Russia's VEB offers liquidity help to banks

WASHINGTON Oct 22 (Reuters) - Vneshekonombank, the Russian state bank being remodelled to lead an economic development drive, is willing to deposit funds with commercial banks to support their liquidity, its head Vladimir Dmitriyev said.

Vneshekonombank (VEB), Russia's debt servicing agent and manager of the state pension fund, is being rebranded as the Development Bank and recapitalised to the tune of $10 billion.

But VEB cannot invest all the new funds at once and is ready to put money on deposit to help banks get over a liquidity squeeze triggered by the U.S. subprime mortgage crisis.

"We have offered our services," Dmitriyev told reporters on Sunday night in Washington, where he attended the International Monetary Fund and World Bank autumn meetings.

"The simplest way would be to place deposits at banks -- either against a pledge of certain instruments or in line with (lending) limits that we have established."

Dmitriyev named state-controlled Sberbank (SBER03.MM) and VTB (VTBR.MM) and Gazprombank, owned by gas export monopoly Gazprom (GAZP.MM), as banks that "need liquidity support".

VEB expects to receive 180 billion roubles ($7.25 billion) by the end of October from a budget stabilisation fund that gathers oil revenues. It is also revaluing its real estate portfolio and other assets by 70 billion roubles.

The Central Bank of Russia has over the last two months made available funding that has on occasions exceeded $10 billion, primarily via one-day repo auctions, to keep the banking system afloat.

BORROWING PLAN

Dmitriyev said it would take some time for VEB to digest the new capital and it did not need debt funding right now. But the bank will seek to more than double its borrowing to $2.6 billion in 2008.

"We obviously do not plan to borrow this year -- investors are closing their positions. But next year we do," he said.

"It's no coincidence that we held a roadshow last week in Frankfurt that was not connected with a particular deal. It attracted huge investor interest."

VEB is reviewing proposals from investment banks for both domestic and foreign borrowing and will firm up its debt raising plans towards the end of the year, said Dmitriyev.

Total borrowing at the bank is expected to rise to 469 billion roubles ($18.88 billion) by 2010, he also said.