Russia has a clear future

Russian economy is becoming more and more attractive for foreign financiers and bankers. They are anxious to establish business links with representatives of the Russian business. You are welcome to read in our rubric «Leaders» an interview with one of these businessmen who has appreciated at its true value the investment potential of this country.

Hans Vontobel, honorary chief of the greatest Swiss banking holding «Vontobel Holding AG» does not look like a typical banker. In his youth he was keen on biology and dreamt of a surgeon’s career. The fortune took another decision and finally Hans Vontobel came to work at a bank. And although the financial sphere is considered to be far from any humanistic ideals he succeeded in saving his ideas of youth during all his long life. And today, at the age of 88, Hans Vontobel is sure that it’s the person who is the main, not the profit. As a real banker he is used to confirm his words by his deeds; that’s why he is very busy with charitable activities.

«New York» of the South-Eastern Asia

For already ten successive years the American «Heritage Foundation» awards the first place in the list of the countries with «the freest economy in the world» to Hong Kong. The volume of currency transactions steadily keeps Hong Kong in the list of ten leading cities of the world.
The favourable geographical position of former British colony, the lack of strict currency regulating system and close connections with the leading exchanges of the world helped Hong Kong to become the leading financial centre of the world. The administration of Hong Kong is strict in keeping to the policy of minimal intervention in the situation at the market. Foreign businessmen are able to manage freely in the territory of this region.

Legalizator number one

The withdrawal of Sodbiznesbank's license has provoked a wide resonance in the Russian society. Betrayed depositors organize protest demonstrations, deputies of the Governmental Duma accuse of everything the corrupted officials of the Central Bank, mass media are active in discussing the theme of a possible crisis to come.

It is early to speak about the crisis yet, experts say. It is not necessary to take extraordinary measures. The only serious problem is the reaction of the population. The trust toward crediting institutions is again undermined.

There is a point of view that the story of Sodbiznesbank reflects the real processes that happen in the banking system. On the one hand, financial institutions become more and more transparent, more and more law-abiding. On the other hand, the level of supervision from the Central Bank is_increasing. Before the AntiMoneyLandering bill has been passed non-civilized forms of work could be left without attention, but as the control is being strengthened, the situation has changed considerably. That is why the case of Sodbiznesbank may serve as a certain signal for other crediting organizations: don’t depart from the rules of the game that are established for everyone.

On the whole, experts agree with the opinion that the probable banking crisis happens in a greater degree at the pages of business editions and not in real life. Actually crediting organizations continue to function and the Central Bank goes on with its work. The problem is that the sensation aroused by newspapers really caused some «trust crisis» at the banking market. And we will need some time to overcome it.

From wars — to free trade

Long negotiations about Russia entering the WTO are coming to the end. What nprice will be paid by Russian banks for the integration of the state into the world economy? Won’t the national financial system go the similar sad way of the neighbours from the Eastern Europe?

These problems are discussed in the frames of the main theme of July issue of our magazine. Now the Russian crediting market is already quite open for foreign financial institutions. However the coming of foreign capital is still restrained by high risks and unpredictability of the situation at the Russian market. Now foreign investors control less then 8% of the total banking capital of the country. In Russia they open only subsidiaries and desist from making direct investments into Russian crediting organizations.

After Russia enters the WTO the situation will change, as some Russian experts say. How will Western financial institutions behave in the conditions of the open market? It is clear that first of all they will follow their own interests. It’s natural — foreign banks are not obliged to support and develop the Russian economy. The latter is the objective of national crediting institutions but how many of them will survive the «invasion» of the Western capital? For the present the situation is developing not in Russia’s favour.

Let banks be

The intensification of competition in the retail sphere has not influenced the position of Sberbank at the market of private deposits. Still more than 60% of all bank deposits of the Russian population are concentrated in this bank. Large Russian crediting organizations attract population money in quite small volumes. It is not the matter with the banks themselves but with the clients who do not trust to large crediting organizations. Commercial banks partially make up for their gap from Sberbank at the market of private deposits by issuing promissory notes. Lately many crediting organizations have made alterations in their liabilities’ structure. A strong brand is needed in order to solve this task efficiently. If it is well managed, one may be very successful in attracting money both from juridical and physical persons.

Grivna in free flying

The Ukrainian banking system was born in the throes. Financial pyramids, hyperinflation, and lack of adequate legislation — all this is already in the past. However the phantom of crisis is still wandering around the plains of the Ukrainian financial sector. And the problems are still the same: imperfection of legislation acts, lack of resources, problematic borrowings…

Nowadays practically all the crediting institutions of_Ukraine are in a chronic need of resources. Large banks do not have enough money to provide for the growth of the business volumes, small banks may even not always satisfy the current crediting demand of their clients. Many crediting organizations have been forced to make syndicated borrowings or issue Eurobonds.

The sudden growth of the crediting volumes led to the increase of problematic borrowings that has made the National Bank of Ukraine quite anxious about the problem. It started to toughen some of the basic norms, including the index of the adequacy of regulative capital. In its turn it made resources for the banks even scarcer.

After coming across the problem of the lack of capital, having exhausted the limit of trust of their foreign partners, Ukrainian bankers most likely will turn their face to their own stock market. They will have to remember the middle 90-s when the stocks of semi-governmental banks were at the leading positions in the list of sales at the trading grounds. If there are necessary resources, the balance of the banking system will be quickly reestablished, the problem of the liabilities’ deficit will be solved and the regulators’ activities will not seem to be so strict.

Hunting for leasing

Active industrial retrofitting and modernization have started in Russia. Many Russian enterprises now release products that earlier had to be brought from abroad. To a great extent this process has been promoted by an impetuous development of the leasing market. Active arrival of Western companies to the Russian leasing market is the matter of the near future. Experts note that the Russian companies work in «hothouse» conditions because they are able to choose most reliable clients and most prospective projects. Large Western companies that grant equipment at lower interests and provide its service maintenance will be able to press Russian leasing companies to the segment where less reliable contracts are concluded.

Most important of all arts

Cinema industry is a special business. Besides bringing profits it_gives chance to influence the mood of people, creates myths and makes them real. In Russia cinema business is not only recovering but also is little by little coming out to the world market. The main obstacle for the quick development of the Russian film industry is the lack of great number of new films. Without mainstream there will be no good films because investments to film industry are rewarded in one from ten cases.

We won’t sell Russia!

First public debates about how foreigners influence the_development of the Russian state took place in the 18‑th century, when the reforms realized by Peter the Great started to be discussed. During the reign of Alexander III there was a massive flow of private investments to the Russian industry from the West, and the problem of the significance of the foreign capital for the country was also much debated. In this period a program aimed at the stimulation of_foreign investments to Russian private enterprises was elaborated in the Russian government. At the end of the 19-th century the ruble became one of the most stable currencies in the world, and active flow of foreign investments to the Russian Empire started. The problem of the «usurpation» of the national economy by foreigners again turned out to be in the centre of public attention.