Raiffeisen Bank International's head of markets and investment banking, Lukasz Januszewski, speaks to Danielle Myles about CEE growth, its future in Russia and his rapid rise through the company’s ranks.

Lukasz Januszewski

Lukasz Januszewski

Only a few bankers sit on the board of one of their region’s leading banks before their 40th birthday. Lukasz Januszewski is one of them. Having worked his way up the ranks at Raiffeisen’s Polish subsidiary, Mr Januszewski was appointed to the board of its parent, Raiffeisen Bank International (RBI), earlier in 2018, charged with overseeing the group’s markets and investment banking business.

He has taken the helm at an opportune moment. After years of being overshadowed by their bigger Western neighbours, the economies of central and eastern Europe (CEE) – RBI’s home market – have become star performers. In 2017 Romania was the EU’s fastest growing economy. Within the bloc, the CEE region accounts for eight of the 12 countries that the European Commission expects to expand by more than 3% next year.

A regional revival

Going hand in hand with this economic expansion is the region’s pick-up in international trade and cross-border transactions. RBI, which operates via its Austrian head office and a sprawling network of 14 subsidiaries, is well placed to take advantage. “We are well-positioned in foreign exchange [FX] and international payments to support the full range of clients, from large financial institutions and corporates to small and medium-sized exporters and importers,” says Mr Januszewski. “So from that standpoint, the growth has definitely had a positive impact on our business.”

The most promising markets for dealflow, he believes, are Austria, the Czech Republic, Slovakia, Romania and Russia. The latter is home to some 9% of RBI’s assets and in 2017 generated nearly 40% of the group’s after-tax profits. It raises the question of whether US and EU sanctions have prompted RBI to revise its Russian strategy, particularly given that lawmakers in Washington are looking to impose new restrictions. Speaking with regards to his division, Mr Januszewski’s response is emphatic. “To date, sanctions have had limited impact on our business model. Russia was important and still is important, and I believe it will remain important for our business model,” he says, adding that the bank is still developing its business in the country.  

RBI played a role in Russian corporates’ recent return to the Eurobond market, ending their years-long hiatus following the country’s annexation of Crimea. Earlier in 2018, RBI helped fertiliser company Phosagro raise $500m and Moscow’s Domodedovo Airport raise $300m in the international markets. Within CEE more broadly, the economic revival bodes well for borrowing mandates. “Growth creates a need for development,” says Mr Januszewski. “That’s a positive for investment banking, predominantly for our debt capital markets business, where today we focus on vanilla transactions, but we are also improving our asset-based finance offering for clients.”

Career history: Lukasz Januszewski  

  • 2018 Board member responsible for markets and investment banking, Raiffeisen Bank International 
  • 2007 Board member responsible for markets and investment banking, Raiffeisen Bank Polska
  • 2003 Capital markets director, Raiffeisen Bank Polska
  • 2002 Deputy capital markets director, Raiffeisen Bank Polska
  • 1999 Dealer, Raiffeisen Bank Polska
  • 1998 Treasury department, Raiffeisen Bank Polska

Connecting CEE sovereigns

RBI’s regional footprint gives it an unrivalled ability to act as a bridge between international investors and local markets. Sovereign bonds are the best way to start. “Here we believe that international investors can have a one-stop shop to access the region, and arguably we are very well positioned for that business,” says Mr Januszewski. “We have been working hard in recent months to improve our capacity in trading of government bonds as they are the most liquid and interesting to international investors.”

This involves making markets in sovereign bonds, as well as bringing new deals to market. In 2017, RBI was bookrunner on the government of Tajikistan’s inaugural international bond, a $500m deal that was reportedly more than six times oversubscribed. This year it was bookrunner on the Slovak government’s €1.5bn bond, whose 50-year tranche made it the longest dated CEE issuance in a decade, and a $600m sale by the Belarusian government. Such mandates highlight how RBI has proved adept at meeting the financing needs of issuer-clients too, by connecting them with investors sitting on liquidity and looking for opportunities to invest.

