Putin's bailout bank needs 1.3 trillion rouble rescue

Moscow

FOR years, Russia President Vladimir Putin used Vnesheconombank (VEB) to pay for "special projects", from the Sochi Olympics to covert acquisitions in Ukraine to oligarch bailouts. Now, the state bank needs a rescue of its own and it could be the Kremlin's costliest yet.

VEB was supposed to be the financial supercharger of the Russian president's state-directed capitalism, using its government backing to raise billions at low rates on Western markets and pumping them into ventures the Kremlin wanted funded, some concealed from public view with code names such as "Lily of the Valley".

Hit by Western sanctions last year, VEB has stopped new lending. The cost of its bailout could reach 1.3 trillion roubles (S$25.3 billion), according to several senior governme…