The FINANCIAL — “VTB Bank, one of the leading banks in Georgia, will increase its corporate credit portfolio by 40% in 2011,” Archil Kontselidze, Director General of VTB Bank Georgia, told The FINANCIAL.
The volume of saving deposits at VTB Bank increased by 25% reaching 5 million GEL since the year 2010. The total capacity of deposits at the Bank reached 366,161,787 million GEL. The majority of deposits at VTB Bank are in USD (47%), followed by GEL (31%), EUR (13%) and other (9%) as of 1 November, 2010.
CSR plays an inevitable role in VTB Bank development. In his interview with The FINANCIAL, Archil Kontselidze spoke about VTB Bank values based on CSR as well as made a brief overview of bank operations in 2010 and future development plans.
Q. What are the activities and directions implemented at VTB Bank within the framework of CSR?
A. CSR is an inseparable part of VTB Bank’s development. We believe that integration and development together with society is more important and in long-term perspectives CSR culture will be much more profitable for the Bank. Let’s take the example of credit politics. An inevitable term while crediting is to know the total revenue of the individual or corporation. At the Bank we categorically deny the distribution of loans if we are not aware of a company’s financial statement as well as making sure the loan will not bring negative outcomes to the entity. This mainly refers to middle and low income segments.
Moreover, while financing we consider the fields which are of vital importance for society. Despite the fact that financing the agriculture sector is not the priority of VTB Group, and for Georgia it is, we support development of agriculture products and provide financing assistance for the field. Secondly, in terms of being ecological, we have a project concerning the rehabilitation of small power stations. Moreover, we have many social projects.
Q. Human Resource represents one of the fields of CSR, what activities are done within the framework of Human Resource Management at VTB?
A. Staff members are the most important assets of the company. Moreover, employees are also involved in implementation of CSR activities within the company.
We understand that salary matters and have regular raises in staff members’ wage packets. The bonus system was not changed even during the most difficult times, in the years 2008-2009. Moreover, we consider the private lives of our staff members and do not overload them with work.
At VTB Bank we have a corporate club, where employees manage many social programmes and participate in social activities. Moreover, we have corporate universities where our staff members enhance their knowledge and education.
Q. CSR might be considered a way of brand differentiation, what are the ethical values at VTB based on CSR?
A. Our brand is unimaginable without sport and social programmes and we believe we are associated with them. We were the first bank in Georgia to finance a football team and we are sponsors of Dinamo. Moreover, we are general sponsors of the football league and have financed several events in football. VTB Bank has also financed several rugby events and we plan to finance one of the teams from the super leagues. Moreover, we are quite active in tennis as well as chess. This is only external financing. Internally, within our employees we have a football team and they play tennis regularly.
Furthermore, we finance cultural and social activities. VTB Bank has been the sponsor of Iavnana for years. In 2010 only the Bank sponsored three Iavnana events. Moreover, financing religious projects is also important. We have several projects supporting innocent people – children, and the blind.
Q. How do CSR activities support the developing of business objectives of VTB bank?
A. Business objectives at VTB are not short-term or only to increase shareholders’ wealth, but to be integrated with society. We believe that those companies which are long-term and fully integrated with society are more stable, have more sustainable development as well as being more profitable.
Q. In your opinion, what are the expectations of the community towards the Bank as a SCR company?
A. The financial systems are the most developed fields in Georgia at present. From the governance side, no other organizations in Georgia are managed like the banks. From the supervision side the sector is quite developed and there is huge support from the Government as well.
Consequently, as for the well developed field, society requests not only good financial results, low interest rates on credits and high interest rates on deposits, but also different activities in many directions, such as support of sports and culture. This is the obligation of a strong organization – to support various activities and not be totally profit oriented.
Q. What are the main differences between CSR and charity?
A. Charity is part of CSR. However, CSR is more about united development politics. Charity might be considered a one-time activity if it’s done only once. However, CSR is complete politics, a general view and consequently includes other different activities from the social side, such as employees, and sports.
Q. How would you evaluate the year 2010 for VTB Bank? What were the main challenges for the Bank?
A. We had the process of internal structural formation and change of politics, a three year business strategy which was finished in 2010. We had to make institutional reconstruction as well as transform from a universal to corporate bank. This year we believe the complete institutional reforms are finished and we have managed to complete our planned strategy successfully. Consequently, those goals and objectives, including corporate and institutional changes are fully achieved and we are working for the next three years on a business plan of strategic development, which will be signed in the middle of December.
Q. What are the expectations of VTB Bank in the year 2011?
A. We are quite optimistic about the Georgian economy and for a further increase of banking systems, which has quite big potential from the economic as well as system development point of view.
We will have a complete spectrum of offers mainly for corporate clients. However, for small and medium size businesses we will provide many products, these will include energy, agriculture and trade products.
Moreover, VTB Bank plans to increase its credit portfolio in 2011, especially in the corporate sector where the increase will reach 40% with our resources.
Q. Which products are popular within corporate as well as retail clients at VTB Bank?
A. Within the first quarter of 2010, there was increase in the dynamics of deposits, consequently liquidity increased at the expense of companies. The main demand was for term deposits and the demand for credit products decreased, which hopefully changed in the second quarter of the year. We see that the business activities and the demand for loans especially in corporate businesses increased slightly in the second half of 2010.
Consequently, in the first quarter of 2010 there was more demand for deposit products while in the second half the credit portfolios became active.
Q. Does VTB Bank plan to offer new products to its corporate clients in 2011?
A. The Georgian market is not ready for difficult products to be sold. Despite the fact that we offer debt factoring and forwarding operations, the majority of demand in the Georgian market is for simple term loans or credit lines. The majority of demand is for price and quality. We are one of the most qualified banks in terms of corporate service. Addressing the prices I believe the tendency towards price decrease will continue next year also. At VTB Bank we will be offering high quality, low price products.
Q. What was the influence of Larization on the banking system? Did the number of loans taken in GEL increase in the year 2010 compared to 2009?
A. Loans taken in GEL increased by 6.5 million GEL. The share of investing GEL in the deposit portfolio increased by 5% in 2010.
Demand for GEL loans was constant. However there was a problem with lack of long-term resources. Georgian banks did not have the opportunity to provide loans in GEL. National Bank of Georgia introduced many products which gave us the opportunity to manage GEL liquidity and we had the opportunity to distribute more money in GEL.
The debtors are also interested in taking out loans in GEL, as they do not face exchange rate risks; consequently the trust towards GEL is strengthened. The new mechanisms brought by NBG for managing GEL liquidity gave the banks opportunity to lend more GEL. Moreover, lending in GEL is especially safer for those companies which have their income in the national currency.
Q. What is the business strategy of the Bank for the years 2010-2013?
A. The Bank’s business strategy is to be a high quality profitable bank which will follow all the requirements of CSR. Thus is mainly a stable corporate bank. One of the major factors is safety which won’t be changed, and quality which will be strengthened. Moreover, following social values is one of the most important factors in our strategy. Within its framework we plan to develop many social programmes in sport as well as in culture. Within the next few years we plan to increase the budget for charity and sponsorship as well.
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