- Region: Europe
- Machinery and Equipment
- Export Loans
July 3, 2007
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on July 2 a bank-to-bank loan*1agreement totaling up to approximately 10 billion yen with the Joint-Stock Bank of the Gas Industry (Gazprombank), the third largest commercial bank in Russia. The loan was cofinanced with Mizuho Corporate Bank.
- This loan will finance, via Gazprombank, JSC Uraltrubprom, a Russian ERW (electric resistance welded) pipe. *2manufacturer located in the province of Sverdlovsk, east of the Ural Mountains, Russian Federation, as it imports ERW pipe manufacturing equipment from Mitsubishi Corporation, Nakata MFG. Co., Ltd. and Mitsubishi-Hitachi Metals Machinery, Inc. It is the largest loan JBIC has provided since the Russian financial crisis in 1998 in support of exports to the Russian manufacturing sector.
- Russia has sustained high economic growth in recent years against the backdrop of high oil prices.*3Japanese firms are thus focusing increasing attention on their business prospects in Russia.*4For Russia to attain sustainable economic growth for the coming years, however, it is essential to further develop domestic industries. Under these circumstances, the newly signed loan is expected to contribute to the development of the Russian manufacturing sector, and to support Japanese firms' business transactions with Russia, by promoting exports of ERW pipe manufacturing equipment that embody Japanese companies' advanced technology.
- To date, JBIC has vigorously supported Japanese plant exports that will contribute to the development of domestic industries in Russia by providing bank-to-bank loans to the Savings Bank of the Russian Federation (Sberbank)*5and the Bank for Foreign Economic Affairs of the USSR (VEB).*6 In our effort to best match Japanese firms' needs in their Russian business with the financial needs of Russian manufacturers and other companies, JBIC will continue to support Japanese firms' trade and investment activities in Russia by drawing on its financing menu, which includes buyer's credit where JBIC will directly assume the credit risk of Russian firms and bank-to-bank loans, where loans are provided by way of Russian banks.
- *1 A bank-to-bank loan is a loan extended to an importer by way of a financial institution in the importing country to finance the import of machinery and equipment from Japan.
- *2 A ERW pipe is produced in the following manufacturing process: A steel band is cast into a cylindrical form at room temperature. Immediately before the contact of edges to be welded, a high-frequency current is introduced into the metal at their surfaces, producing high heat. Then upsetting force is applied, producing coalescence.
- *3Russian GDP grew 6.4% in 2005 and 6.7% in 2006.
- *4"In the Survey Report on Overseas Business Operations by Japanese Manufacturing Companies", an annual survey conducted by JBIC in fiscal 2006, Japanese manufacturers indicated growing interest in Russia, ranking it 6th among the promising destinations for business expansion over the medium and long term.
- *5In October and November 2005, JBIC provided a bank-to-bank loan (totaling about US$88 million) to finance, via Sberbank, OJSC Kazanorgsintez the import of a petrochemical manufacturing plant from Japanese firms.
- *6In June 2006, JBIC provided a bank-to-bank loan (totaling about US$32 million) to finance, via VEB, ZAO Orsk Compressor Plant, the import of a manufacturing plant of refrigerator compressors from a Japanese firm.