Azerbaijan, Baku, Nov. 15 / Trend A. Akhundov /
The State Oil Fund of Azerbaijan (SOFAZ) is negotiating with Russia's VTB Bank within the ruble portfolio expansion, SOFAZ head Shahmar Movsumov told media today.
"At present, the negotiations with VTB Bank are under completion," Movsumov said.
According to the new investment strategy, the State Oil Fund of the Azerbaijani Republic began investing in assets denominated in Russian rubles on October 19, 2012. At present, SOFAZ's investment portfolio includes only short-term deposit in the Russian "Gazprombank" to the amount of 3 billion rubles ($ 100 million).
He added that after the negotiations with VTB are completed, SOFAZ will consider other possible variants for placing funds on deposit accounts.
The process of negotiations with the Russian bank is under completion, Movsumov said.
SOFAZ plans to expand its ruble portfolio to $300 million by late 2012. The list of banks, in which the deposits will be placed, is planned to be expanded to diversify the ruble portfolio.
The currency structure of SOFAZ's investment portfolio is determined as follows: 50 percent of the assets can be placed in U.S. dollars, 40 percent - in euro and 5 percent - in pounds sterling. The remaining 5 percent of the total value of SOFAZ's investment portfolio may be represented in the currencies of the "G7" countries, the countries with long-term ratings at least "A" (Standard and Poor's, Fitch Ratings) and "A2" (Moody `s), Russia and Turkey.
SOFAZ assets, as of Oct. 1, 2012, increased by 11.4 percent up to $33.192.4 billion compared to early 2012 ($29.8 billion).
It is predicted that by late 2012, SOFAZ assets reach the level of $34 billion.
SOFAZ was established in 1999 when its assets amounted to $271 million.
The main purposes of the fund are: accumulation of funds and placement of the fund's assets abroad to minimize the negative impact on the economy, preventing a "Dutch syndrome" to ensure savings for future generations and to maintain the current socio-economic standard in the country.