The FINANCIAL — “Bank Republic plans to develop its business in both directions – Retail and Corporate in 2011, therefore we are aiming at increase of our portfolios in both fields in line with the market development and our ambition to gain market shares,” told Christian Carmagnolle, CEO of Bank Republic, Societe Generale Group, one of the leading financial service groups in Europe.
“When we launched our lending campaign early December, we sent a clear message to the “market’: Bank Republic is back to business. It was well perceived and our commercial results are positive. The campaign was a “commercial rebound” for our teams who worked very hard to satisfy our clients with the timely response for their credit application and for sure with very good price during the campaign,” Mr. Carmagnolle told.
According to Mr. Carmagnolle, Bank Republic will continue to provide clients with new products and advantages in the future. “Bank Republic will offer very soon new innovative solutions for day-to-day banking, deposits and all the range of services for retail and corporate clients. We are ready to implement many new solutions during 2011 and for the years to come,” Mr. Carmagnolle said.
“We continue to adapt our commercial organization and we just implemented some internal improvements. Thanks to that, we are able to dedicate more skilled bankers to our clients to better know and thus better serve them. In accordance with Societe Generale ambitions 2015 strategy, we need to be the “most desirable” bank on the market. We are challenged to be innovative but stable, proactive but smooth financial institution for delivery of the best terms products and superior quality of service,” Mr. Carmagnolle added.
Mr. Carmagnolle joined Bank Republic in December, 2010. Before appointed as CEO of BR, Mr. Carmagnolles’ very first career step in SG was undertaken in 1972, in corporate direction, being later promoted to Deputy Executive Director in SG affiliated Komercni Banka in Czech Republic.
Bank Republic is one of the leading commercial banks in Georgia employing more than 1000 staff, serving its clients through 49 branches and service centers. Currently, Societe Generale posses 80% share in Bank Republic.
Q. Mr. Carmagnolle you have been in charge of CEO position, since the beginning of the year 2011. What has changed in BR after your arrival?
A. Bank Republic is very interesting institution, with good experience and practice. The Western standards have been already successfully pioneered in the Bank and the corporate culture of the Bank is overall high. It was really interesting and challenging for me to join BR as the CEO.
In addition to that, my arrival coincided with the period of “commercial rebound” of the Bank, when the new commercial campaigns and projects have been implemented. The projects ultimately became very successful thus contributing to the overall rehabilitation of the Bank. From the end of last year, our commercial status became more active and the results improved respectively.
Q. According to the last audited financial statements of September 2010, BR profit and loss statement shows 27 million net loss. In your opinion, what were the main causes of high expenditures?
A. When the crisis happened, Bank Republic decided to take care of its clients and acted in accordance with Societe Generale culture and principles. We spent lot of time to elaborate solutions with our defaulted clients, in a period where all our organization and strategy was to develop our networks (branches, call center and Internet banking) and our franchise. We were longer to react than our main competitors which are much more mature “universal banks”.
It is also right that the structure of our “new” retail portfolio was quite “short term maturity oriented”, due to the fact that many loans were dedicated to short term needs, as consumer finance or auto loans. That was the reason why in 2009 and 2010, portfolios natural amortization was so significant.
Furthermore, in line with our strong social responsibility behavior, we decided to strengthen the credit parameters and criteria in order to avoid generating additional turmoil in our clients’ indebtedness. Doing so, we were less developing our new portfolios than some competitors having more aggressive lending policies. As you can see, we are developing a long term sustainable strategy, oriented on the social responsibility thus focusing on ours clients’ benefits and profitable long term relationships with them.
A. Thank to our retail campaign and strong commercial action, first quarter is well oriented, but it’s too early to talk about financial results.
Q. BR, is part of Societe General Group, does this mean access to Societe Generale funds? How does Societe Generale Group participate in strengthening BR financial statements?
A. We are the member of Societe Generale, large financial institution. As any other subsidiary, we enjoy the competitive edge of being the international brand thus facilitating the international transactions / trade finance for any our client which is interested in such type of operations.
