubles as compared to 5.8 billion roubles in 2002.
In the year 2003, VTB remained a major player on the Russian securities market. Over the year 2003, the trading volume with Russian Federation eurobonds and MinFin bonds was over US$24 billion, while the trading volume with rouble-denominated commercial papers exceeded 30 billion roubles.
Vneshtorgbank traditionally commands leadership position with regard to custodial services on the Government foreign-currency-denominated bonds and global securities market. These securities portfolio on client accounts with Vneshtorgbank was over US$5 billion by the year-end 2003. VTB remarkably expanded its custodial activities with commercial papers over the year 2003. Balances on corporate securities accounts with Vneshtorgbank increased almost twice as much throughout the year 2003.
In 2003, Vneshtorgbank strengthen its positions as a major market maker on the forex and money markets, and on the precious metal market. Through more dynamic performance on the interbank market, VTB succeeded in substantially increasing the existing counterparties in number and deposit limit volumes set on Vneshtorgbank by foreign banks.
In the precious metal market, VTB continued to actively purchase gold from Russian producers and to sell it on the domestic and international markets. Total gold volume purchased directly from producersounted to 24.4 tons in 2003 exceeding by 16% the indicators of the year 2002. Total volume of loans made to gold producers was in excess of US$100 million as of 31 December 2003.
In 2003, Vneshtorgbank made well-directed efforts aimed at strengthening and diversifying its funding base. Under the finance borrowing programme approved by the Supervisory Board in 2003, Vneshtorgbank successfully implemented several projects intended to raise funds on the Russian and international capital markets. In early 2003, Vneshtorgbank succeeded in distributing the third offering of rouble-denominated bonds for 2 billion roubles, and in 2004, the forth VTB`s securities offering at par will be issued for 5 billion roubles, and the offering circular was already registered by the Bank of Russia.
As far as raising funds on the international capital market is concerned, VTB prolonged a syndicated loan granted in late 2002 and increased it up to US$382 million, and it raised a US$175 million facility from a group of foreign banks. Those facilities were made to Vneshtorgbank at LIBOR+1.5% p.a., which is unprecedentedly low for such non-secured loans ever granted to any Russian borrower. In December 2003, Vneshtorgbank made a successful distribution of the 5-year eurobondsounted to US$300 million, to which Moody`s Investors Service and Fitch agencies assigned a credit rating of the investment class equal to the rating assigned to the Russian Federation eurobonds.
In 2003, Vneshtorgbank continued its co-operation with export credit agencies and banking institutions in most industrialised countries. At present, Vneshtorgbank has in place broad capabilities to finance import deliveries of its customers using foreign credit lines for over US$3 billion. To illustrate some of such contracts entered into in 2003: a CHF250 million agreement with Union Bank of Switzerlandm, Switzerland; agreements for ?300 million each with Natexis Banques Populaires and BNP PARIBAS, France; a US$200 million agreement with China Construction Bank; a ?100 million agreement with ABNRO Bank, the Netherlands.
During 2003, within the framework of credit lines opened on Vneshtorgbank, several individual credit agreements were entered into and intended for VTB`s customers for almost US$450 million.
В 2003, Vneshtorgbank made a substantial progress in retail business and strengthen its leadership positions on this market segment. Presently, VTB is a leader in rendering retail services such as raising individual deposits, handling payment card holders, buying and selling traveller`s cheques, accepting payments from individual customers in favour of corporate entities, money transfers, including through Western Union.
As of 31 December 2003, total deposits raised from households posted a 70% increase to 26.8 billion roubles as compared to the year-start 2004. Payment card issued by Vneshtorgbank was over 350,000 as of 31 December 2003, an over than twofold growth as against the year-start 2004, and consolidated balances on card accounts were close to US$90 million.
In 2003, the international card acquiring network expanded almost threefold, from 673 to 1,890 point of sales. At present, it comprises 179 cash advance terminals, 451 ATMs, 1,260 trade and service companies having in place merchant acquiring agreements with Vneshtorgbank.
Based on its long-term development strategy as a network-oriented banking institution of the national dimension, Vneshtorgbank continued developing its network of branches and teller offices. For the year 2003, total branch assets showed a 71% growth, from 25 billion roubles to 43 billion roubles, funds raised on regional markets increased by 47%, from 25 billion roubles to 36 billion roubles, and the lending portfolio of the branches rose almost twofold, from 20 billion roubles to 39 billion roubles.
In 2003, VTB opened the Kemerovo branch and its 10 sub-branches, and 10 sub-branches in the Moscow City and the Moscow Region. At present, the Vneshtorgbank branch network comprises 43 branches, 76 sub-branches, 39 teller offices outside the cashier`s office.
Based on the Mortgage and Consumer Lending Centre opened in 2003, Vneshtorgbank started implementing the federal housing mortgage programme. As from the start of operations of the Centre in late 2003, VTB made mortgage loans for over US$7 million.
Vneshtorgbank`s operation in 2003 and development of new lines of business on the banking market were subject to the Vneshtorgbank development concept up to the year 2008 approved by the Supervisory Board of the Bank. The Concept aims at transforming Vneshtorgbank into a universal banking institution of a European level, increasing VTB`s business volume and making more efficient its transactions. After the measures set forth by that programme instrument are implemented, by 2009 total assets of the Bank will be increased almost fourfold to US$30 billion or US$35 billion, the capital will grow 1.5 times to reach US$3 billion or US$3.2 billion. Vneshtorgbank`s share on the Russian banking market will grow several times, and, in particular, services to corporate customers will reach 13%, investment banking, 10%, lending to small and medium-size businesses, 15%, financing of the foreign trade, up to 17%. On the retail banking, the VTB`s share will grow to 12%, in housing mortgage, up to 10%, its mortgage lending portfolio will reach US$1.5 billion