THE "DAUGHTER" JUSTIFIES HOPES

The sustainable development of the banking sector of Azerbaijan and its stability, which was not particularly disturbed even in times of global economic crises, are of interest to many foreign financial institutions. Not every foreign bank that has come to Azerbaijan can grasp the peculiarities of the local market and strengthen its presence on it.

In this sense, VTB Bank (Azerbaijan) can be regarded as an example of the successful development of a foreign bank in the country. The growing customer base, the goals that have been achieved and ambitious plans for the near future indicate the correctly chosen development policy of the subsidiary of the Russian bank.

In an interview with R+, the senior vice-president of VTB Bank and head of the subsidiaries department, Mikhail Yakunin, also pointed to another important component of the success of the Azerbaijani "daughter" - stable and rapid economic development in Azerbaijan.

- VTB Bank is represented in a number of post-Soviet countries today. How do you assess the current situation on the banking market of Azerbaijan and how comfortable is it for the presence of foreign banks here?

- The banking market of Azerbaijan is one of the most stable and dynamically developing markets. The current and projected figures of GDP growth and other statistics can be viewed as positive in the current macroeconomic situation in the territory of the former Soviet Union. It is particularly important that the economy is growing not only thanks to the oil sector, on the contrary, its share has declined in the recent period, while other sectors, particularly industry, are showing an impressive growth. And this is one of the major positive aspects. And, of course, the general economic situation and the 10-per-cent growth of the banking sector and relatively stable exchange rates create favourable conditions for banking business in Azerbaijan.

- By your own admission, the Azerbaijani "daughter" of VTB today is one of the most dynamically and successfully developing ones among other subsidiaries of banks. What do you think are the components of this success?

- I'll start with the fact that in different countries of our presence, we have chosen different models of development - somewhere it is buying existing players and somewhere else - "start-up from scratch" or "start-up" with partners. VTB Azerbaijan started "from scratch" without a burden of problems that could have been acquired following the purchase of an existing bank. This is one of the keys to the dynamic development of the VTB "daughter" in Azerbaijan. In addition, an important role was played by a successful partnership with OJSC Ata Holding - a company that has a perfect understanding of the current situation on the market of the country and conducts a deep expert review. It is this combination of the expertise of the Azerbaijani and Russian banking markets that led to a successful outcome. The bank fulfilled the tasks set in the previous three-year strategy, achieved a positive financial result and moved on to a different stage of development. For example, last year, the return capital of the Azerbaijani "daughter" of the bank accounted for about 18 per cent, which is a very good indicator.

- Against the background of this successful development, is it planned to expand the activities of the VTB subsidiary in Azerbaijan, increase shareholding or start a new business outside the banking sector?

- As far as the shareholding is concerned, at the present time, we are quite happy with the existing balance (in the structure of the bank's shareholders, 51 per cent of the shares belong to JSC VTB Bank and 48.99 per cent to the Ata Holding group of companies). We believe that this is the key to the efficiency we have achieved.

In terms of further development, I should note that in the current year a three-year strategy for the VTB Group was adopted, which includes a strategy for each of its subsidiary banks. In the next three years we will focus on improving efficiency. As part of this strategy, VTB Bank (Azerbaijan) intends to join the TOP-10 banks of the country over the next three years. This is not an end in itself, but one of the landmarks.

Also, we cannot rule out the possibility of starting a new "non-banking" business in Azerbaijan. The market is very interesting and dynamic. By focusing on the expansion of the product line, we pay attention to related products, for example, factoring (a range of services for manufacturers and suppliers conducting trading activity on credit terms - author). This is particularly interesting in terms of establishing close relations between Azerbaijan and Russia, financing trade, and later it can be a promising product in trade relations with other countries.

- Is there any intention to focus on one specific direction of the banking business in the future?

- We see VTB (Azerbaijan) as a universal bank and are now operating in all sectors of the economy with both legal entities and individuals. To date, the customer base of the bank is balanced and distributed almost fifty-fifty between individuals and legal entities. In the corporate segment, we are more focused on lending to the real sector and industry as we find this area interesting and dynamic - it is about 70 per cent of our portfolio.

If the local subsidiary bank lacks resources in lending, we are ready to involve the parent bank and other subsidiaries, create a syndicate, etc.

- Against the backdrop of a difficult political situation and sanctions on Russian banks, do you observe or expect any changes in the activity of VTB - in particular, its subsidiary in Azerbaijan?

- The activities of the VTB subsidiary in Azerbaijan will not suffer from the sanctions against Russia. The sanctions, which were imposed upon the Russian banks, will not affect the activity of VTB in Azerbaijan as they relate only to the possibility of obtaining finances on the stock markets of the USA and Europe. VTB (Azerbaijan) is not using this financing tool in its work. Customers of VTB (Azerbaijan) will not feel any changes in the bank's work in connection with the sanctions - the bank will continue to provide the full range of services and fulfill all its obligations in full.