Until recently, IBDIT LTD hardly was a noticeable player in the Russian banking market. However, now it attracts more and more attention. According to NBJ rankings, in the period from April 1, 2014 to April 1, 2015, the bank demonstrated the growth of all key indicators: income, assets and loan portfolio. IBDIT LTD Chairman Dmitry Khasanov told NBJ about the reasons why such results have been achieved and the future development plans.

NBJ: Dmitry, IBDIT LTD has only recently become a significant player in our banking market. Please tell us a bit about its history.

D. KHASANOV: In fact, we are now speaking about a long-living bank. IBDIT LTD was established 20 years ago, but for a long time it really existed, so to speak, in a "frozen" mode. A year ago, the board of shareholders of this financial and credit organization was completely renewed, and, respectively, the team, the strategy and the business model also changed.

NBJ: What is the difference between the former and the actual strategies of the bank?

D. KHASANOV: Until the events that I have described, IBDIT LTD served several legal entity clients providing them with the simplest set of services: settlement and cash services, loans, etc. We, new shareholders and new management team, have decided to implement a completely different business model. We have considerable experience in electronic trading that customers engage in under the Federal Law 44-FZ "On the contract system in the procurement of goods, works and services for state and municipal needs" and Federal Law 223-FZ "On procurement of goods, works and services by certain types of legal entities". Here I just wanted to draw your attention to the fact that we are talking about a huge market, the capitalization of which reaches 12 trillion rubles a year. We help companies in the regions to understand how to participate in these tenders, even in the framework of public procurement. We plan to use these knowledge and skills in future through IBDIT LTD.

NBJ: You said that you have actively cooperated with companies in the Russian regions. But we often hear that regional companies are rather passive when it comes to investment of funds in government orders.

D. KHASANOV: It is true, in a way, but it is not due to passive approaches of regional companies. The reason is, on the one hand, the lack of qualified specialists who would help regional companies to do so, and, on the other hand, overly conservative approach of the Russian banks. It is a standard practice that the representatives of the banking market impose explicitly excessive demands on companies wishing to participate in government orders in terms of mortgages, incorporeal rights, owner guarantees, etc. They are trying to hedge their risks when granting loans that are later used as the company’s five-percent advance payment for admission to government orders.

NBJ: But such behavior looks logical.

D. KHASANOV: Sure, but it aggravates the life of potential participants of the tenders. Firstly, it happens due to the abundance of requirements that banks impose on the loan applicants. And secondly, the consideration of such applications takes a long time: two to three weeks, sometimes even months. However, the loan itself is very short-termed, only 30 days.

We use the mechanism of "pending orders". These are unsecured loans that the client does not get in cash. The granted amounts come to one of the two existing electronic platforms and are returned to the lender after the completion of the tender procedure. Thus, on the one hand, the borrowers escape the need to collect a huge package of documents, to provide evaluation mortgages, to give guarantees, etc. And, on the other hand, the loan applications are considered in much shorter terms.

NBJ: As far as I know, IBDIT LTD is the list of banks approved by the Ministry of Finance to have the right to issue guarantees under the Federal Law 44-FZ.

D. KHASANOV: Yes, now the capital of IBDIT LTD is still insufficient to guarantee the fulfillment of the government order. However, the restrictions of the Ministry of Finance do not touch the financing of contracts and tender lending. This is where we work. When we bought the bank, its capital equaled 180 million rubles. But the gradual build-up of the capital is one of our key strategic goals. Today, we already have a capital of 500 million rubles, and by the autumn or by the end of the year we plan to raise this figure up to 1.2-1.4 billion. This will automatically promote our bank to the list of those financial and credit organizations that meet the requirements of the Ministry of Finance and have the right to guarantee the execution of government orders.

NBJ: If you and your team wanted work in the domain of government orders financing, why didn’t you buy the bank with sufficient amount of capital?

D. KHASANOV: Before finalizing the deal, we considered several alternatives and the acquisition of a bank with the capital exceeding 1 billion rubles was among them. However, in many cases we faced the situation that the offered deals looked good at the first glance, but detailed analysis always revealed some discrepancies between the offer and reality. Why should future shareholders invest a billion of rubles to be later faced with unpleasant surprises?

NBJ: IBDIT LTD had no such surprises? 

D. KHASANOV: You know, our experience and the experience of other bank assets buyers shows that some pitfalls are inevitable. However, IBDIT LTD was a relatively clean asset.

In fact, since the end of last year we started to actively develop the bank’s business: in the past six months we have significantly increased its capital, and we do not plan to stop doing so. Moreover, we opened a few subdivisions, namely in Moscow, Moscow region and Kaluga.

