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www.arb.ru Association of Russian Banks
RUSSIA NOW WWW.RBTH.RU
03
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Money How foreign invaders are getting their hands on the Russian people’s cash
New banks make customer the king
If money is the lifeblood of an jar) at home. Even so, banks sia’s far east, Expo was a tiny
economy, then banks are the have made massive inroads regional operation on the bor-
heart. And, to take the metaphor since the Kremlin launched a der with China, but Barclays
a step further, the world’s concerted reform effort in 2004; used it as a platform to launch
financial system just suffered a white goods retailer M-Video their operations country-wide.
massive heart attack. So it reported pre-crisis that up to a Only two years on, the familiar
seems an odd time for the third of its sales were paid for white eagle on a blue back-
leading international banks to using bank credits. ground can be seen on cash ma-
be beefing up their Russian Russia’s banking sector re- chines across the country.
operations, but a war for the mains dominated by the state- “If you want to know how com-
contents of wallets has recently owned retail giant Sberbank, mitted HSBC is to Russia, look
broken out in Russia. which is three times the size of at the fact that we upped the
its nearest rival (another state- bank’s capital by $200m in the
BEN ARIS
owned giant, VTB Bank). How- midst of the crisis in September
RUSSIA NOW ever, in recent years Sberbank’s 2008,” says Moscow veteran and
near monopoly of retail bank- HSBC’s CEO Stuart Lawson,
The combined assets of Russia’s ing has been whittled away by who also founded Citibank’s
top 200 banks were worth just the rise of commercial banks – Russian operation in 1995.
over $1 trillion before the crisis, both foreign and local – that The Russian banking sector re-
according to Business News Eu- offer something Sberbank has mains wide open. Surprisingly,
rope’s annual ranking of CIS always failed to provide: serv- the average Russian is a much
banks. While their assets have ice. The long queues and surly better credit risk than the aver-
fallen tenfold in the last year, clerks that have been Sber- age European, because everyone
these banks are expected to claw bank’s hallmark can’t compete VLADIMIR FILONOV_FOTOIMEDIA was simply given their apart-
back most of the lost ground with the brightly lit and hi-tech Competition in the market for Russian bank customers has been heating up despite the crisis ment following the collapse of
over the next two years. offices of leading commercial the Soviet Union in 1991, Rus-
At the same time, bank service operations, such as Alfa Bank, sians have almost no debt.
penetration is extremely low: which have been aggressively Unicredit, which have been the price of bank stocks hur- mier banking services to the “It is hard to gauge the value of
according to pre-crisis surveys chasing new customers. specialising in Eastern Europe tling through the roof. emerging upper-middle class. the residential real estate trans-
only one Russian in four has any Big international banks have since 1998. But everyone got se- Britain’s HSBC was an early Another British bank, Barclays, ferred to the population, as
kind of bank account at all – left most of the play to their riously interested in 2007, when mover, setting up shop in 2005 also entered the market in 2007, until recently there has been no
most people prefer to keep their smaller continental peers, like a wave of mergers and acquisi- with its offering of private buying Expobank right at the secondary market to price it,”
cash in a banka (a glass pickling Raiffeisen International and tions swept the region, sending banking for the rich and pre- top of the market. Based in Rus- says Roland Nash, head of re-
search at Renaissance Capital.
“But it should be worth hun-
dreds of billions of dollars.”
Finance Discount rates finally
securities that can be used as
Top 10 banks by customer satisfaction
French giant SocGen has been
collateral for a loan. in Russia since the Nineties, but
start to make a difference
Bank Position Position Change in
This scheme took some time to
in 2009 in 2008 position
built up its business slowly.
come into effect: the discount Alfa Bank 1 1 - After setting up a rep office, it
Picking apart the
rate was still unable to perform Raiffeisenbank 2 6 +4 launched a greenfield retail
its role at the height of the crisis UniCredit Bank 3 8 +5 bank called Banque Société
last autumn. While the US Fed- VTB24 4 10 +6 Générale Vostok (BSGV) sever-
trends in interest
eral Reserve System and the
BSGV 5 4 +1
al years ago, and then bought
European Central Bank were
MDM Bank 6 2 -4
Russian niche players such as
trimming their interest rates,
Citibank 7 3 -4
the leading consumer loans op-
the CBR raised its discount rate
Absolut Bank 8 5 -3
erations Rusfi nance and Delta-
In late October, Russia’s Central In Russia, interest paid on retail from 11 to 12pc on November
KMB Bank 9 23 +14
Credit.
