Russian defense sector will be shielded from sanctions

Rostec's unit may be turned into a bank for the defense industry enterprises.
The main candidate for the role of a specialized bank for servicing the defense industry complex was the Russian Financial Corporation (RFK), which is 100% owned by Rosoboronexport (part of Rostekh). The allocation of a special bank for the defense industry was required because of the high risk of tougher sanctions from the US, which could be cut off from working with defense enterprises of the state bank. In addition to the RFK, according to Kommersant, Svyaz-Bank and Novikombank are also being considered. The choice should be made before the end of the year.

The fact that the RFK can become a specialized bank servicing the defense industry, Kommersant learned from several sources, including those close to the government and the presidential administration. Regular discussions on this topic are held at meetings with the assistance of Presidential Assistant Andrei Belousov, the Ministry of Finance, the Central Bank, as well as Sberbank and VTB, Kommersant sources told Kommersant. The scheme of the specialized bank for the defense industry should be worked out by the end of the year, the interlocutors of Kommersant clarified.

The RFK was informed that they believe that it has the necessary facilities for servicing the defense industry enterprises, but note that the issue of appointing a bank for such services has not been discussed yet. In the Finance Ministry, Rostekh, Rosoboronexport, Sberbank, VTB declined to comment. Contact with Mr. Belousov "b" yesterday failed. The Central Bank did not respond to a request from Kommersant.

The idea of ​​creating a "defense bank" is being worked out since the signing by President Donald Tramp of the law "On Countering America's Opponents through Sanctions" (CAATSA) in early August. One of the provisions of this law says that sanctions can be imposed on any person who carries out "significant transactions" with the Russian military. The limits for such transactions should be established within 180 days from the date of signing the law.

Now in Russia the state program of armaments for 2011-2020 (with a total volume of 23 trillion rubles) is being implemented. To fulfill its tasks, defense industry enterprises resort to borrowing funds from large state-owned banks - primarily Sberbank and VTB (about 90% of financing). However, if the sanctions specified in the new US law are imposed, they will be forced to reduce their work with the defense industry. Therefore, there was a need to transfer financial transactions with defense enterprises to a specialized bank for which US sanctions would not matter.

Fears of the two largest banks - Sberbank and VTB are understandable and understandable, they are afraid of applying sectoral sanctions, which will affect their own projects and capitalization, the source of Kommersant in the government apparatus says. "But the need for the defense industry in borrowed funds has not been canceled," he adds. "And the budget is simply not calculated for direct injections into the defense industry." According to another source, "Kommersant", the need for lending to the OPK will continue in the next state program of armaments for 2018-2025 (it should be submitted to Vladimir Putin for approval in December).

At the same time, the OPC leaders themselves do not yet know how the work with the specialized bank will be built, says a high-ranking source in one of the holding structures: "It is most convenient for us to work with state-owned banks, because the conditions they offer are optimal and they do not change the rules of the game, you will be. "

In the opinion of experts, it will take 9 to 12 months to transform the RFK into the OPK core bank, while the issue is rather urgent. RFK is a small bank, which is included in assets and capital in the third hundred. "We need to adapt the bank: to make capital, to recruit staff, and also to ensure that all the necessary procedures, for example, for the defense industry sector, are well documented," commented the head of the Expert RA Validation Department Stanislav Volkov.

As alternative candidates for the role of a specialized bank for the defense industry, according to Kommersant sources, Vnesheconombank's Svyaz-Bank subsidiary and Novikombank, which is also controlled by Rostekh, are also being considered. But the Svyaz-Bank was opposed by the Finance Ministry and the Central Bank. They, according to the interlocutors of "Kommersant", even sent a joint letter to Russian President Vladimir Putin with the justification of his position. "The choice of Sviaz-Bank would immediately put Vnesheconombank under a new sanctioning blow. You can not risk the state corporation, which already has problems with restructuring a huge foreign debt, "explained a source familiar with the content of the letter. In Sviaz-Bank they said that they do not have information on this issue. The candidacy of Novikombank (there they refused to comment), according to Kommersant sources, is still being discussed, but "the RFK is a priority."