SG supports Bank Republic not only financially, but in any rational initiative and action. The new ongoing capital increase dedicated to strengthening our lending capability is, if necessary to stress, the confirmation of our shareholders’ and mainly Societe Generale group’s confidence and support to Bank Republic. Being part of SG group means to benefit from SG rating to improve cost of funding thus ultimately leading to better serve ours clients.
Q. Among banking products, for which comes the biggest share of profit?
A. On lending activities, our strategy is to balance Retail and Corporate revenues on one side and short and medium/long terms revenues on the other side. We also need to increase our fees and commissions revenues thank to news innovative offers.
Q. How would you evaluate clients’ loyalty before and after crisis period? In your opinion, what is the expectation from clients towards BR?
A. We are estimated as highly reliable bank, and the customers are really keen to save the deposits with us, to implement the different transactions and, generally speaking, bank with us. We have been several times awarded for trustfulness and reputation. The volume of deposits is constantly increasing. The clients are really loyal, and of course they naturally expect the even wider range of the banking solution and more improved quality of service, which is and will be definitely delivered by us.
Q. How has the demand changed for different products at BR? Which products are mostly demanded currently?
A. Our clients are interested in both retail and corporate products and solutions. The mortgage, business, consumer loans, corporate packages and deposit products are equally popular among the respective segment.
Recently the mortgage loans have been very popular during the campaign; now we are stimulating the business loan campaign to enable the business representatives to enjoy attractive products and solutions. We design the products with very competitive terms and rates to make them very popular, useful and beneficial for the retail and corporate customers.
Q. How would you evaluate activities of corporate clients in 2010?
A. As economy is gradually recovering, large companies have activated their transactions with banks. Although some segments have not fully recovered yet, 2010 year has proved that the worst is already behind for large companies. These positives trends are reflected in most of our corporate customers’ activities. In fact, some of them are starting to think about gradual expansions of their businesses, which is good sign. We would be happy to support them in those plans.
Q. What offers will BR have for corporate clients?
A. Bank Republic provides tailor made financial services to its corporate customers.
Our Corporate Banking Division is responsible for managing and developing the relationship with corporate customers. We aim to be the true banking partner by helping our clients to meet their long-term, strategic goals across all essential functions, like financing and operational services. In addition, we provide a complete range of trade products and services, such as guarantees and letters of credit, to help corporate clients to secure and finance their international transactions.
Q. Which product will be the most actual for Bank Republic’s corporate clients in 2011?
A. The most active corporate banking products still remain short and medium terms credit facilities, both cash and documentary financing. Being part of Société Générale Group enables us to offer these products, like credits, international guarantees and letters of credit with exclusive terms to our Georgian customers.
Q. What is the index of bank deposit growth in Bank Republic? Please compare it to the last year.
A. The deposit growth rate is sufficiently high in Bank Republic. The growth rate of the deposits in December 2010 vs. December 2008 decreased very insignificantly, just by 1%.
Q. The major strategy for banks was to charge high interest rates on deposits at the end of 2009 and during 2010. However, by the end of 2010 the tendency was changed and banks main strategy became to charge lower interest rates on loans. In your opinion, what were these changes governed by?
A. Each bank follows its own commercial strategy based on several criteria on which the cost of funding is crucial. To offer better prices on loans it is obvious banks must offer lower prices on deposits which are “banks raw materials”.
Q. NBG increased saving reserve from 10% to 15%. In your opinion, what will be the affect from bank’s side in crediting Georgian economy?
A. The usual mechanism of such central bank policy is to tighten lending policy of the banks to mitigate inflation. It should lead banks to reflect cost of liquidity in their pricing.
Q. Does BR plan to expend the chain and service centres in 2011 during the end of the year?
A. We are very pragmatic in this area. Any good opportunity will be study but we need to be selective with places which are already over covered by banks.
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