The Japan Bank for International Cooperation (JBIC) has signed an agreement for a bank-to-bank loan totalling the equivalent of US$70mn with the Savings Bank of the Russian Federation (Sberbank), the largest commercial bank in Russia. The loan was co-financed by Sumitomo Mitsui Banking Corporation and primarily provides yen-denominated credit, with dollar-denominated credit exceptionally extended if deemed necessary, to support Japanese exports.

Using this credit line, Sberbank will be able to meet the medium and long-term financial needs of Russian companies with their orders of machinery and equipment from Japan.

Denominated in yen and dollar, this credit line will make it more convenient for Russian companies to purchase Japanese products.

With the economic crisis of August 1998 behind it, the Russian economy has registered steady growth in the past few years. GDP growth rate increased to 7.3% in 2003, and is forecast to register 7.3% again in 2004.

Demand for capital investment is expected to increase in the coming years in anticipation of this sustained growth, hence the Japan-Russia Action Plan signed by Prime Minister Koizumi with President Putin in January 2003.

The action plan called for both sides to examine the possibilities of providing credit based on the credit standing of Russian firms and banks to help promote bilateral trade.

This is the third credit line JBIC has provided to Russia, following those extended to Bank for Foreign Trade (VTB) and International Moscow Bank (IMB) in March 2002 and June 2003 respectively.