“Nine years is a very long horizon”

The FINANCIAL — Philipp Pott, General Manager of ProCredit Bank Georgia, explains the bank’s development strategy and pace in the local market over the past nine years and its future prospects.

ProCredit Bank Georgia, one of the leading financial institutions in Georgia focused on lending to very small, small and medium-sized enterprises, is celebrating its nine years of successful operation in Georgia.

Q. It’s been nine years already, almost a whole decade, that ProCredit Bank Georgia has been present on the local market. Are there any welcome surprises arranged for the bank’s oldest clients due to the jubilee? What’s the number of ProCredit bank Georgia’s clients that have been loyal since the very first year of the bank’s operation in Georgia?

A. We didn’t prepare any special gifts for our customers simply because their number is too large – already 200 thousand. What most other banks would probably do is give presents to, let’s say, its top 100 customers, but this is not our style. Since we cannot give presents to all of the bank’s customers, we choose not to give any presents at all.

We are thinking of planning something interesting for the tenth anniversary in 2009, which is a round date and would make sense to celebrate together. We’ll think more about some ideas closer to the time but it would not be about presents as such, more likely a big celebratory event.

As for the number of devoted clients who’ve been our customers since the very first year of the bank’s operation in Georgia, we count around 200 of them as of today.

Q. Last week ProCredit Holding purchased all Commerzbank’s shares in ProCredit Bank Georgia, which had possessed a 1.2% stake in the bank. By when is ProCredit Holding expected to acquire the 7.4% stake of the last left shareholder Internationale Projekt Consult (IPC) GmbH?

A. It was a very minor buy out of 1.2 % and it is in line with the strategy of the Holding to consolidate ownership. Consolidated ownership makes life much easier because you have fewer shareholders, less paperwork and you can take decisions faster and also the shareholders’ structure becomes clearer for investors.

Q. Which concrete aspects of the bank’s activities is the common strategy of ProCredit group (which envisions enabling ProCredit Holding to become the main shareholder of all ProCredit banks) going to have a direct impact on and what welcome news is expected since this very acquisition of Commerzbank shares?

A. In the future it will be easier for the investors as they’ll only have to go to Frankfurt and talk to the owner of the 22 banks that we currently have all over the world.

As for IPC, it is the biggest shareholder in ProCredit Holding. In the future the holding might also buy out their shares in Georgia but IPC will remain the shareholder in the Holding. I can’t say the exact date of when it’s going to happen as no decision has been made yet.

Q. Since July 2006 you’ve been General Manager of ProCredit Bank Georgia. The previous General Manager Mr. Philip Sigwart handed over his duties after successful four years at the helm of the bank and continued his career as General Manager of ProCredit Bank Kosovo. Could you please recall the top success stories within the three years you’ve been directly in charge of ProCredit Bank Georgia’s management?

A. If we talk about any achievements they’re certainly not my achievements, but that of our whole team in ProCredit.

We have certainly achieved quite a lot during the last two years. The bank has been developing very nicely in terms of infrastructure, number of branches, number of employees and clients. The bank is growing according to the expectations of our shareholders.

What is clear enough, we have a completely different strategy from all other banks in Georgia and I hope this is being increasingly perceived too. We’re the only big bank in Georgia which does not aggressively promote consumer lending. The future will show that it is the right strategy that we don’t try to disburse loans to people who easily get over-indebted.

For the many years of its existence ProCredit Bank has stuck to its convictions, philosophy and missions.

Q. Prior to becoming General Manager of ProCredit Bank Georgia, you were a member of the management team of ProCredit Bank Ukraine and also General Manager of ProCredit Moldova. How would you compare the banking sector and in particular the ProCredit group development in Georgia with Ukraine and Moldova back in the early times you worked in the latter two and how dramatically has the picture changed considering the fact that the banking sector is today regarded the best developed field in Georgia?

A. These three are very different countries both in terms of size and development pace. Ukraine is the biggest one, whereas Moldova is a bit closer in size to Georgia.

Ukraine was a country which, after the revolution in 2004, gained a lot of interest from foreign investors earlier than Georgia did. There was aggressive investment in the country, especially in the banking sector and the growth was coming to a great extent from consumer lending. Ukraine is a crazy market where you can get whatever you like by consumer lending, mortgage lending, car loans, etc. That is a temptation of course and that’s how most of the banks build up their loan portfolios.

If we compare Ukraine and Georgia today, the banking sector as such in comparison to the size of the economy is much bigger already. In a certain sense, Georgia might learn from the experience of Ukraine because it is a little bit ahead.

Moldova has a very small banking sector, much smaller than Georgia in terms of the size of the banks. The biggest bank in Moldova is not bigger than our bank in Georgia, which is far from being the biggest one in the local market. The investment climate is probably weaker than in Georgia and very few international investors have come to the country. In Moldova strong development of the banking sector is still to come.

In Georgia we have had a very stable economic environment for the last two-three years, which is also helping the banking sector to grow fast.

Q. As for your future career prospect, how long do you see your professional activities being carried out in Georgia for and which country would you prefer to continue your career in?

A. I’d like to keep this question open. It doesn’t depend on me as such. I’m pretty mobile and I’m always where Frankfurt wants me to be, so I’d like to keep this question open to me.

That’s also why I’ve never asked myself the question about what would have happened if I had had a choice. Wherever I’ve been so far: Russia, Armenia, Moldova, Ukraine, Georgia – I have felt very welcome and good. I don’t plan to leave Georgia anytime soon as I have lots of things to do here.

Q. “In deposit-taking, as in its lending activities, ProCredit Bank does not target the upper end of the market that consists of a few high net worth individuals. Instead, ProCredit Bank offers its services to a broad spectrum of people, in particular those who have had little or no experience with banks,” is said in the letter from the Supervisory Board. What are the shares of low income households in the overall volume of deposits opened at ProCredit Bank Georgia at the moment?

A. There’s no clear definition for what a “low income household” means. Sometimes middle class people’s deposits are for small amounts in the beginning and then they add more and more; which gives them advantage over large deposits that are more stable with only little further money added for years. As for our current portfolio, around 70,000 Term Deposits and Savings Accounts up to GEL 1,000 are opened at ProCredit Bank Georgia.

Q. How do you see ProCredit Bank Georgia’s position in the local market and the bank’s priorities over the next nine years?

A. Nine years is a very long horizon. Usually, we have a five year strategy plan. What we assume is that we will be growing by 30-40% per year over the next five years.

We’ll have increased our branch network, which currently includes 46, up to 100 by 2012. By the end of 2008 we’ll have over 100 ATMs.

ProCredit Bank Georgia will keep on bringing new service offers like POS terminals as more and more people are demanding non-cash services. We’ll make use of the large basis of 35 thousand business customers. I hope in the next years they’ll have POS terminals, which will make their lives easier.

In five years we’ll have more than 2,500 employees as we plan a big branch expansion.

I think the major task and goal for us should be to keep the same spirit and corporate identity in the bank although the team is becoming bigger and bigger every year.

ProCredit Bank is one of the leading financial institutions in Georgia focused on lending to very small, small and medium-sized enterprises and offering legal entities and individuals the full range of banking services.

The bank started operating in Georgia in 1999 and now has 46 branches all across the country. All branches of ProCredit Bank are equipped to the highest European standards with ATMs and all branches are open six days a week.

The bank is part of an internationally operating banking group that covers 22 banks on three continents of the world.

Written by Kate Tabatadze