In 2012, VEK Bank was able to significantly increase the volume of business: the main indicators showed a growth by 30%. In an interview with NBJ, Oleg SKRYL, chairman of board of the VEK Bank, speaks about the bank's strategy and the factors that led to such a success.

NBJ: Oleg Viktorovich, VEK Bank rapidly boosted its assets in 2012. How did it manage to do that?

O. SKRYL: Really, in November 2011, the bank's assets amounted to more than three billion rubles, and by January 1, 2013, this figure exceeded 4.5 billion rubles. Our long-lasting work bore fruit, and now we are going through a period of intense growth. Also the fact that in 2012 we started to get full value from the Saratov branch opened in 2010 played its part.

The main products offered by VEK Bank to its clients are loans to small and medium businesses, cash and settlement service, credit cards. We have a fairly large amount of raised funds of the individual customers, which forms the basis of the resource base of financial and lending institutions. The dynamics of the individuals' deposit portfolio suggests that the depositors trust us. In addition, the bank's mortgage program is developing. We were able to establish partnership relations with AHML and DeltaCredit Bank.

I would like to emphasize that the assets can be increased indefinitely, there is always demand for loans. The only question is the Bank's capital capacities and ability to raise "long term" resources at reasonable prices.

NBJ: What is the current amount of the bank's authorized capital, and where do you find sources of additional capitalization, especially given the stringent requirements of the Bank of Russia?

O. SKRYL: At the moment, the bank's authorized capital is 323 million rubles, and its equity is more than 720 million rubles. Of course, we meet the regulator's requirements completely, even with a reserve. However, we are being incited into additional capitalization not so by the Bank of Russia as by the needs of our clients. They are growing with us, and at some point reach a certain level where we, due to the regulatory restrictions, can no longer grant them loans or guarantees in the amounts they require.

We use all known mechanisms of capital raising. However, in my opinion, the Bank of Russia could also support small and medium-sized lenders in this, because they are the capillaries through which money flows into the real economy. Whereas, in the big banks the money gets "stuck", directed to exchange markets or foreign markets.

NBJ: What are the competitive advantages of small banks as compared to large lending institutions? What is the difference in customer service?

O. SKRYL: Small financial institutions are much more mobile. The Board of Directors, the Management and the Credit Committee of the bank are working in a very close and constant interaction, so loan approvals are issued with­in shorter periods of time compared to large bureaucratic lending institutions. Of course, we maintain high standards of risk management and do not simplify the approaches to credit risk assessment, at that. It's just that the "know your client" rule works. We have worked with our client base for a long time and know it well, 80% of our borrowers are loyal clients of our bank. Such a close interaction allows us to make credit decisions within a week. We come to the aid of the new borrowers in the preparation of a business plan. All client work is strictly individual.

NBJ: Which companies form the back­bone of your client base?

O. SKRYL: Our main borrowers are the small and the medium business. I'd like to note that we have not noticed any deterioration in our clients' condition over the past year. Companies are finding themselves new niches and horizons.

In fact, the business, especially the small and medium ones, has already become accustomed to all sorts of shocks and changes in working conditions -people have learnt to adapt to everything, and difficulties only make them work harder. In this regard, we have the same psychology as that of our clients: we make decisions quickly and flexibly, we find options that suit both the bank and our borrowers.

NBJ: Much has been said that banks have to be high tech. Do you agree with that and what exactly do you do for the development of IT systems?

O. SKRYL: Of course, lending institutions have to keep up with the times. If they don't fit into the changing reality, they will inevitably be left behind and lose clients. Many of our employees have technical background, and apart from that, we have a large IT department. We are constantly improving our IT systems. In 2012, we completed the replacement of the ABS. We are also improving the Client-Bank system, changing the plastic card software to provide all of the modern services.

NBJ: What role, in your view, does the presence of a close-knit team play in the success of a lending institution?

O. SKRYL: A bank is a collective enterprise, very much depends here on the key persons. Our core team has worked together for many years, we have never failed each other. The client base is also constant and focused on the team members. I want to emphasize the role of my first deputy Andrei Nikitin. He has worked for the bank for more than 12 years, and by now he deals with analytics and development of financial tools.

Deputy chairman Sergey Chernykh is responsible for the client interaction, and he has worked for the bank since his college days in 1995. Deputy chairman Alexander Vernik is developing lending instruments, and is responsible for the interaction with AHML.

NBJ: This year VEK Bank celebrates its 20-year anniversary. What achievements are you particularly proud of?

O. SKRYL: The main achievement is the 20 years of steady development. For a Russian lending institution that's a long time. Despite the fact that during this period there were significant changes in the composition of the owners, the bank was able to maintain the continuity of both the team and the clients. I am confident that we have the strength to maintain the growth rates we achieved. We are planning to grow 25-30% a year.