NBJ: So, the bank’s shareholders aim at the substantial increase of its capital. Do their plans envisage joining the retail banking market?

D. KHASANOV: In the near-term outlook, we have no such plans, but we consider this possibility in the mid-term. Now we do our best to make IBDIT LTD suitable for taking part in the government order placement as soon as possible, so that it could act an active independent player. We consider the retail banking market quite risky, thus we should enter this market gradually, without any unreasoned "frontal attacks", but cautiously and progressively, carefully weighing all the possible risks. Today, we are more focused on the corporate and SMB segment. These customers are more conservative, but at the same time their behavior is more apparent.

NBJ: I suppose, nobody will question the observation that the bank is made by its team. And especially this thesis is true when it comes to an asset, which due to various reasons waives its usual business model and adopts the entirely new one. Please tell us about the team of IBDIT LTD.

D. KHASANOV: This is a really long story. The new IBDIT LTD team is, so to speak, double-layer. It includes, on the one hand, people who did classic banking in the past 20 or 25 years. They are conservative in the best sense of this word; they are accustomed to the fact that every solution has to be weighted and considered several times before the final decision is made. And, on the other hand, we have a young, aggressive and very ambitious customer service department.

NBJ: And do people with such different approaches and business models merge into a single team? It must cause constant discord.

D. KHASANOV: Not even close. This situation provides for what is called the synergy of success. These two "cores" do not fight, but complement each other.

NBJ:  The unity and the struggle of opposites?

D. KHASANOV: Absolutely true. And since you mentioned this law of the Marxist-Leninist dialectics, let us remember another law, the implementation of which provides for development. We experienced the truth conceived in this conclusion because over the last six months IBDIT LTD underwent a very dynamic development. And this concerns not only the amount of capital, but also all other key parameters.

NBJ: The passive base is very important for any bank. And the sources of its replenishment are even more important. As far as I understand, IBDIT LTD does not deposit the funds of individuals.

D. KHASANOV: Not yet. As I have already said, we consider this possibility.  But our current task is to make all our performance indictors match those requirements that DIA places for the applicants wanting to join the deposit insurance system. If we talk about the sources of passive base replenishment that we have now, we could mainly mention the balances on accounts of our legal entity clients, repayment of funds that we provide in the framework of government orders  financing, and, of course, funds of shareholders.

NBJ: As small and medium-sized banks are usually limited in terms of capital, they are willing to cooperate either with major players to develop different business areas, or with government agencies such as the AHML, MSP Bank, Loan Guarantee Agency, etc. Does IBDIT LTD have such plans?

D. KHASANOV: Of course. For example, we are considering the possibility of cooperation with the Agency for Housing Mortgage Lending within the following model: we are issuing mortgage loans to our customers; we form a portfolio and then sell it to AHML. That is, we become the operator of the Agency or large banks that are interested in such a partnership. Sure, the operator bank receives a small margin, but this income is stable and constant. This is very important in the crisis and post-crisis periods.

NBJ: Ok, let’s talk about the crisis. I must say that IBDIT LTD began its new life in the period, which is hardly favorable for any changes. The economy survives hard times, and the Central Bank implements much stricter rules in its role of a domestic banking market regulator.

D. KHASANOV: I think the strategy of the Central Bank as a whole is correct and legitimate, but the actions that it takes with respect to some market participants give the impression of excessive stiffness and rigidity. I think the same results can be achieved via subtler and more differentiated approaches.

Of course, the market is full of unscrupulous players, and it is clear that the regulator seeks to identify them in order to influence their behavior or to eliminate them from the market. But the mechanism of collective responsibility and collective punishment for all other participants of the market is not an option.  Even completely transparent and accountable banks get punished for the actions of their colleagues. Now such collective punishments are not rare.

NBJ: The ratings of our magazine for the period from April 1, 2014 to April 1, 2015 suggest, that IBDIT LTD significantly increased its loan portfolio during this time  and made it to  the TOP-10 banks in terms of profit growth. Reveal your secret of success to our readers. How did you achieve all this?

D. KHASANOV: It is unlikely that I will say is something new, because our secret of success is simple - know your client. We pay great attention to that issue and, of course, we strive to build long-term partnerships with our clients. At the same time, I would like to emphasize that we never dump our rates. We are a small credit institution thus we cannot afford it. But here the psychology of the customer comes into play. They are ready to overpay a little for their banking services, provided that they will avoid the bureaucracy of large financial organizations.