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Vneshtorgbank and the Russian Ministry of Regional Development start cooperating in the national priority project «Affordable and comfortable housing to Russian citizens»

11 August 2006

A cooperation agreement was signed on 11 August 2006 between the Ministry of Regional Development of the Russian Federation and Vneshtorgbank, providing a basis for the partnership of VTB Group and the Ministry in implementing the national priority project “Affordable and comfortable housing to Russian citizens” in constituencies and municipalities nationwide.

Efficient private-public partnership set under this agreement will allow the parties to raise private investments, including foreign ones, for implementing the national priority project, fostering urban development, modernising construction industry and residential utilities. Joint development of regional markets of affordable housing, including through housing mortgage facilities, regional infrastructure formation and innovative capacity promotion will be important aspects of cooperation when implementing the national priority project.

Under the agreement, the Ministry is going to invite Vneshtorgbank as a financial adviser on the national priority project and make use of VTB Group strength in financing investment projects and programmes under this project.

Vneshtorgbank, on its part, is going to actively promote the national priority project in Russian regions using VTB Group regional branch network, including delivery of cash and settlement services related to national priority projects. In addition, joint formation of a housing mortgage pattern and a mortgage securities market in the regions will be a promising line of cooperation efforts.

VTB Chairman and CEO Andrey Kostin and Minister of Regional Development Vladimir Yakovlev signed the Agreement.

«Participation in national priority projects, as defined by the Russian Government, lies in the core of VTB Group activities for today – said Andrey Kostin at the signing ceremony. - In the near future, we intend to sign similar agreements with the Ministry of Agriculture, the Ministry of Social Development and Public Health and the Ministry of Education of the Russian Federation. These agreements are intended to serve as a basis for our further co-operation for the benefit of the four national priority projects».

At present, VTB Committee on national priority projects headed by Senior Vice President and Member of the Board Konstantin Kozhevnikov is completing the funding mechanism for national priority projects through VTB branches and subsidiaries located in over 69 constituencies of the Russian Federation. In particular, within the framework of VTB participation in the top national project “Affordable and comfortable housing to Russian citizens”, more than 100 territorial offices take part in implementing VTB Group mortgage programme, with monthly issue of mortgage loans being close to 1.5 billion roubles.

To more efficiently implement its projects, VTB will apply a housing construction funding model, which comprises direct interplay with local administrations. Under the model, it will be possible to lift some administrative barriers and eliminate redundant intermediaries from housing development and sale, making it more affordable.

Nowadays, Vneshtorgbank is working on a number of pilot projects to finance housing construction, including, industrialized building of large-scale low-rise houses with a total space of about 2.5 million square metres; construction of an integrated home-building factory with an annual output capacity of 360,000 square metres; and creation of housing complexes in a variety of Russian regions. Altogether, Vneshtorgbank is going to allocate twice as much funding for housing construction, up to 19 billion roubles, and about 70 % of the projects are intended for regions.

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