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Evgeny Titov: "Do not be afraid of loans, the main thing is to build financial models"
- Evgeny Viktorovich, the success of the banking sector largely depends on the development of business in the Far East as a whole. Is it necessary, in your opinion, for the state to create special conditions for business development in the Far East? Are there special tools that Sberbank is ready to offer specifically to the Far East business?
- It is necessary to create special conditions, nevertheless, the Far East is not only infrastructureally behind in development not only in comparison with our neighbors in the APR countries, but also in other regions of the country. This lag is due to objective reasons. It is the creation of optimal conditions for investors, primarily from the APR countries, the Ministry for the Development of the Far East is now actively engaged. And I see my role in providing the state and business with the necessary financial resources, consulting and expert support. I want to emphasize that we individually approach each investment project, because there are no two identical projects, as well as two identical people. Investment projects, including those involving the state, are of paramount importance for us. In them, we consciously participate with a minimum or even zero margin, realizing that the cumulative effect of their implementation will more than cover the incomplete revenues. We proceed from the premise that large investors who come to the region will necessarily bring contractors and subcontractors with them, serving companies, all will need the appropriate infrastructure, and this is a great opportunity for small and medium-sized enterprises, many of which will become our customers. We do not have localized, exclusively "Far Eastern" banking instruments, yet the international group Sberbank acts as a single financial organism. However, the regional approach in our case is that the Far-Eastern Sberbank is endowed with powerful powers to make independent decisions and in this sense defends the interests of the region.
- Not so long ago in Vladivostok on the FEFU campus on the Russian island was an international business conference "Far East - investments without borders", which was organized by the Far-Eastern Bank of JSC "Sberbank of Russia". What is the purpose of this event? Will it become regular and what are the specific results of this business conference?
— Our business meetings in this format have long become regular. The conference in Vladivostok is the third Far Eastern business forum. Earlier similar events were held in Khabarovsk and Birobidzhan, we plan to hold similar meetings in other large Far Eastern centers. Vladivostok Forum attracted more than 350 investors, businessmen, politicians, representatives of public organizations from all regions of the Far East, as well as Japan and South Korea. The forum united us in the desire to exchange best practices and together to develop and implement tools for accelerated development of the territory. A natural philistine question: why do we, the bank, do this? Why not just provide banking services? I will answer simply: we want to create a unified information space in which business, government and banks can solve problems in a constructive dialogue and work for results, they will be on the same wave as they say. And this will allow to fully realize the potential of the territory, create effective production and improve the quality of life in the Far East.
- The focus of the conference was the creation of export-oriented territories for advanced development, financing and creation of industrial parks, as well as financial and economic support for trade and export operations. What are the details of these discussions?
On the issues of creating TORs, we have already established a dialogue with Minvostokrazvitiy, since Far-Eastern Sberbank has information on real investment ideas of business clients. Investment activity in the Far East somehow passes through us. Thus, we help to compare business opportunities and tools of TORs. Sending a letter to the Ministry about the project implemented by our partner, we present the business idea, confirming the readiness to participate in its implementation. In the future, the options for state support of the project are being worked out. This is more effective than the traditional scheme, when the client lobbies his own interests. As soon as the last signature in the law on the TOR is put, we with the representatives of the Ministry of Regional Development will start a substantive dialogue and will fill the territories with concrete projects.
- Political events are developing in such a way that business with the support of the state has turned its face to the East and actively builds relationships with Chinese, Korean, Japanese partners and, in general, with the countries of the APR. What kind of work has already been done in this direction by Sberbank and what major steps are to be taken in this direction?
At our business conference, the Consul General of the Republic of Korea in Vladivostok, Li Yang Gu noted that today a foreign investor does not feel secure enough and has to act in conditions of considerable legal and political uncertainty. This is a powerful stop factor: if risks are high, business goes only on the basis of super-profits, and since we cannot provide record margins, we need to reduce risks. Economy is trust, the representative of South Korea stressed.
We must be open and understandable for the Chinese, Korean, Japanese investor - no understatement, double standards, changing rules of the game as it goes. It is important to bring the Far Eastern business to the world level of financial interaction. With representatives of the business community, we also discuss modern banking instruments, such as hedging currency risks, futures, currency options. Five years ago these products were little known, and now for a number of our partners this is quite ordinary manipulation. Serving foreign trade transactions, we actively use modern tools.
