Czech Export Bank renews loans for exports to Russia
The Czech Export Bank has renewed loans for exports to Russia, which were suspended last December, due to the market situation in the country. According to the bank’s CEO Jan Bureš the bank board decided to renew loans after the Russian ruble stopped weakening in January and is likewise taking measures to minimize its losses in the country.
Czech Export Bank, advised offloading some of these loss-making assets and a number have already been sold.However, despite the weak rouble the bank does not want to write off projects that are viable and has started negotiations with debtors, offering them new repayment schedules.
It is also ready to offer new loans to Czech producers who provide a significant number of jobs in the regions. According to the bank’s CEO Jan Bureš the new conditions for providing loans for exporters to Russia will be stricter than for other countries and the bank will prefer loans returnable over a seven-year-period and syndicated loans in cooperation with strong Russian banks. Overall, the Export Bank says it is ready to spend another ten billion crowns in support of Russian-oriented business projects this year.
There are divided opinions on this policy in the Czech government. While Industry and Trade Minister Jan Mládek is in favour of maintaining and strengthening trade links with Russia, Finance Minister Andrej Babiš is advising a more cautious approach with regard to what may be an increasingly problematic market. Moreover the Export Bank has been criticized for granting imprudent loans in the past and the government has moved to bring it under greater control. A government-proposed amendment to the law would give the Finance Ministry access to more information regarding individual projects and the size of the loan requested. The proposal came in response to the outcome of a financial audit by the Supreme Audit Office which concluded that the Export Bank had granted risky loans to the tune of over 8 billion crowns. If the proposed amendment is approved by both houses of Parliament and signed by President Miloš Zeman it should come into effect by June 2015.
The Czech Export Bank is owned by four ministries. The Finance Ministry has 41 percent of shares, the Ministry of Industry and Trade owns 24 percent, the Foreign Ministry 10 percent, the Agriculture Ministry 5 percent and the remaining shares are in the ownership of the Export Guarantee and Insurance Corporation EGAP, which itself is owned by the afore-mentioned ministries.