By Andrei Skvarsky.
Raiffeisen has no plans to follow its European counterparts by retreating from or retrenching in Russia, the Austrian lender’s top spokesman, Michael Palzer, tells EmergingMarkets.me.
AS: Russia’s Sberbank is said to be eyeing the Russian assets of crisis-hit European banks, hoping to buy them cheaply. Has it offered to buy your Russian subsidiary?
MP: We consider our Russian subsidiary a key strategic layer and it is our largest profit contributor: ZAO Raiffeisenbank earned a profit before tax of EUR 206 million in the first half of 2011. I don’t see any reason why we should sell consider any buying offer, however, I am not aware of such an offer.
I also would like to stress that we have already faced one crisis in Russia that we managed to get through together with our customers. Back in 1998, Raiffeisen decided to stay in the market and to even recapitalise its Russian bank – at a time when other banks decided to leave the market.
AS: Are you losing a market share in Russia to Sberbank and the other state bank, VTB, or have you picked up business from foreign lenders such as HSBC that are pulling out of Russia?
MP: Our position remains stable, and we are growing with the market at the same rate.
In the heat of the crisis state banks were indeed more active than commercial banks, which led to a serious strengthening of their position in 2009. In 2009 state banks demonstrated rapid growth compared to the banking system as a whole. At the same time, since the beginning of the end of the crisis in 2010 there has been a reverse trend, in which clients who moved to state banks in the heat of the crises began returning to the commercial banks.
Banks with foreign capital are among the largest players in the market. The biggest foreign groups represented in Russia are employing the strategy of universal banks; they are expanding their branch network, they are servicing a fairly large client base and will continue to do so in the future.
Attempts to classify the events according to any one attribute could lead to erroneous conclusions. The exit from Russia of a few banks does not mean that all foreign banks have revised their attitude to the Russian financial market, and to the Russian economy as a whole. I don’t think that this means anything at all. We’re talking about the banks which have a lot in common. They entered the market in 2007-2008 by acquiring existing banks, which were very highly estimated. This was partly because the people who purchased them had overly high expectations for market and business growth. The future is incorporated into any assessment model, and any valuation which is made today also takes into account the future. The crisis led to adjustments, including adjustments in these expectations. The market is correct, only the timing and cost of entry into the market were unjustified. After all, the foreign banks for whom Russia is a key market including our bank, have continued their active development for a long time.
The growth in the share of state banks in the market was determined by the crisis. In addition to market share, they took on significant risks, and in general they have become more professional. In 2010 the situation was reversed: the clients who were given unique support by state banks for the most part returned to private banks for refinancing. No one is dominating, the share of private banks in lending grew in 2010, and the situation has reversed – the market share of state-owned banks has fallen.
AS: Are you making, or planning to make, any important hires in Russia, or are you, on the contrary, cutting your Russian personnel and costs?
MP: A couple of days ago, Moscow main territorial department of the Bank of Russia approved candidacy of Sergei Monin for the position of the Chairman of the Board of ZAO Raiffeisenbank.
At the present moment the documents of G. Hebenstreit as the member of the management board of ZAO Raiffeisenbank are under the process of consideration by Moscow main territorial department of the Bank of Russia, we hope to receive form Bank of Russia a letter of approval soon enabling to appoint candidate internally.
Now we have a vacant position of the Head of Treasury Division.
Our general number of employees is quite stable and even increased between end of June 2010 and end of June 2011 by some 250 to slightly above 8,600.
AS: Are you raising your rates in Russia?
MP: As of now we have only raised our mortgage rates.
AS: Do you have any contingency plans for a possible major crisis in Russia?
MP: As an international bank, we do of course have contingency plans for almost any imaginable case. However, we do not see a major economic crisis on its way to Russia. According to the analysts from Raiffeisen Research, Russia’s economy is in fact set to post one of the best growth rates of the whole Central and Eastern European region in the coming year. We expect the Russian economy to expand by 3 per cent in 2012, while the CEE region as a while is likely to grow by 2.3 per cent.
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