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There will be another serious shock

Ruben Vardanyan Troika Dialog Manager

Date: 28 June 2011

Source: Gazeta.Ru

The crisis didn’t lead to the improvement of the world financial system – Ruben Vardanyan, Troika Dialog’s Board of Directors Chairman, believes another serious shock can be expected. This affects the outlook for investment companies’ professional activities.

This spring you said that the first half-year of the 2011 financial year was difficult, including because of the waiting period for the Sberbank deal. In the end of May, Sberbank and Troika Dialog signed the legally-binding agreement. What results do you expect by the end of the year?

The market is complicated, it is very “nervous.” Many factors are going to depend on the level of transparency of the markets primary distribution. If the number of transactions in our pipeline will be realized (we have 20 mandates, including those we received together with Sberbank), we will feel fairly comfortable. The stock market, as opposed to, say, the motor industry, is more unpredictable. It is impossible to forecast its behaviour. Despite the fact that investment activity was profitable in the first half-year, the results do not correspond with the business plan and the tasks. We will see. It is not an easy year.

How is the integration of the banks proceeding?

We are bound by restrictions: we do not have the opportunity to do many things officially until we get the endorsement from the regulating authority. Therefore, we will have a long period, even after the signing of the legally binding document, which can last for six months, that is, until the end of the year. From this point of view, within the bounds of the law, we do the best we can to make our collaboration mutually beneficial.

So there is no point in waiting for consolidated bookkeeping between Sberbank and Troika Dialog before the end of the year?

This point can be viewed as purely formal: we can provide the financial reporting if we reschedule our financial year until January 1st.

Sberbank CEO Herman Gref said that Troika Dialog's prospects were the subject of many discussions…

That’s true. It’s necessary to understand that the financial market has changed radically and the bank too. Asset management is going through a tough recovery period after the crisis. Like it or not, but it is the present condition of things. You have to be a realist. On the other hand, the stock market is singularly cyclical. The main components of successful work on the stock market are a well-considered structure, well-considered team, and a well-developed client base. By the time of integration, all the business processes were legibly lined up and functioned perfectly in Troika Dialog.

Will the human resources structure of Troika Dialog change after the completion of the transaction?

Yes, considerably.

A lot of people will leave?

Not exactly. They will change their line of work. In this case, we should examine the question from another point of view. I should mention that many people will join us from the market. An expansion will happen. Many things will change: arrivals, retirements, redistribution of functions.

Has the fact that Troika Dialog became a part of a state bank predetermined the attitude of the clients towards the company? Has the number of clients increased or decreased?

We haven’t noticed yet. Mostly, people react not to “some abstract state bank,” but to Sberbank, the biggest state bank in Russia. Somebody has a positive attitude towards it; somebody has a negative attitude, which is quite natural. However, the overwhelming majority of participants on the market view the transaction positively. This is the reason why the number of clients will increase, as a large bank has more abilities and higher guarantees of reliability.

What will happen with the Troika Dialog brand? Herman Gref reacted very indefinitely to this point. Could the brand disappear?

Many brands have disappeared, ones that lasted for 100, 200 years…

What is your attitude towards it?

Quite composed. Nevertheless, the decision hasn’t been made yet. Some answers to many fundamental questions are missed. Firstly, what will happen with the Sberbank brand, represented not only in Russia, but also in Belarus, Ukraine, India, and China. If there is going to be a unified brand – it is one thing, if different ones – another. Secondly, the question is whether we want to have a different brand for some clients groups or not. Thirdly, are we going to divide the offered products between more and less risky ones? So the decision about the Troika Dialog brand depends on the products, clients, and the unified brand. Herman Gref is right: we do not know yet.

Why did Troika Dialog decide to join the project “Universal electronic card?” Is it connected to the transaction with Sberbank, one of the shareholders of the project?

It is one of the directions, which we have discussed before making the transaction. At the present moment it is becoming more promising from the point of view of our retail.

At the St. Petersburg forum, during one of the sessions, you, being a moderator, asked the bankers and officials to answer the question, whether there will be another crisis before 2013 or not. What is your opinion?

The way people voted during this session and the choices they made helped in making conclusions. People explained that they do not trust any currency and they expect four country defaults, if not more. I could say that the chances are quite high that there will be another serious shock. Elvira Nabiulina correctly noted that this time the crisis did not cause a total cleansing of the financial system or its improvement. No system purification happened. The crisis was cut off with the help of the government, which is a fact. The reduction of the crisis could lead to either recovery, or deterioration of economics.

How is the institutionalized charity fund work proceeding?

The work isn’t advancing: It is necessary to finish the transaction before starting something new. The problem can be solved very simply. It is also necessary to build your chain: what happens when a person decides to put some money in the charity fund; whom should he turn to for support; how will the money be formalized; what will the accounting look like; where should he put the money; The process is technological; it doesn’t provoke any interest. We should build up the process during two or three years.

This winter you told us that you want to start working on the project this autumn?

I hope so.