Bank (CBR) dropped its discount deposits is tax exempt provided 12, 2008, adding one percentage
BANK Uralsib 10 11 +1
However, three years ago, Soc-
rate to a record low of 9.5pc, interest does not exceed the dis- point on December 1, to 13pc. Gen caught acquisition fever
slashing it by another 50 basis count rate plus 5pc. Otherwise, At the same time, the bank was Banks with increasing customer satisfaction and paid $2.33bn to oligarch
points to 9pc at the end of the difference between the in- pumping cash into the ailing Vladimir Potanin to take con-
November. terest rate and the established banking sector, lending 500bn
Bank Position Position Change in
in 2009 in 2008 position
trol of Rosbank, at the time the
maximum is subject to a 35pc roubles to Sberbank and 450bn
Promsvyazbank 11 26 +15
biggest private bank in Russia
MAXIM BUILOV
tax rate. The situation with re- roubles to Vnesheconombank.
KMB Bank 9 23 +14
and still a top 10 player.
RUSSIA NOW tail loans is similar, but in this Both loans were issued far
Bank "Globex" 24 35 +11
Analysts called the valuation of
case banks pay tax if the inter- below the discount rate. Sber-
Sberbank 21 29 +8
almost six times book value
These measures would have no est they charge is lower than the bank and Vnesheconombank
Credit Bank of Moscow 12 19 +7
“mind-boggling” at the time; in
signifi cant impact had the dis- discount rate. So Russian banks then redistributed the assets
VTB24 4 10 +6
the Nineties, the Austrians who
count rate not fi nally assumed were unable to introduce a among commercial banks. UniCredit Bank 3 8 +5 bought most of Central Eu-
the role it is supposed to play in grace period for credit cards. Even now, the CBR lends at the OTP Bank 15 20 +5 rope’s banks paid up to about
developed economies – the reg- This only became possible after discount rate and most loans is- Raiffeisenbank 2 6 +4 one-and-a-half times book
ulation of the value of money. an amendment to the tax code. sued are short-term. Russian
TRUST National Bank 16 18 +2
value for them.
Despite the latest cuts, Russia’s It was only recently, largely due banks in need of cash can bor- The rise of the big international
discount rate remains the high- to the global financial crisis, row for a short time. Borrowing banks will turn up the heat on
est among G20 nations.Y et Rus- that the discount rate began to for longer terms – to finance
Banks with dropping customer satisfaction
the locals. While the likes of
sia has shown impressive regulate the value of money. In mortgages or industrial loans –
Bank Position Position Change in
HSBC and SocGen can give
progress: over the past 15 years, the summer of 2008, the remains problematic. This in 2009 in 2008 position Russia’s Sberbank and Alfa
having survived a number of do- CBR began to expand the list of means that the latest reduction
Russ-bank 30 13 _17
Bank a run for their money, the
mestic and international crises, securities acceptable as collat- of the discount rate will not di-
Moscow Bank for Reconstruction and 19 7 -12
real losers in this battle will be
the CBR lowered the discount eral for bank loans. Initially, the rectly impact corporate or re-
Development
the small Russian banks.
rate by more than 23 times. list included only low-yield
Credit Europe Bank 25 17 -8
tail loans. In the future, a viable “Russia’s smaller banks are al-
Until recently, however, the dis- government securities. This refi nancing system might give
Sobinbank 20 14 -6
ready under pressure,” says
MDM Bank 6 2 -4
count rate did not fulfi l its main blocked the refi nancing mech- banks security, allowing them
Citibank 7 3 -4
Lawson. “The crisis has been a
function, failing to affect bor- anism, as unattractive govern- to lend more freely.
-
BINBANK 13 9 -4
strain, but now the cost of cap-
rowing costs for banks and in- ment securities were shunned
Rosbank 32 28 -4
ital is going up; they are not
dustrial producers and largely by banks. As the crisis deep- Maxim Builov is a special cor- Bank Vozrozhdenie 18 15 -3 going to be able to invest into
focused on control over interest ened, however, the list expand- respondent for Kommersant Moscow Industrial Bank 34 31 -3 the systems that will make
rates in the retail sector. ed, and many banks now have Daily magazine.
SOURSE:PRISEWATERHOUSECOOPERS AND SENTEO GMBH
them competitive.”
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