The bank, for its part, is actively presenting itself to investors from the APR countries. In early July, at the first Russian-Chinese Expo in Harbin, Sberbank organized a financial forum, which became one of the key events of the business program of EXPO. Communication with representatives of Russian and Chinese business, the Chinese banking community allowed to better understand each other and to outline promising areas of cooperation in the context of further economic integration. Of course, this work is not one year or even a decade, because the Asian partners are very carefully and deliberately approaching the building of business relations. But the main thing is that the general vector points to the great economic prospects for the further rapprochement of the Far East with our neighbors in the APR countries. Therefore we will work.
- It is known that at present the Far Eastern Bank of Sberbank of Russia OJSC supports about 700 investment projects, the volume of their financing amounted to about 60 billion rubles last year. This year it is planned to finance projects for another 100 billion rubles. Is it possible to tell about the largest and socially significant projects of them? How do implemented projects really affect the socio-economic development of the Far East?
I will not talk about the planned deals, so as not to jinx it. I will only say that among them there are even more ambitious projects, that they are aimed at various branches of the real sector of the economy, and a number of them will be implemented in the TORs.
- How do you assess the level of development of projects on the principles of public-private partnership in general and in the Far East in particular?
— At the moment, PPP projects are not very developed in the Far East, there are separate centers, but they do not add to the effective system. Taking into account the plans of the state program of social and economic development of the Far East, this form of cooperation will acquire more concrete outlines. As they say, wait and see. In any case, there is an understanding that without the support of the state, the "new industrialization" of our vast region is impossible.
- By the way, about new industrialization. What is the essence of the program of the same program initiated by Sberbank?
— “New industrialization” is a program of long-term support for investment projects that has no analogues. Within the program, we offer three financial and two non-financial services. Among them is the specialized loan offer “Industrial Park” to finance the creation and development of a site for locating industrial or innovative industries in industrial parks, agro-industrial parks, technology parks, technopolises and special economic zones. This is an extended loan period - up to 14 years with public funding of the project and up to 12 years in other cases. This is a reduced share of the borrower's own funds - from 20% of the investment value. This is a low interest rate, which is determined individually, and the possibility of postponing repayment of the principal on the loan. And this is a complex financial service of the company, as well as tenant companies (residents) of the industrial park.
Accordingly, for micro and small business companies that want to become residents of industrial parks, we offer a loan "Business Project". I draw your attention to the minimum share of own funds - from 10%, the offer is exclusive. This is a long-term loan for up to 10 years with an amount up to 600 million rubles. Here, we also offer an individual repayment schedule and a deferral for the main debt for the investment period up to 12 months.
- All regions of the Far East differ in terms of socio-economic development and business activity. Which regions of the Far Eastern Sberbank are leading and why?
In any case, our task is to offer individual solutions to the business, taking into account the sectoral and geographical factors. All regions have similar problems. We are still dealing with the migration of the economically active population. Therefore, it is vitally important for us to provide people with comfortable living conditions and decent wages.
- How does Sberbank intend to overcome the tendency of outflow of the population from the Far Eastern territories? Are there any special mortgage programs?
- Today, a mortgage can improve the standard of living of the population. The share of the Far Eastern Sberbank in the regional mortgage lending market is over 54%. This tool is our priority - only for the last 3,5 of the year, we have issued more than 43 thousand mortgage loans to residents of the region. These customers could make up the population of the whole city. They stayed in the Far East, because they had their own housing. Of course, we have preferential programs for obtaining housing loans, within which the interest rate and down payment amount are reduced. These are the programs “Young Family” (for families in which at least one of the spouses does not exceed 35 years of age) and “Military mortgage” for military personnel. Moreover, under an agreement with the Government of the Khabarovsk Territory, a program of concessional lending for the construction or renovation of a private house for families with three or more children is in effect. There are similar agreements with other Far Eastern territories.
- In the banking sector, there has been a trend of more rigorous risk assessment. Financial institutions are looking more closely at their borrowers. Is it worth worrying customers corporate segment?
The more actively we participate in increasing the purchasing power of the population and the demand for credit resources of the corporate segment, the higher the social significance of the projects. If we consider the experience of Western countries, there is practically no one who would conduct an efficient business without attracting credit resources from banking institutions. At us still there is a paradox when businessmen are set by the purpose to lower a debt load and to manage own means. I know many young entrepreneurs who say they are interested in developing their business, but do not want to depend on banks. In my opinion, this is a utopia. You can provide business growth in 3-5%, without bank financing. At the same time, there is an opportunity to grow at a rate of 50-100%, but it is impossible to dynamically develop a business without borrowed resources. Do not be afraid of loans, the main thing is to properly build financial models.
- It turns out that the domestic business community should change its mentality?
