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from the state-bank-needs-cash-infusion dept.
Bloomberg reports that a state bank used to pay for "special projects" in Russia may require an $18 billion bailout due to the effects of sanctions and low oil prices:
For years, Vladimir Putin used Vnesheconombank (VEB) to pay for "special projects," from the Sochi Olympics to covert acquisitions in Ukraine to oligarch bailouts. Now, the state bank needs a rescue of its own and it could be the Kremlin's costliest yet. VEB was supposed to be the financial supercharger of the Russian president's state-directed capitalism, using its government backing to raise billions at low rates on western markets and pumping them into ventures the Kremlin wanted funded, some concealed from public view with code names like "Lily of the Valley."
Hit by Western sanctions last year, VEB has stopped new lending. The cost of its bailout could reach 1.3 trillion rubles ($18 billion), according to several senior government officials, ballooning the budget deficit at a time when plunging oil prices are forcing spending cuts. "The government can't just leave it alone to face the problems caused by the financial and economic situation in the country, speaking directly, by various kinds of sanction pressures," Prime Minister Dmitry Medvedev told a VEB board meeting discussing rescue options on Dec. 22.
The Finance Ministry has submitted proposals to aid VEB in 2016 to the government for approval, with some measures ready to be carried out in the first quarter, Svetlana Nikitina, an aide to the finance minister, said in Moscow on Tuesday. The plan provides for boosting capital to ensure the bank's ability to pay creditors, as well as supporting liquidity and cleaning up assets, she said.
Over the past eight years, VEB came to epitomize Putin's hybrid system that combined elements of market financing with tight Kremlin control, funding billions in industrial and infrastructure projects back in the days when oil prices were high and foreign credit was easy.
But U.S. and EU sanctions imposed in 2014 over the Ukraine crisis cut off VEB's access to international financial markets, leaving it without a source of cheap funding and facing as much as $16 billion in foreign-currency debt just as the ruble began its plunge. At the same time, falling oil prices accelerated Russia's slide into recession, pushing many of VEB's projects deeper into the red.
(Score: 0) by Anonymous Coward on Wednesday December 30 2015, @06:45PM
This is currently true, but real estate have a brutal wake up with demographics changes. The baby boomers are starting to die, and if their kids aren't interested in the property will sell even if below "market average". Why do they care, any money is more money to them. Currently speculative buying can fill in those cracks (especially with low interest rates), but it seems likely there will be a downward spiral unless we can find a reason to justify more houses than people. Although with the collapse of traditional marriage, perhaps more houses will be needed in the near future as men and women live separately.
(Score: 0) by Anonymous Coward on Wednesday December 30 2015, @07:11PM
Not really sure how the "collapse of traditional marriage" applies here. TFA is about Russia, which still heavily favors traditional marriage. Remember the GLBT protests [wikipedia.org] surrounding the 2014 Olympic games in Sochi?
And even if the fall of traditional marriage had an impact on housing demand in a place like the US, I would think it would result in a decrease in housing demand due to more gay or lesbian couples living together instead of by themselves. Do you really think more gay people who previously would have hid in a traditional mariage would choose to live alone rather than in a gay marrage with someone under the same roof?
(Score: 1, Informative) by Anonymous Coward on Wednesday December 30 2015, @08:02PM
Its weird you went off on the gay tangent when the GP was clearly talking about people choosing to not get married.
Perhaps your gaydar needs a squelch adjustment?
(Score: 2) by isostatic on Thursday December 31 2015, @01:37AM
The change of the traditional family (2 adults, 2.4 kids, 1 house, 1 worker) into 2 workers has driven house prices up. People spend x% of their income on houses, it used to be £30k a year income, so say £1k a month. It's now £60k a year, giving £3k a month that can be spent (although some of that goes to child care, hence government subsidising childcare and encouraging outsourcing child upbringing)
Sucks if you're a single parent, or if you want to bring up kids in the traditional way.