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VTB finances Russian Railways

31 October 2008

Within cooperation between JSC Russian Railways and JSC VTB Bank, VTB has been actively financing the company using remote banking services. Since September 2008, the Bank has extended short-term loans to Russian Railways amounting to RUR 22.2 bln.

The financing is provided under the Remote Banking Loan Procedure Agreement signed between the parties in 2008. The Agreement envisages short-term lending to finance the ordinary business of Russian Railways and its branches. The transaction costs are determined by market environment and the rates in the international and domestic money markets.

Since Russian Railways' establishment in 2003, VTB has been effectively developing cooperation with the company, being its strategic customer. Today, VTB has set a revolving documentary credit limit for Russian Railways amounting to RUR 27.5 bln. In the near future, the Bank intends to significantly increase the limit in order to make transactions with debt instruments of Russian Railways, and to hedge foreign currency and interest risks, arising in the ordinary course of the company's business.

For reference:
Russian Railways (open joint stock company) was established by the Russian Government in September 2003. The Russian Federation is the sole shareholder of the company.
Russian Railways is one of the largest transport systems in the world. Total length of track is 85.2 thousand km. JSC Russian Railways takes first place in the world for the length of electrified lines totaling 42.9 thousand km. Russian Railways handles 39% of all cargo turnover in Russia (including pipeline transport) and over 41% of passenger rail transport.

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