- He is already changing. But there are still conservatives who believe that cooperation with the bank should be minimal. However, throughout the civilized world, lending has become a traditional tool.
- Perhaps entrepreneurs are afraid of the reaction of creditors in the event of a crisis period for business: suddenly the company will be on the verge of bankruptcy, and the bank will not want to enter the position of the borrower.
- The answer is in building a financing model. When a client applies to the bank, employees of a financial institution conduct an expert review of the project for which a loan is required. An entrepreneur applies to a credit institution with an already developed business model. As a rule, in their plans startups, being in an emotional outburst, somewhat overstate the expectations. Unfortunately, in reality, miscalculations in the financial model can have negative consequences. Such moments can be avoided if you agree on the financial model with the bank and make timely adjustments. In addition, it is necessary to raise the level of financial literacy by studying the experience of predecessors and drawing information from specialized sources - Sberbank's Internet portal “Business Environment” can be a good help.
- At one of the meetings with journalists, you compared the relationship between a client and a bank with a model of family relations. Similar to a life scenario, a financial institution meets a client and offers support. In the future, the parties stipulate the terms of harmonious relationships and enjoy the partnership. However, according to the laws of the genre, a critical moment may arise in a pair. How does the bank deal with a client who has stumbled or become a victim of circumstances?
- Indeed, everyone has the right to make mistakes and not all circumstances can be calculated at the initial stage of the relationship. I adhere to the postulate that any failure of a client to accept credit covenants is our common mistake, because we analyzed the financial model together. There are several ways to solve the problem. The bank can go to change the requirements for the partner. In the event of a substantial failure to comply with the financial plan, we can restructure the debt. But it is worth remembering: despite the fact that everyone has the right to make a mistake in the family, a scar on the heart still remains. In building relations between the bank and the client, there also remains the scar of non-compliance with the terms of the agreement. Undoubtedly, we will resolve the problem situation, but we will have to evaluate the next joint project with some caution. The entire chronicle of the partnership with the bank is reflected in the client’s credit history.
- When you came to the post of the head of the Far Eastern Bank of Sberbank of Russia, the main task that you publicly identified was the withdrawal of the Far Eastern Bank to the first position in the corporate rating of Sberbank of Russia. What did you manage to do in this sense and what are the tasks for the future?
- How did you manage to change business performance indicators, the dynamics of private and corporate products development?
— Compared to the beginning of 2012, we increased the share of the Far Eastern Sberbank in the retail lending market from 34,8% to 38,2%, the share of attracted funds from the population - from 49,1% to 52,1%. In absolute terms, our retail loan portfolio grew from 68,6 billion rubles to 169 billion rubles, and the amount of funds raised - from 171 billion rubles to 302,5 billion rubles. As for working with legal entities, I would like to note the growth of the loan portfolio from 101,3 to 184,3 billion rubles, including for small business - from 9,5 to 24,7 billion rubles. The portfolio of attracted funds of legal entities grew almost 14 times: from 5,6 to 77,4 billion rubles. The total number of our corporate clients has reached 70 thousands.
Serious progress has been made in the direction of remote maintenance. In fact, from scratch, a real "bank in your pocket" was created, available to anyone at any convenient time and in any place where there is access to the Internet or mobile communications. Thus, the share of transactions in remote service channels increased from 54,6% to 89,2%. This means that our clients can now make 9 from 10 operations with their finances independently, without being tied to the time of work and the location of our offices. So, the number of users of the service "Mobile Bank", which allows you to make transactions on a cellular phone, increased from 224 thousand to 713 thousand. Internet banking "Sberbank Online" has expanded its audience from 82 thousand to 474 thousand of Far Easterners. Innovative service "Autoplayzh of housing and communal services", which allows you to entrust the payment of utilities of the bank, now enjoy 76 thousand of our customers. These figures are impressive and inspiring, but at the same time it is just the beginning of a new era of digital banking in one click.
- Is there any competition with local Far Eastern territorial banks that have very strong regional networks?
"Competition is noticeable, regional banks have their advantages - a more differentiated approach, exclusive industry solutions, they often benefit from the flexibility and speed at which new products can enter the market. And although we are a fully universal bank, there are separate markets where we are not leaders and act as catch-ups. I believe that this situation positively affects the development of the banking services market, since it is in competition that the best practices and the best quality of service for the client are born.
- Evgeniy Viktorovich, since your previous activities were related to the North Caucasian bank of Sberbank of Russia, can you describe what are similar features and what is the difference in the work and mentality of business in these regions? And, is there a regional specificity, and if so, what is it expressed in?