The share capital structure of the Bank holding Republic Financial Corporation experienced radical changes: RFC president Alexander Malchevsky became a majority shareholder of the holding acquiring 80% of its shares. During his interview with NBJ journal Alexander MALCHEVSKY told about further development of RFC business and the issues set for bank holding members - Mosoblbank, Republic Bank and Inresbank.

NBJ: Alexander Andgeevich, what are the reasons of changes for RFC share capital structure?

A. MALCHEVSKY: I wouldn't mention any serious changes. Yes, I acquired the majority stake but it doesn't mean that traditional RFC strategy will be changed radically. The continuity of policy will be kept.

NBJ: Including the current holding structure?

A. MALCHEVSKY: I would like to be understood correctly. Of course, there will be some changes but not global ones. Procedures will be standardized and company activities will be optimized. It's a normal and natural process of any business development. No company should stagnate in order to stay in the market. Any company should change together with the market and constantly react to its challenges. But for the time being we are satisfied with the chosen strategy. It has proved its effectiveness. We will continue to develop our regional network and support small and average business within regions. Besides, the main task of the holding will be its capitalization increase. And special attention will be paid to management quality increase and general transparency of all business structures.

NBJ: As far as we know RFC bank holding was established several years ago. Tell us, please, about its structure in detail. What are the companies of this RFC holding?

A. MALCHEVSKY: First of all three banks -Mosoblbank, Republic Bank and Inresbank. The holding also comprises pawnshop chain, insurance company, media group, the chain of tourist companies, construction sector, investment company, production enterprises, horse racing sport club and many other companies. As you may see the holding members are quite different companies working in different business areas.

NBJ: Mosoblbank is well known bank on the market. The other two members of the bank holding - Republic Bank and Inresbank - are less known.

A. MALCHEVSKY: As for Republic Bank it served corporate clients before the acquisition and after it. In the nearest future there will be the merging process of Republic Bank and Mosoblbank. Inresbank performs a different range of activities: it provides investment services to private and legal persons. In our opinion - and the world experience proves it - the model of classical banking and investment banking division is true. It allows us to share risks and this measure consequently provides more effective risk management. And our clients have the possibility to choose what products are best for them - the risky or traditional ones.

NBJ: As far as I understand there will be no merging of Inresbank and Mosoblbank, right?

A. MALCHEVSKY: No, we don't have such plans. As I already mentioned the differentiation of classic bank risks and investment risks is a very good business model.

NBJ: And the merging of Mosoblbank and Republic Bank is necessary to enhance Mosoblbank corporate business?

A. MALCHEVSKY: Yes. In the course of the years the Republic Bank gathered the pool of corporate clients. Many of them have been working with the bank for a long time.

NBJ: Let's discuss RFC structure issue again. So, you are not only RFC president but also a majority shareholder of the holding. What changes do you feel personally in this respect?

A. MALCHEVSKY: I don't feel any serious changes concerning my work. Probably my liability for making decisions has increased and of course new possibilities appeared concerning holding structure reforming process.

NBJ: When I was preparing our interview I managed to know that BH RFC is the member of the important international organization - Brussels International Banking Club. What's the sense of RFC membership for this club and what advantages does it provide to the holding and its companies?

A. MALCHEVSKY: BH RFC became the club member a year ago. It's not a long period. As for the advantages they are rather intellectual than material ones. The Brussels International Banking Club is place for communication and current issues discussion. We've acquired the opportunity of experience sharing with Russian and foreign colleagues and adopting best practices. Moreover this club membership allows us to attract new partners. Thus such intellectual communication gives us quite certain financial profits, of course.

NBJ: It's not a secret that many Russian banks started to experience the liquidity problem again and some of financial credit organizations have the problems concerning capital. Does the membership of the abovementioned club allow to ease such problems' decision?

A. MALCHEVSKY: Yes, it's possible, theoretically. Practically none of three RFC holding banks has such problems. If you look through the financial statements of Mosoblbank, Republic Bank and Inresbank you may make sure that all three assets overcome the liquidity and capital standards determined by Central Bank two or three times. Of course, Mosoblbank which comes into the TOP-ioo list of the largest Russian banks according to a number of indicators demonstrates especially impressive results.

NBJ: And now it's quite logical to pose the next question: this year Mosoblbank had its 20th anniversary. How did the bank celebrate it?

A. MALCHEVSKY: The whole year 2012 for us is the year of Mosoblbank 20th anniversary. It's not a single event: we perform the events and conferences in all the regions where our bank has its subsidiaries. Particularly we are in active cooperation with an Independent economic organization of Moscow region and act as the partner of the Moscow region culture ministry programs. We support child sport programs and cooperate with RSAPC "Dynamo" city organization...

NBJ: 20 years is quite a mature age for Russian financial credit organization taking into account the youth of our bank market. What were Mosoblbank anniversary results?

