The additional capitalization of Russian Agricultural Bank will allow increasing the volume of farmers support by more than RUB 40 billion annually

17 November 2020

The Russian government will provide Russian Agricultural Bank (RusAg, the Bank) with an additional capital of RUB 10.5 billion by acquiring an additional issue of the Bank’s shares. The funds received by the Bank will be used to expand lending to the agricultural sector and export of agricultural products within the framework of the State Program on Agribusiness Development and Regulation of Agricultural Products, Raw Materials and Food Markets, as well as the International Cooperation and Export National Project.

RusAg will place 10.5 thousand ordinary shares with a par value of RUB 1 million each. The securities are placed in favor of the Federal Agency for State Property Management by private subscription. Due to the additional issue, the Bank’s authorized capital will amount to about RUB 470 billion.

The current injection to the capital of RusAg is aimed at two priority goals: RUB 6.3 billion are intended to expand lending to the agricultural sector, RUB 4.2 billion – to increase support for exporters of agricultural products.

“Russian Agricultural Bank is an efficient financial institution that maximizes the return on public investment in capital. Each ruble invested in the capital of the Bank makes it possible to annually increase support for farmers by a fourfold amount. Additional funds in the Bank’s capital will allow us to increase the volume of lending to agribusiness by RUB 42 billion annually, of which RUB 16.8 billion – for the development of exports,” said Kirill Levin, First Deputy Chairman of the Board at RusAg.

The need to expand the volume of lending is due to the growing demand for technical and technological modernization of production and processing of domestic agricultural products, as well as the need for farmers and agricultural exporters for additional resources for circulating lending.

In 2019, RusAg allocated more than RUB 1.3 trillion for financial support of agricultural producers and, by the end of current year, the Bank will maintain a positive growth trend in lending. RusAg also remains the undisputed leader in lending for seasonal works – the Bank consistently accounts for more than 70% of loans issued for these purposes. The Bank sequentially increases its financing of agricultural exports: the volume of lending to exporters of agricultural products for 10M 2020 amounted to about RUB 340 billion. RusAg is also a key participant in program for lending to the purchase of residential real estate in rural areas at a preferential rate of 2.7% per annum by the Russian the Ministry of Agriculture. To date, the volume of loans issued by RusAg under the rural mortgage program has exceeded RUB 53.5 billion. Thus, about 27 thousand people were able to improve their living conditions.