Russia attacks EBRD lending freeze, says bank is straying from mandate

LONDON, May 11 (Reuters) - Moscow attacked the European Bank
for Reconstruction and Development over its freeze on lending in
Russia on Wednesday and said the bank was increasingly moving
away from its core mandate.
Russian Deputy Finance Minister Sergei Storchak called the
EBRD's freeze on lending "politicised" and "discriminatory." The
freeze is likely to be maintained if Western nations decide next
month to roll over sanctions imposed on Moscow in 2014 after it
annexed the Crimean peninsula from Ukraine.
"In contrast to the sanctions of the EU and some countries
aimed at Russian state companies and specific individuals, the
EBRD has gone much further in its politicised approach,"
Storchak said, referring to the blanket ban on all new projects.
"The Bank's discriminatory policy towards our country is
also expressed in the tacit ban on cooperation with Russian
sponsors in a number of the Bank's countries of operations,
which is at variance with free market principles."
The comments came in a statement at the EBRD's annual
meeting, which is attended by the development bank's 65
shareholder governments. Russia is one of them.
Storchak also said the bank was going into riskier areas to
make up for the absence of projects in Russia and still spending
heavily in parts of central Europe even though they are well
down the development track. He criticised the bank's moves into
euro zone countries Greece and Cyprus as well.
"What we are seeing is a trend towards the erosion of the
EBRD's mandate, which expresses itself in a shift of business
emphasis towards areas which do not fully correspond to its core
function," Storchak's statement said.
"Refocusing the EBRD's business activity on high-risk
regions endangers the bank's financial stability."
The EBRD's holdings of bad loans is expected to rise from
just under 6 percent to 7.5 percent by 2018, but its finances
returned to profit last year.
Rating agency Standard and Poor's said recently the bank
could raise its effective lending book by as much as 50 percent,
or 30 billion euros ($34.26 billion), before losing its
AAA-rating as long as major backers like the UK kept theirs.
EBRD President Suma Chakrabarti, who won a second term on
Wednesday, said the bank needed to maintain its presence in
Russia, since it still holds a portfolio of more than 5 billion
euros of Russian assets = 0.8756 euros)