Russia's automobile giant, AvtoVAZ, is establishing new system of mutual settlement with its dealers.

The settlement system is operated by Novikombank, which has only very recently become the car manufacturer's banker.

New deal

Novikombank was appointed banker to AvtoVAZ in January 2006. The bank has said it will offer AvtoVAZ dealers special banking programmes, preferential tariff rates and the personal attention of its branch managers.

The bank has also launched a new mutual settlement programme for AvtoVAZ and its dealers. The programme employs letters of credit (L/Cs) and bills of exchange.

Dealers say they have been using L/Cs and bills of exchange under the new programme since February 2006.

Shareholders

AvtoVAZ is the largest car manufacturer in Russia and Eastern Europe and controls around 70 per cent of Russia's car production.

It has a US$330 million joint venture with General Motors (GM) of the US. AvtoVAZ and GM each hold a 41.5 per cent share in the venture while the European Bank for Reconstruction and Development owns the remaining 17 per cent.

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