Stefano F. Fugazzi (ABC Economics) – According to Bloomberg, Russia’s Vnesheconombank (VEB), a former Soviet bank, one of the largest State-owned corporations (technically a “Bank for Development and Foreign Economic Affairs”), is “on the brink of collapse”. Hit by Western sanctions last year and with foreign currency debts totaling $15 billion, VEB has stopped new lending.
The Russian government is now expected to rescue the troubled entity.
The cost of its bailout could reach 1.3 trillion rubles ($18 billion), according to several senior government officials.
“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.
For years, Vladimir Putin used VEB to pay for “special projects” from the Sochi Olympics to covert acquisitions in Ukraine to oligarch bailouts.
Click here to view ABC Economics SPECIAL REPORT on RUSSIA