A. MALCHEVSKY: In my opinion the results are evident to everyone: almost no one knew about this bank in 2006. And now mass media and our colleagues pay attention to it. The bank popularity rises and it's very pleasant, of course.

NBJ: Mosoblbank popularity also increased in no small measure because of its vast subsidiary and office network. And if we take into account all three RFC holding banks...

A. MALCHEVSKY: Inresbank, for example, has quite a small network and it's reasonable as this bank is an investment one and as I already mentioned it has some different development model in comparison with Mosoblbank and Republic Bank. Mosoblbank was developing its network all these years as we planned to create the most comfortable conditions of operation fulfillment. In the case of Mosoblbank we developed new office opening within small communities. Inresbank specializes on the cities with population exceeding one million which have a rather high demand on investment services.

NBJ: During medium-term period will you keep the accent on the development of Mosoblbank new offices in small communities or are you planning to increase its network in cites with the population exceeding one million?

A. MALCHEVSKY: In this case we do not plan to change the business conception radically. All our indicators show that the chosen model works successfully. Besides in our opinion this model corresponds to the idea which was several times mentioned by the government and bank associations and which concerns the necessity of banking system establishment all over the country. We are impressed by this idea and we participate in its development to the best of our abilities.

NBJ: In one of your interviews published by Bankir.ru portal in 2010 you told that Mosoblbank is planned to become a financial supermarket. Do you preserve such a policy or have you already realized this purpose?

A. MALCHEVSKY: It can't be completely realized a priori: new products will always appear on the market. Nowadays besides widespread products we propose to our clients by Mosoblbank network mortgage credits, insurance services, cooperation with factoring companies, retirement insurance services, etc.

NBJ: Thus, the creation of financial supermarket is quite an attainable purpose for you. It's not a secret that there are market experts who consider this idea just as a fine expression.

A. MALCHEVSKY: I can't agree with them. Financial supermarket model exists and can be realized by all means. What's supermarket in the traditional meaning of this word? It's a store where you can buy everything: starting from bread and ending by glue. Why can't we have a bank where a client can buy any services and financial products - banking, insurance, investment ones, etc.? Of course, you need time to create such a supermarket: new products can't be incorporated in bank line within a day or two. But the creation of financial supermarket is quite possible as the result of constant and considered work.

NBJ: When banks declare the beginning of such projects they usually accentuate the idea of financial supermarket creation to provide the client all necessary products and services in one place or office if more exactly...

A. MALCHEVSKY: Yes. A client shouldn't leave the bank unsatisfied by the fact that he couldn't find the service or product he needed. If it happens the client's loyalty reduces or completely disappears. And our purpose not only to hold the client but also make his children and grandchildren come to Mosoblbank in 20-30 years. In fact there is such tendency in western countries. Who said that it's not possible in Russia?

NBJ: At the end of last year mass media wrote a lot of additional emission performed by Mosoblbank and about the original way of this emission offering. Event the forgotten term "National IPO" was remembered then. What made Mosoblbank to choose such a model of share placement?

A. MALCHEVSKY: I would like to make a correction here: there was no direct offering in the strict sense of this word provided by applicable legislation. We rather had some securities circulation which was performed in two steps. First of all the shares were proposed to actual bank clients, bank partners and employees and then they were proposed to everyone. The purpose of the first step was the client, employee and partner stimulation and the demonstration of the bank respect and gratitude for their loyalty. I don't see anything extraordinary in our decisions and our activities.

NBJ: The second step was more extraordinary when the bank started to propose to clients its shares along with deposits and credits.

A. MALCHEVSKY: And what's extraordinary here? In the developed countries it's a normal practice which doesn't give any rise to complaints. The result of such two-step offering is the appearance of almost 37 thousand additional shareholders and the considerable increase of bank capital.

NBJ: What step attracted more shareholders: the first or the second one?

A. MALCHEVSKY: The second, of course. During the first step the number of shareholders was constant. And during the second step everything depended on the intensity of the demand in subsidiaries. The client interest to our proposition was rather high. And the investment sums differed immensely. People acquired from one up to several hundred shares.

NBJ: Nevertheless such a way of offering is not very common for Russian banks.

A. MALCHEVSKY: We told at the beginning that the so-called "National IPO" is just the bank preparation to the ordinary IPO. And it happened: our shares have been already placed at MICEX on non-listed basis.

NBJ: And the last question I would like to ask. You became a candidate of economic sciences this year. How do you manage to perform scientific activity along with the management of such a huge holding as RFC?

A. MALCHEVSKY: Of course, the work in RFC holding hindered the work on my dissertation but I don't regret about it. As far as the topic of my dissertation was connected with my banking activity I had the chance to improve my work and develop it during the holding management.

NBJ: Are you planning to continue your scientific activity?

A. MALCHEVSKY: Yes, to the best of my abilities. Recently I have been invited to the guardian council of the State management university. It's a very interesting perspective for me as I have the chance to perform my scientific work more actively and prepare specialists for our country.