Export Development Canada (EDC) and OJSC Vneshtorgbank (VTB) of Russia have signed an agreement to put in place a US$50mn line of credit to finance Canadian exports of goods and services to Russia.

“Russia presents rich opportunities for Canadian exporters in many different industry sectors,” says Klaus Bittner, EDC regional vice-president, International Markets Group. “This new line of credit with VTB helps to meet the need for buyer financing so that more Canadian companies can conclude transactions with Russian buyers.”

VTB’s proven ability to assess the creditworthiness of Russian buyers makes it an ideal partner for EDC. In establishing a line of credit, EDC’s funding will be specifically directed in support of Canadian exporters, but VTB will make credit decisions on Russian buyers of Canadian products.

VTB is one of Russia’s top banks with a diversified lending portfolio and holds specific expertise in foreign trade financing. VTB is 99.9% owned by the government of the Russian Federation and is the preferred counterparty for many international financial institutions, export credit agencies and private commercial banks seeking to extend their services into the Russian market.

The VTB-EDC line of credit agreement marks a new and exciting stage in strategic co-operation between the two institutions. The relationship began formally in 2003 when a memorandum of understanding was signed to explore financing arrangements for specific transactions, to exchange information about potential projects and programmes, and to promote each other’s services in Canada and Russia. The line of credit has repayment terms in options of three, five and seven years, respectively.

EDC has been increasingly active in support of Canadian business in Russia in recent years. From just more than C$4mn in 2002 and C$16mn in 2003, EDC’s volume of business in Russia has exceeded C$133mn to date in 2004.

Examples of EDC-supported business in Russia in 2004 include US$10mn buyer-financing for the purchase of Nortel cellular technology by Uralwestcom for use in the Sverdlovsk region; US$20mn financing for a feasibility study related to the Sual Group’s integrated Komi Aluminium project in Russia’s Komi Republic; and a US$15mn line of credit for Russian diamond producer, Alroas Company, to finance purchases of Canadian capital goods and services.