Editor's note: This is the second in a series of reports about the effect of the global financial crisis on Russia.

Vneshekonombank, which does not even report to the Central Bank because it has no banking license, will soon take charge of $74 billion, or 14 percent of the country's reserves.

The funds channeled to the state corporation will include $50 billion to help companies refinance foreign debts, $17.3 billion in subordinated loans for the country's largest banks, and $6.7 billion to invest in stocks and corporate bonds that the government sees as undervalued.

The efficiency with which Vneshekonombank, or VEB, will channel these funds into the economy and the soundness of its decision-making will be critical at a time when investors worry that the cost of bank bailouts will continue to rise. Acting on those fears, Standard & Poor's on Thursday changed its outlook on Russia from stable to negative. (Story, Page 7)

"Originally the bank planned to invest up to 850 billion rubles into infrastructure and industry by 2012, but now it's obvious the spectrum of VEB's activity will change," VEB deputy chairman Sergei Vasilyev said in an interview. "A lot of our efforts will now be directed toward solving the problems relating to the financial crisis."

VEB chairman Vladimir Dmitriyev told President Dmitry Medvedev during a meeting Thursday that work on bailing out the economy was going full steam ahead. "VEB's supervisory board has approved a number of documents that are needed to achieve our goal," he said, Interfax reported.

The demand for loans has already exceeded the amount made available, with applications for $100 billion received to date. VTB and Rosselhozbank will be the first to receive support, with documents drawn up and signed for 100 billion rubles and 25 billion rubles, respectively.

That is a pretty sharp turn for VEB, which only a year ago was transformed into the Development Bank with the goal of fostering development and investment into Russian infrastructure and industry. Its charter capital was formed by pooling the assets of the old Vneshekonombank, the Russian Development Bank and Roseximbank, and the Russian government approved of its strategy, core team and structure. The bank is still known by its old name rather than the Development Bank.

Despite more than 80 years of operations, the bank does not hold a banking license because historically it served as a financial agent of the government, managing foreign debts and receivables, providing loans and guarantees to exporters and managing pension fund assets.

The philosophy behind forming the new VEB was to stimulate investment into the country's obsolete infrastructure -- where projects take long to execute and many years to recoup costs -- through public-private partnerships. This has been the approach taken by many countries around the world, and VEB -- a state bank operating on market principles -- seemed an ideal instrument to stimulate such activity.

Since last year, VEB has only financed several infrastructure projects, including a 4.5 billion ruble, 14-year loan to the Rostov sewage processing plant Voda Rostova and a 815 million ruble loan to a Zelenograd microchip production plant called Angstrem. As the financial crisis unraveled, VEB, whose advisory board now includes the most influential members of the Russian government, became the sacred cow ordained to save the ailing financial sector.

Vasilyev, VEB's deputy chairman, said the bank would now be responsible for several key areas relating to crisis management, including refinancing foreign loans for Russian corporations, analyzing the credit worthiness of banks that want to receive state subordinated loans and supporting the Russian equity markets.

Ria-novosti / AP President Dmitry Medvedev greeting VEB chairman Vladimir Dmitriyev at the presidential Gorky residence Thursday.

"To a lesser extent, we will be able to dedicate resources to infrastructure investments because this would mean we have to significantly increase our staff, which we cannot do at the moment," Vasilyev said.

Vasilyev said 1,500 people now work for the bank, and one of the biggest challenges in the coming weeks will be to quickly reorganize operations toward new tasks and away from the original mandate of the bank.

The choice of VEB to act as savior appears to be a wise one: If a commercial bank such as state-controlled Sberbank or VTB had been selected, it would have gotten an unfair competitive advantage, said Olga Naydenova, a senior banking analyst at Alfa Bank. "VEB is viewed as a government agency that is well-positioned to perform these duties -- it has the ability to make credit decisions without getting the competitive advantage that a commercial bank would get," she said.

Vasilyev said VEB had no plans to become a commercial bank and would focus only on solving the tasks relating to financial stability. "Infrastructure projects will still be here in a few years. These are our long-term goals. But the crisis needs to be addressed today," he said.

Yekaterina Malofeyeva, chief economist at Renaissance Capital, said many governments around the world were now taking a large role in crisis management, and she was not worried that VEB would turn into a true banking player.

She said it was "logical" that the government alter VEB's original functions to fulfill the goals that were most critical and noted that the bank would not receive the $50 billion for subordinated loans right away.

Vasilyev said companies that want to receive refinancing of their corporate loans will have to go through three credit committees and be approved by VEB's supervisory board. "Yes, in part, the final decision will be political, but we also are acting as a bank and have our own risk management department that will not blindly approve projects that carry big risks," he said.

But a key question is whether VEB might risk crossing the line between state and commercial interests.

The banking sector is expected to go through a wave of restructuring and consolidation in the coming months, with the stronger players remaining, Medvedev's economic aide Arkady Dvorkovich said at an investment forum on Wednesday.

In a sign that VEB itself may become the driver of the consolidation and owner of some ailing banks, it has moved to take over two midsized banks, Svyaz Bank and Globex.

As much as 50 percent of the country's more than 1,000 banks may cease to exist, but the top 50 to 60 banks should be able to receive the funding support they need by matching government aid with private capital increases, said Nikolai Podguzov, a debt-markets analyst at Renaissance Capital.

Medvedev on Thursday asked Dmitriyev to be quick in implementing the state's anti-crisis program. "At the moment, given that you are the central coordinator of these funds, you must act as quickly as possible," Medvedev said, Interfax reported.

The bank's supervisory board is chaired by Prime Minister Vladimir Putin (last year it was chaired by former Prime Minister Mikhail Fradkov), and its eight members include First Deputy Prime Minister Viktor Zubkov, Finance Minister Alexei Kudrin, Economic Development Minister Elvira Nabiullina, Deputy Prime Minister Dmitry Kozak, Transportation Minister Igor Levitin, Industry and Trade Minister Viktor Khristenko and VEB chairman Dmitriyev.

Putin on Thursday showed his support for the country's largest private bank, Alfa Bank, by visiting a branch office in Novosibirsk with bank president Pyotr Aven.

Previous crisis-related reports can be found at www.themoscowtimes.com.