Corporate Governance System

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22 meetings of the Supervisory Board and 232 meetings of the Management Board of Vnesheconombank were held in 2014. Their agenda included the following key items:

• investment loans;
• exports and guarantees;
• interests in the capital of third parties;
• operations of subsidiary banks and companies of Vnesheconombank;
• sponsorship and charity;
• crisis management;
• review of the Internal Control Service’s reports;
• other items within the remit of Vnesheconombank’s governing bodies as set out in Federal Law No. 82-FZ ’On Bank for Development’ dated 17 May 2007.

Under Federal Law No. 82-FZ ’On Bank for Development’ dated 17 May 2007, the amount of remuneration and/or refundable expenses payable to Members of Vnesheconombank’s Supervisory Board is subject to approval by the Russian Government, and the amount of remuneration and/or refundable expenses payable to Members of Vnesheconombank’s Management Board is subject to approval by the Supervisory Board of Vnesheconombank. The amount of bonuses payable to Members of Vnesheconombank’s Management Board and the Chairman of Vnesheconombank is directly proportional to performance of Vnesheconombank against corporate key performance indicators.

In 2014, no remuneration, including salaries, bonuses, commission fees, allowances and/or refundable expenses, individual fees payable for involvement in the activities of a relevant governing body or other types of remuneration were paid to Members of Vnesheconombank’s Supervisory Board.

Committees and the working group of Vnesheconombank’s Supervisory Board are standing deliberative and advisory bodies. They include Members of Vnesheconombank’s Supervisory Board and representatives of government authorities that can share unique knowledge and competences matching the level and areas of decision-making. Collective working bodies may also involve in their work independent experts outside their permanent membership.

A priority task of collective working bodies consists in preliminary review of pivotal issues within the remit of Vnesheconombank’s Supervisory Board. The committees provide a detailed analysis of documents that are to be submitted to Vnesheconombank’s Supervisory Board for discussion. This exercise guarantees that information that the Bank’s Supervisory Board uses to make its decisions is reliable and complete. Members of collective bodies maintain ongoing working contacts with Vnesheconombank’s executive bodies.

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Internal audit is run in Vnesheconombank by the Internal Control Service of Vnesheconombank (ICS). Its operating procedure is determined by the Supervisory Board of Vnesheconombank. ICS is a standalone function of the Bank that reports to the Supervisory Board of Vnesheconombank, which ensures its independence and efficiency in performing its control functions. In its day-to-day activities, ICS is reporting directly to the Chairman of Vnesheconombank.

Vnesheconombank’s annual financial statements are subject to mandatory audit before its approval by the Supervisory Board of Vnesheconombank. The auditor to audit the annual financial statements is appointed through a tender subject to approval by the Supervisory Board of Vnesheconombank. The audit opinion must be enclosed to the published annual financial statements. In line with the decision by the Supervisory Board of Vnesheconombank, in 2014 the Bank’s annual financial statements are audited by Ernst & Young Vneshaudit ZAO.

In 2014, in order to make its corporate governance processes more efficient, Vnesheconombank implemented a range of measures seeking to streamline the organisational procedures that underlie the activities of the Bank’s governing bodies. Particular attention was paid to automation of processes of preparation for meetings of the governing bodies; training of the personnel of Vnesheconombank and the Group’s entities, and to better follow-up of decisions adopted by the Bank’s governing bodies.

Further on, our corporate governance processes will be improved by implementing Vnesheconombank’s Development Strategy for 2015–2020, which provides for changes in the project management system, streamlining and re-engineering of business processes, and standardisation of management and control mechanisms.

Measures designed to develop the corporate governance system and implemented in 2014:

• the systems for preparing online digital materials for meetings of collective governing bodies of Vnesheconombank created in 2014 were developed and launched;
• the system for following up instructions given by Vnesheconombank’s collective governing bodies was upgraded;
• a field training workshop on Preparation of Materials for Meetings of Collective Governing Bodies of Vnesheconombank attended by more than 120 representatives of Vnesheconombank, and various ministries and departments was held;
• participation of Vnesheconombank's professionals in a number of international hands-on workshops and conferences on corporate governance was arranged;
• an updated version of an information leaflet on Regulatory Documents Governing Activities of Collective Bodies of Vnesheconombank was published.

Vnesheconombank’s Development Strategy for 2015–2020 provides that the Bank’s key goal with respect to the Group should consist in taking maximum advantage of opportunities and capabilities offered by its subsidiaries to achieve the Bank’s priorities as the national financial development institution. The management system will combine independent decision-making by the Group’s entities with centralised follow-up by Vnesheconombank.

As a key strategic initiative with respect to its subsidiary banks aimed at increasing their capitalisation, Vnesheconombank is embedding an integrated approach to the organisation of sales of products and services of the Group’s entities via subsidiary banks. Vnesheconombank will still continue providing its subsidiary banks with support both by lending and by issuing guarantees, confirming letters of credit and other financial mechanisms. In managing subsidiary banks, Vnesheconombank acts as a strategic controller:

• development strategies of subsidiary banks are developed and updated based on Vnesheconombank’s Development Strategy;
• current planning of subsidiary banks’ operations is driven by their development strategies;
• Vnesheconombank coordinates performance enhancement programmes of subsidiary banks and relationships between its subsidiary banks to deliver synergy;
• the motivation system of subsidiary banks’ management is also driven by strategic goals of subsidiary banks;
• development strategies of subsidiary banks are followed up every six months, and current plans every month.

Vnesheconombank’s non-lending subsidiaries are responsible for performing their specialised functions within the Group and improving their own performance. Vnesheconombank manages non-lending subsidiaries by performing the functions of governing bodies of these entities, including centralised control of decision-making by Vnesheconombank’s representatives that sit on governing bodies of the Group’s entities.