Mr Januszewski’s group encompasses not just investment banking and primary and secondary markets, but also research, institutional client coverage and RBI’s asset management businesses. He is focused on advancing the division so that it serves the full spectrum of clients, from retail to corporates to institutional investors. For retail customers, that means creating investment products that suit clients’ lifecycle and are tailored to their needs. FX, interest rate hedging and international payments present the biggest opportunities to increase corporate business. Meanwhile, for institutional investors, particularly those with truly international portfolios, one of RBI’s most valuable offerings is securities services. This is thanks to the bank’s on-the-ground presence across the CEE region. 

“[In securities services] we are uniquely positioned as we are connected directly to most local settlement centres,” says Mr Januszewski. “This allows international clients to keep their securities with us in a standardised set-up, although they may touch almost all countries in our region.”

Irrespective of the customer type, Mr Januszewski views digitisation as one of the biggest opportunities for his division. Retail banking’s leadership in this area has, he believes, heightened demand for similar advancements in investment banking. “Nowadays everyone is used to working with apps in their personal life, including our managers, and that makes it more difficult for them to accept working with other financial institutions via paperwork and manual processes,” he says. “This is where I see an opportunity to provide our services in a more efficient and streamlined way.”

The investments this requires seem more likely to be forthcoming after the bank’s 2017 merger with its majority owner Raiffeisen Zentralbank Österreich. RBI’s goal was to strengthen its capital base after it came third last in stress tests of 51 major European lenders the previous year. It achieved its aim, which Mr Januszewski notes “has allowed us to focus on the business and growing the top line”.  

Regional capital markets

Nearly two-thirds of RBI’s offices are within the EU, but they are overwhelmingly in the bloc’s smaller, less-developed markets. This gives Mr Januszewski an optimal vantage point for assessing EU-wide initiatives, such as the Capital Markets Union (CMU). While bankers covering western Europe witness more small borrowers switching their bank loans for bonds – one of the CMU’s major goals – the benefits are still a way off for many CEE markets. This is largely down to borrowers’ size and sophistication. “When you compare the cost of preparing a Eurobond issuance with a loan, for small amounts I still believe that the competitiveness of a bank loan wins,” says Mr Januszewski. “Only if the market and regulators work together to change the market’s processes and requirements will we see more smaller borrowers.”

Mr Januszewski gives the example of a cheaper ratings process for smaller firms. “When we as an industry find a way to rate small issues in a transparent and not too expensive way, and when investors can really rely on the rating, that will help the market flourish,” he says. Another hurdle stemming from investors’ requirements is ticket sizes. At many buy-side firms, the proportion of a deal they can purchase is capped at between 10% and 20%. In a billion-euro-plus bond, this amounts to a respectable investment, but many CEE borrowers are looking for just a few million euros. It can be hard to make a business case and justify involving the credit committee for a small slice of a deal of this size.

But there are reasons to be cheered by small and medium-sized enterprises' (SMEs’) activities at a domestic level. Local currency bond markets have existed throughout the CEE region for years, with their own documentation and practices now well-established. More SMEs are tapping these markets, typically raising between €20m and €50m, predominantly for two reasons. First, to diversify their funding to ensure they can access finance when banks are less willing to lend. Second, to introduce the firm to the public markets and raise its profile ahead of an initial public offering.

Rapid rise

Mr Januszewski’s suggestions for improving regional capital markets should not be taken lightly. Two decades with RBI has given him an intimate understanding of CEE business. Having worked in various capacities at the bank – as a dealer, in the treasury team and capital markets origination – he also has a good grasp of RBI’s abilities and potential.

What makes his rapid rise through RBI’s ranks even more impressive is that he completed his economics and banking degree part-time while working at the bank. He attributes his success to various sources. “It was a combination of my personal dedication, support from my superiors, and the economy growing at such a pace that there was a need for new managers – people who could adapt quickly and take on bigger jobs.” And the final ingredient? He says to never underestimate having a bit of luck.

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