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Long-term mission

Evgeny Titov: "Do not be afraid of loans, the main thing is to build financial models"

Long-term mission

Evgeny Titov, Chairman of the Far Eastern Bank of Sberbank of Russia, talks about how a bank can build trusting partnerships with business.

- 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?

- Minvostokrazvitiya proposed a new model of accelerated socio-economic growth through the creation of territories for advanced development (TOP). The corresponding bill has already been approved by the Government of the Russian Federation and will be put to the vote in the State Duma this fall. If this idea proves its effectiveness, positive experience will be spread throughout the country. We, as the leading bank of Russia, are ready to provide comprehensive financial and non-financial support in the establishment of TORs and industrial parks, in the implementation of investment projects involving private and public capital. At the conference, we presented entrepreneurs with specific tools for implementing these ideas - and this is not only lending, but also educational services, as well as foreign trade financing.

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.

Currently, we are involved in developing projects for several industrial parks. In particular, we have good experience with partners in Primorsky Krai. I really appreciate our cooperation with a group of DNS companies, which, born in Vladivostok, has rapidly conquered the Russian retail market for computer and home appliances and today supports the idea of ​​creating an industrial park. In Khabarovsk Krai, we are interested in investing in the industrial park "Avangard".

- 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?

- First of all, we should note the important role of state regulation in building foreign economic cooperation. We should not sell non-capitalized natural resources abroad, if we can export products with added value. In order for our export-import-oriented economy to be effective, banks should constantly look for instruments of cheap financing, including at the expense of foreign resources. Indeed, trade and export financing allows us to lend to our partners at rates well below the Russian market rates. Meanwhile, our partners should understand that shadow deals will not be financed and such projects will not be developed.

As Deputy Minister for Development of the Far East Maxim Shereykin noted at the last conference, the investment interest of our partners from the APR countries to the Far East is very high and, most importantly, stable. But only the degree of realization of this interest is still low. Why? The investor is waiting, looking, assessing risks and opportunities. And that's why it is critically important for us to listen to the investor's voice, openly communicate, without hiding anything, but also without embarrassment to advertise the Far East, because we have something to offer. And of course, we need to work together to improve the investment climate, creating a system of preferences based on the principles of deregulation and tax incentives.

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?

- The number of investment projects is constantly changing, as some projects are being implemented, new ones are appearing. Our largest investment project at the moment is a comprehensive modernization of the Khabarovsk oil refinery, which we have financed for 29,5 billion rubles. I would also like to note the creation of the agro-industrial complex KHAPK Green Agro in the Primorsky Territory (financing of 1,6 billion rubles), the construction of kindergartens in the Sakhalin Region (1,3 billion rubles), the construction of a fish processing plant in the Kamchatka Territory (0,5 billion rubles), modernization (0,8 bn. Rub.), The development of the Malomyr and Pioneer gold deposits in the Amur Region, the organization of Sambery hypermarkets in the Khabarovsk and Primorye Territories. Each realized project can be called socially significant, because people get jobs, the taxable base increases. I believe that all projects are of social importance, because their implementation leads to economic growth.

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?

- From the point of view of providing banking services, it is wrong to rank regions according to the level of socio-economic development and business activity. As for investment projects in which we already participate or plan to participate, they are in all eight regions of our presence, they simply have different directions. Each territory has its own specifics, its profiling industries and growth zones. For example, if we are talking about the Kamchatka Territory, we recall the fishing industry. We are talking about the Magadan region, then we mean gold mining. Recently I visited Magadan, where I got acquainted with the customers of our bank engaged in gold mining. The capacity and potential of the area is really great. In the "golden" times for the industry, the leaders of many Magadan companies invested their earned money into working capital, in updating technology and technology. Now they can extract gold, enriching fine fractions concentrates. The Amur region is traditionally associated with agriculture. Sakhalin - with the oil and gas industry. The economy of Primorye and Khabarovsk Krai is more diversified, but it also has its own locomotive sectors. In Primorye Territory our client, Grasp company, is implementing a project of a closed cycle for the production of sugar from sugar beet.

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?

- We are experiencing the factor that the quality and amount of funding from external banks in our colleagues in the shop are reduced, which leads to a revision and tightening of the conditions for financing the real sector of the economy - that is, business. In this regard, we have to be more sensitive to the risk assessment and to analyze with great attention the business model of projects that need credit. Today, the market can be noted the tendency of increased attention of banks to investment projects of clients. Sberbank takes a proactive position, analyzing information about the plans of customers and anticipating their intentions. In fact, nothing terrible has happened in the market. Yes, the interest rate on loans has slightly increased due to the increased level of funding. Yes, the requirements on the level of risks to a number of projects, including industry ones, have become tougher. But the world banking community is working according to these standards - Russian banks will not get out of the requirements stipulated in the agreements "Basel 2,5" and "Basel 3". What is happening now in the regional market of banking services are natural processes that are not connected with politics.

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.

Of course, the literacy of calculating the monetary model depends not only on the client, but also on us. The bank should constantly be in contact with the client and calculate the models that change at different stages of the investment project implementation, taking into account the current circumstances. We try to convey this position to the authorities: it is not the interest rate that affects the investment climate of the regions, but the level of the entrepreneur's knowledge and the competence of the partners. Sberbank today, without false modesty, is one of the few players in the Far East that provides quality underwriting of investment projects. In order to gain the reputation of a reliable partner, we had to make some losses. Some clients believe that Sberbank makes high demands. But even without entering projects, which, as a rule, later become problematic, we undertake to hedge the risks. And the bank's ability to correctly assess the risks visually shows the level of bad debts: we have a delay of 3%, and someone 19%. We are aware of our mission in the market and build long-term relationships with customers. One time to give out short money and leave is not our way.

- 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?

We did this: according to 2012, the Far Eastern Sberbank ranked first among the 17 territorial banks of Sberbank that participated in the competition, although in 2011, the bank was only 14. Immediately, I note that in 2013, we became only seventh, that is, we failed to consolidate our success, but this was expected. The fact is that the competition assesses first of all the relative, rather than absolute indicators - the growth dynamics for market shares, profit volumes, labor productivity, etc. Given our low starting position, we made an impressive leap forward and quickly pulled up to the leaders. But sustaining high growth is not easy. We simulate the situation and understand that according to the results of 2014, we can really enter the TOP-5 of the best territorial banks, and in the optimal scenario and our effective work - in the TOP-3. However, in this light, a real challenge for us is to merge with the Northeast Bank, given the high costs of doing banking in the Magadan region, Kamchatka Krai and the Chukotka Autonomous Region.

- 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?

- Territories are similar to undisclosed labor, economic, resource potential. Of course, in the Far East there are industry specificities associated with such sectors as mining, forest and fish processing. The region is complex in terms of infrastructure, transport accessibility, low population density. But I can say one thing: it is interesting for me to live and work here. The Far East is unique, it is an amazing drive, when around - despite all the problems and distortions - life is full, new ideas and approaches are born. Businessmen, politicians, public figures, and just the Far East clearly understand: if we do nothing, we can lose this region, which then turns into a raw material appendage, which does not create added value. And on the contrary, if everyone invested in the development of non-mineral exports, modernized transport, energy, communication infrastructure, created growth zones based on TOR, attracted international investors, that is, if we set priorities correctly, not grabbing everything, we can develop faster than the rest of Russia . Still, we have a unique competitive advantage: it is in the Asia-Pacific region that today the world’s productive forces are concentrated, interested in building foreign economic relations with their neighbors. And we need to integrate into these processes, and as soon as possible, because the market will not wait.        

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