Banque Societe Generale Vostok Knows Secret Of Conquering Russia
13.11.2009 — Analysis
The financial crisis has been raging in Russia for over a year. Many Russian banks have not survived the test by instability and left the market. Nevertheless foreign credit institutions working in the RF have proven surprisingly enduring.
Banque Societe Generale Vostok (BSGV) opened 6 new branches in Russian cities in 2009. Today the organisation has more than 260,000 individual and 6,500 corporate clients. It has assets of 184.8 billion roubles and capital of 16.7 billion roubles. Pierre-Yves Grimaud, the Director General of Banque Societe Generale Vostok, in an interview to RusBusinessNews spoke about how foreign banks manage to steadily hold their positions in difficult conditions in the Russian market.
- Mr Grimaud, the Societe Generale banking group has been present in Russia since 1873. The Banque Societe Generale Vostok itself has been established in 1993 in Moscow, now its branches work in 19 cities of Russia. What do you have to do to run a successful business in Russia?
- Russian market belongs to the category of developing markets, this brings some specifics. It is more volatile, less predictable, and harder to make long term forecast for. These factors must be taken into account by any foreign player starting business in this playing field. However, owing to the fact that the banking market is actively developing, it gives a lot of opportunities for business, for the implementation of new successful projects. This is a huge potential of which European markets cannot currently boast.
We have tried to use, with the top efficiency, those opportunities which the Russian market has afforded us and is continuing to provide; not all foreign players, however, decided to go this way. Many of them still treat the Russian market with caution and prefer implementing local projects. In our view they are limiting their opportunities by doing so. Those who want to run a successful business in Russia can be advised to learn how to use the vast market potential, be prepared for cardinal changes, and not fear starting from scratch.
- What are the specifics of work in Russia for a bank of a 100% foreign capital? Does your system of running the business differ in any way from those employed by Russian financial institutions?
- Our key advantage is in that we can use the experience of the Group working in various markets and offer Russian clients those products and services which have been successfully tested worldwide and accepted in many countries. Moreover, we adhere to the international standards in serving our clients and use personalised approach. This is not an empty declaration, when we speak of high quality service and individual approach we mean the working systems for quality control and management for services we offer, professional training programmes for client managers which were developed and are used on the basis of our own BSGV Training Centre etc.
In other words our clients in Russia get the same standard of service as Societe Generale clients in other countries, as well as the opportunity to have the account in a large stable bank. They don't have to choose between the quality of service and the reliability of the bank. This is the kind of approach that not all large Russian financial institutions can be afford by far.
- What is your recipe for survival at the time of crisis?
- Keep to the golden medium. Translated into the language of banking this means keeping a strict balance. First and foremost this applies to credit portfolios. The attempts of some banks to expand the client base through more loyal conditions for borrowers in the conditions of crisis have turned into the growth of debts in arrears and the reduction of credit activities. BSGV initially chose a rather well balanced approach to the borrower assessment and risk analysis; this is why in the new conditions we did not have to cardinally change requirements and test the loyalty of our clients.
Moreover, the fact that the bank has no assets on the stock market helped avoiding additional losses due to the rapid fall of stock prices. The range of the bank's programmes has been well balanced from the beginning and did not have any high risk client attraction tools, for instance consumer loans issued to anyone presenting the bank with two forms of ID. This enabled us to preserve all our products and services during the crisis, not a single programme has been suspended or discontinued, this includes mortgages and loans to the real sector of economy. All this helped the bank preserve sustainable positions in the market.
- Societe Generale Vostok has been initially established as an investment bank. What investment projects are you supporting in Russia today? Which spheres are the most interesting?
- BSGV is a universal bank and we aspire to develop all spheres of activity evenly. There is no doubt that the crisis forced us to make amendments to our development plans, the general strategy, however, remains unchanged. 6 offices have been opened in Russia this year, in Volgograd, Voronezh, Stavropol, Ufa, Sochi, and Tyumen. We will continue investing in retail, we are planning to actively increase the rate of development of the sphere of work with small and medium size businesses.
- In the Urals the bank is working in Ekaterinburg, Chelyabinsk, and Perm. You said that this year the new branch has opened in Tyumen. How attractive is the Urals region for BSGV? Do you have plans for further promotion into this market, maybe opening branches in Yamal and Ugra?
- The Urals region has a huge economic and consumer potential and this is why it is very interesting and important for us. In fact, we are only beginning to develop it. Besides Ekaterinburg, Chelyabinsk, and Perm, an operations office is working at the moment in Tyumen. The crisis has slowed down the global process of regional bank chain development, having made the issue of the efficiency of each and every branch the priority. The BSGV network is not an exception. The priority goal for us at the moment is raising the efficiency of existing branches.
- What are the plans for the further development of the bank in Russia?
- The priority goal for us is in the conclusive overcoming of negative crisis factors and the transition to the new level of development in the existing market conditions. Even now we are trying to keep hand on pulse and carefully monitor the consumer demand and the changes in the market in order to be able to offer popular and needed conditions and programmes.
Reacting to the consumers' expectations of the decrease in the interest rates and using new tools for the risk level analysis some time ago we decided to reduce interest rates on car loans and mortgage programmes. I should think that this is just the beginning of changes which we will be implementing taking into account the positive changes in the market. As for the strategic plans, they are aimed at the increase of share of the bank's presence in Russia, preserving the sustainable positions in the market and the increase of the volume of work in all spheres.
Interview prepared by Maria Truskova
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