Bank of Moscow has played an important role in the economic development of Russia. Its investment projects were important for the regional developments but also have benefited the economy of the whole country. The Bank has continuously invested into different industries such as agriculture, forest industry, pulp and paper sectors, construction and spirits production. All these projects together helped to support economic growth and create tens of thousands of new employment places in different sectors of economy across Russia. It is important to give recognition to all of these projects.
Evidently Bank of Moscow has played a prominent role in the development of Moscow City, but also in the cooperation with many regions and federal districts across Russia by supporting various investment projects.
For example, in 2004 Bank of Moscow signed an agreement with Novosibirsk City (in Siberia) to provide financing and support for investment in Siberian companies that need modernization, thus helping to increase their effectiveness, profitability and employment opportunities for more people.
Besides this type of regional cooperation, Bank was also benefiting many other regions in Russia by investing into different industries there. It is important to bring attention to the importance of these projects in Russia.
The Bank has always been open and transparent about its investment projects. At the beginning of 2005, Bank of Moscow set up a joint stock company Investlesprom. Today, Investlesprom is Russia’s largest vertically integrated holding company that includes over 60 enterprises in forest, wood processing, pulp, paper and paper packaging sectors. Bank of Moscow own 20% of shares in this holding.
The enterprises of Investlesprom are located in six Russian regions – in the Republic of Kareliya and in the areas of Kirov, Vologda, Arkhangelsk, Tomsk and Perm, – as well as in other 11 countries which makes Investlesprom Group the largest timber holding in Russia and Europe.
Investlesprom owns Russia’s most modern factory which produces plywood and which was even visited by the President last year. Investlesprom is responsible for creating thousands of jobs in Russia; in particular, its companies employ almost the entire population of two Russian cities – Segezha in Karelia and Sokol in Vologod region. These cities depend entirely on Investlesprom.
IAccording to the agreement, signed by the Bank of Moscow, Karelia Republic, and Investlesprom in October of 2007, the Bank was to invest over 20 bn RUB to support modernization of Inversleprom companies. A similar agreement was signed in December 2007 with the Vologod region with a plan to invest 23 bn RUB during the course of 5 years.
This demonstrates that the Bank of Moscow through projects such as Investlesprom was aiming at the realization of Russia’s plan for modernization of the country. The Bank was planning to help create some of the most modern production facilities in the country which would in turn lead to plenty of benefits, such as support of regional development, an increase in the regional tax base and the creation of thousands of new work places.
Bank of Moscow actively supported agricultural development as it provided financing for companies in the agriculture industry.
One of its most notable investment projects in this sector was working with Terra-Invest holding company, one of the twenty largest agricultural companies in Russia. Through its 5 bn RUB investment, Bank of Moscow was helping to modernise and develop a company that employs around 1300 people and that is present in 11 regions of Russia with total control over more than 140 thousands hectares of land.
Most of the construction projects financed by the Bank were located in Moscow. But the Bank also invested in projects in St Petersburg and Lipetsk.
Since 2000, the Bank’s investments in housing projects, office buildings, hotels, shopping and entertainment centers helped to create nearly 3 million square meters of new space.
In addition, Bank also financed big investment projects aimed at reconstructing and modernizing objects of great social importance, such as building of big city highways (Volokolamskoye Highway, Dmitrovskoye and Varshavskoye Highways), reconstruction of the national park Tsaritsyno, the modernisation of Leningradsky Prospect and reconstruction of networks and stations of the Moscow Underground system.
Wine and Spirits Industry
Bank of Moscow has been a major shareholder in one of the Russia’s largest wine and spirits holding company Obyedinennaya Kompaniya (United Company). Such companies as Factory KiN, Moskovskij mezrespublikanskij vinodelceskij zavod (MMVZ) were part of the holding.
Unlike many other companies in this industry, these companies were managed in a transparent way and paid taxes. The aim was to create the strongest player in the Russian market of wine and cognac.
These investment projects demonstrate the important role that Bank of Moscow played in boosting economic growth in Moscow and many other regions of Russia, helping to create thousands of work places across Russia and supporting the modernization of the country. Modernisation has been defined as one of the top priorities by Russian political leadership. And it is logical to assume that investing into the new developments should be an important component of modernization.
Financing such projects was a normal practice of the Bank of Moscow. However, it seems that at present these projects have been frozen under the new management of the Bank, creating uncertainty for the future development of these companies and industries.