Baltinvestbank will expand its presence in the Volga Federal District

OJSC Baltinvestbank, a blocking stake in which belongs to OJSC Samara Bearing Plant, announced the expansion of its geographic presence: in 2008 the bank will enter Naberezhnye Chelny, Ufa, Kazan, Saratov, as well as Perm and Orenburg. The Samara branch of the bank will become the management center of the Volga division. Market participants are cautious about their competitor's prospects, calling the Volga region lending market developing, but having already decided on its leaders. Chairman of the Board of Baltinvestbank OJSC Igor Kirillov explained the bank’s interest in new regions by the fact that the Volga Federal District is one of the most dynamically developing districts in Russia. “This year it is planned to open bank representative offices in cities such as Naberezhnye Chelny, Ufa, Kazan, Saratov. The Samara branch will be the management center for the bank’s Volga region network,” explained Mr. Kirillov, also adding that the credit institution intends to expand to Perm and Orenburg.

To implement development plans, the bank intends to place a debut three-year bond loan worth RUB 1 billion this year, which was registered on January 11, 2008. The organizer of the placement is Svyaz-Bank. The guarantee for the issue is provided by Baltinvest Finance LLC. “The funds raised will be used for small business lending programs and the development of the bank’s network,” Mr. Kirillov explained the decision to issue bonds.

Baltonexim Bank, later renamed Baltinvestbank, was created in December 1994. The bank's priority is to serve large and medium-sized enterprises in various areas of business in the North-West and other regions of Russia. Baltinvestbank's network consists of 4 branches and 29 additional offices. As of January 1, 2008, shares of Baltinvestbank OJSC were distributed among 32 shareholders, including 10 individuals and 22 legal entities (6 OJSC, 8 LLC, 5 CJSC). The bank's largest shareholders are Samara Bearing Plant OJSC - 25%, Seolfor Management Limited - 19.9%, Radio Technologies SPb LLC - 12.86%, SV LLC - 11%, Kommerz ImpEx LLC - 9, 56%. Based on the results of work in 2007, the balance sheet profit of Baltinvestbank OJSC amounted to 260 million rubles, the balance sheet currency - 21,100 million rubles, the portfolio of loans and equivalent debt - 15,167 million rubles. Participants in the Volga Federal District lending market are cautious about the emergence of a new competitor and predict that the bank will take some position, but will not be able to displace the leaders. In particular, in Kazan Baltinvestbank will have to compete with the leader of the local market - Ak Bars. Tatfondbank, Bank of Kazan, AKIBANK, Avtogradbank, and Spurt also occupy strong positions. The environment is no less competitive in another region into which St. Petersburg financiers intend to enter: the Saratov region ranks fourth in the number of independent banks among the regions of the Volga Federal District, behind the Republic of Tatarstan, Samara and Nizhny Novgorod regions. At the beginning of 2008, there were 13 independent banks with 20 branches in the region, as well as 36 branches of non-resident banks and 18 branches of Sberbank of Russia. The total resources (at the expense of which banks lend to clients. - Kommersant) of the banking sector in the region at the beginning of 2008 amounted to 88.6 billion rubles.

“The emergence of a new player is very good for customers. This means that new services will appear. But for banks that are already operating in the Saratov market, the arrival of a new player means even more intense competition. All niches in the Saratov market have already been divided,” says Irina Shatylko, head of the public relations group of the Volga Territorial Administration of OJSC AKB Rosbank. According to her, “the average income of the population of residents of the Saratov region is low. Therefore, the product range offered by Baltinvestbank in one region may not always be suitable for residents of another region. Residents of the North-Western region, the Leningrad region, have a completely different income, they earn more than the average Saratov resident, so it will be difficult for the bank to find a client who will “pull” the Baltinvestbank product.

Vice-President, Head of Small and Medium Business Department of Spurt Bank Elena Ipolitova believes that the lending market for small and medium-sized businesses in Kazan is large and there is enough room for everyone. She estimates the volume of the Kazan market at 2.5-3 billion rubles. per year, clarifying that this is a rather pessimistic estimate, entrepreneurs can master even more. “If Baltinvest builds its policy wisely, it will be able to take a share in the market. It is still difficult to judge which one, because it is not clear which entrepreneurs the bank will bet on; no one has seen its products,” Ms. Ipolitova emphasized. Chairman of the Board of the Bank of Kazan Aidar Khamidullin agrees with her. He believes that Baltinvest’s success in the market will depend on the bank’s product line, loan issuing technologies, in particular, the speed of decision-making, and the work of its staff. “The fact that they are opening in Kazan is good and will spur the local market to self-improvement,” summed up Aidar Khamidullin. “The most profitable areas of the bank’s work today are retail and factoring, the development of which can be ensured by expanding the geography of activity; accordingly, this step aimed at increasing the branch network is a mechanism for increasing profitability in the future,” says the head of the investment consulting department of the BCS company Consulting" Roman Ageev.

Elena Kolycheva, Samara;
Yulia Garayeva;
Natalia Glivenko, Saratov

Kommersant (Kazan) No. 55 from 04/03/2008, p. 12

From the Baltic to the Volga