The FINANCIAL — Out of a total of 23 countries Georgia has been shortlisted as a leader of VTB Group. Determining competitive economic fields, managing macroeconomic stability and its strong team have been the main contributors to the success of VTB Bank Georgia in 2015. Next year VTB Russia plans to increase capital for its Georgian bank.
“Georgia managed to find its model of economic development. The country has determined its competitive fields. The government and central bank of Georgia maintained macroeconomic stability. Georgia also managed to control inflation and exchange rate, despite fluctuations. The country’s banking sector is quite sustainable. Businesses in the country are finding new niches, which is also crucial. All of these have contributed to the success of VTB Bank Georgia in 2015,” Mikhail Oseevskiy, Deputy President and Chairman of VTB Bank Management Board, told The FINANCIAL.
Oseevskiy distinguished the strong team of VTB Bank Georgia as an additional factor adding to the success of its operation. “All staff members are very loyal and they sincerely sympathize with their clients. I was very surprised to find out that on Fridays staff members can come into the bank dressed in casual clothing. However, when doing this they are transferring part of their salaries to charity. It is a brilliant idea.”
During his first visit to Tbilisi, Oseevskiy met with the Minister of Finance of Georgia, as well as the President of NBG. “We feel concern about the budget as its sustainability directly influences any processes in any country. With the President of the Central Bank we exchanged views regarding strengthening the role of the national currency in the economy. We feel that at this stage it is not taking its proper place. The information delivered by them helps us to work out our strategy. Currently we are working on a mid-term, three year strategy. It varies in each country.”
In his exclusive interview with The FINANCIAL, Deputy President of the leading Russian bank provided his outlook regarding the ongoing economic difficulties in the region and shared his expectations for 2016.
Q. Since gaining independence the majority of Post Soviet states have seen lots of economic difficulties, including defaults. Russia is no exception. What are the main differences between the current economic problems and the issues that have been experienced previously?
A. There are some nuances concerning each country individually and there are also global issues. The trend of 2015 was a dramatic fall of prices in crude producer countries, especially oil products. The second trend was a drop in the speed of development of the Chinese economy. These global processes, like global warming, had an impact on all countries and more so on Russia, Azerbaijan and Kazakhstan as energy producers. Other countries that were consumers of natural products should have benefited on their side, however it developed the other way. The market economies of all these countries are tightly connected. It is clear that contrary to 2008 and 2009, the depth and length of the waves are much more. During the economic crisis of 2008 and 2009 markets fell down quite rapidly but they managed to restore themselves sooner. Currently we are observing that these processes are long-termed. We are witnessing the transformation of technological changes. The share of renewable energy is increasing in economies. Currently leading companies are representing IT technologies, not crude products. So this is another change of the model of economic development in the world. It is a challenge for every country. Everyone is revising the existing situation and trying to find new drivers of development. Russia is also experiencing a big challenge due to the big share of the oil and gas industry in our economy. Even in comparison with 2008 and 2009, the structure of the Russian economy has changed significantly.
Q. How long will this period of adaptation last?
A. No one can predict it. However, based on the history of mankind’s existence, people are prone to development. Any difficult changes ultimately result in concentration, finding new power and energy and changing their lives for the better. If we recall the Great Depression that took place in the US in 1929-1939, it was one of the most severe experiences. However, by the beginning of the Second World War the US had managed to overcome it. I think each country will choose its individual path, but there will not be long-term stagnation or recessions. It is human nature to gravitate towards the better.
Q. Will plans regarding VTB Bank Georgia depend on the results of the governmental elections of Georgia scheduled for 2016?
A. As a global player we are outside of politics. We are present in countries in which we have long-term plans. The most significant thing for us is the clear visibility of our existing and potential clients, how to do business. It is doubtless that politics does have an impact on the economic situation. We analyze this factor which is why we see the importance of arranging such meetings as the one I have just had. However, against the background of a strengthened economy, the influence of politics weakens.
Q. In China and Armenia you have started offering loans in Rubles for those customers that are involved in trade with Russia. Will you be offering this service to Georgian customers too?
A. This is our systematic approach that will take a long time. Accordingly we are not putting forward some quality goals. The most important thing for us is to offer Rubles for those companies that are trading with Russia and help them to avoid currency risks. This offer will also be available for Georgian customers. We will be offering not only loans but also guarantees in Rubles. These are the kinds of rules implemented by many countries.
Q. The current economic situation has had an impact on all businesses. How have you tried to alleviate pressure on your customers in such a situation?
A. Many customers have found it difficult to transform given such global challenges. We tried to be flexible. Overall conditions caused an increase in the worth of money. Despite it we did not enhance the interest rate on loans. In case of necessity we restructure loan terms. We try to give companies time to adapt to challenging conditions. Of course this is done at some expense of loss from our side. However, it is crucial for us to help businesses to continue their work because finally, their effective results will allow us in the mid or long term to cover our loss and gain profit. Our business is based on companies, our citizens. So we have to love and respect our clients, but they should also adequately respond to it.
Q. What are your plans for 2016 for the Russian and Georgian markets?
A. We think that the Russian economy has now passed through the main period of adaptation. Various sectors, like transport, logistics, and agriculture, are already expressing huge interest in continuing investments. In Georgia we still plan to remain profitable. In this regard the Bank will receive additional capital. What’s most important is that our shareholders are interested in further development. We are constantly issuing bonds and the group’s assets exceed USD 200 billion.