Q Everyone has been waiting for new rules that will make bank mergers easier, but Rosbank went ahead before they were introduced. Is the merger complete?
A 1stOVK is registered under the Rosbank name and all 11,000 staff have been moved to Rosbank along with 1.5 million clients.
Under Russian law you can’t just transfer clients. They have to close their account with 1stOVK and open a new one with Rosbank. Our group has experienced such a big inflow of new customers that, although we probably lost a few customers in the process, it was more than compensated by the inflow of new customers.
Now we have 560 outlets and 2500 points of sale serving 2.5 million retail customers and 56,000 legal entities, of which 7000 are big corporates.
Q Retail banking has become the hot topic of the moment. Has the expansion paid off?
A We have increased our retail loan portfolio from $1.3bn at the start of 2005 to $1.8bn by the end of the year. The focus has been on car loans and it has been very successful: car loans are the fastest growing sector among the retail banks. But in 2006 the focus will shift to the mortgage programme, which will become the key driver of growth.
By the end of 2005, the consumer lending portfolio was equally divided between car loans and consumer finance, but we expect our $50m mortgage portfolio to grow to $150m in 2006. We have already established a mortgage programme in the 13 most developed industrial centres, including Moscow, St Petersburg, Khabarovsk, Krasnoyarsk, Vladivostok and Novosibirsk.
Q How has your private banking business been doing?
A We set up private banking services five years ago and Rosbank is now one of the most successful private banks in Russia. The number of high net worth individuals is growing exponentially and has started to grow quickly in the past three or four years.
The products on offer are becoming more complicated as the customers are more educated. We offer almost all the classic private banking products, including wine banking – some customers invest in wines, and others want to collect it. We have 1000 families. It is hard to say how much this business is worth, but an estimate would be approximately $700m in deposits and $150m under management.
Our total retail deposits are about $1.9bn, of which $1.3bn is mass market. Private banking is a big contributor to retail business.
Q What are your initial public offering (IPO) plans – aren’t Russian banks very expensive?
A We will definitely IPO this year. We already have consultants working on it and plan to float both in Russia and London simultaneously.
We also will appoint two independent directors to the board to oversee corporate governance and auditing functions.
Russian bank valuations are very high – double those of central and eastern Europe. But these valuations are not just about Russian banks, they are about growth economies versus maturing economies. Western banks are looking to expand and this puts pressure on prices.
There are only a few interesting targets but they are very expensive; and there are some more available and cheaper targets but they are not particularly interesting in terms of business development.
