Private Banking does not mean taking money abroad

Date: 29 September 2009

Source: RBK Daily

There are no hurdles left for the merger between Troika Dialog and Standard Bank: the regulatory organs in Russia, the U.K. and South Africa have given their approval to the deal. Speaking with RBK Daily correspondent Albert Koshkarov about how the alliance will lead to the creation of a new financial institute capable of working effectively on global markets is Chairman of the Board of Directors of Troika Dialog Group Ruben Vardanyan.

We are currently bearing witness to some deep changes in the global financial architecture whereby the role and influence of emerging markets are growing ever larger. The world is changing: whereas until now resources accumulated mostly in the U.S. and Europe for subsequent distribution across the world, companies from Russia, South-East Asia, India and the Middle East will now interact directly far more often. Singapore is a great example of how rapid-growth economies are becoming powerful regional retail-financial centers. As for the terms of the deal, Standard Bank will receive a 33% share in the company. We in turn will receive a 100% share in Standard Bank Russia. Prior to the deal, we were saying how important it was for us to work not only in Russia, but on other markets as well. For example, for several years now we have worked successfully with Temasek, our partner in Singapore. We have always searched for people and companies that would allow us to enter outside markets by sharing our knowledge and experience. Our primary interest is in China, Africa, and the Middle East, countries offering interesting opportunities for Russian companies.

The New Troika, which will appear as a result of the alliance, will be capable of offering a wide range of services. Investors in Asia will above all be interested in private equity, since right now, in my opinion, is a favorable time for strategic investors: it is simpler to agree with company proprietors. In addition, we will sell fixed-income instruments, since Asian investors tend to be conservative and probably will not be interested in the stock market.

The classical investment banking business remains our priority. However, at the strategic session of Troika Dialog’s partners, it was decided to develop the commercial banking business as well. The expanded product line will further fortify Troika Dialog. Not to mention, Russia’s banking services market is still taking shape and possesses a great amount of potential. I don’t see any reason to work in just one area: a commercial bank having accepted lots of deposits and invested heavily in securities can also run into trouble during a period of turbulence on the stock market.

We don’t have any such plans, since, in our view, private banking should not exclusively connote taking money abroad. We aim to render services to wealthy clients on the Russian market, and I think that asset management is the strongest area within this business. In addition, we see our role not only as an adviser or simply a manager. For many years now we have been trying to create a sort of club that would include close friends and partners and bring people together on the basis of various projects, such as the Skolkovo Business School or the organization of business forums. Standard Bank could become a platform for the private banking group. The bank’s operations will focus on operations with wealthy private clients, for whom the list of services will be expanded with, among other things, classical banking products. We don’t have any intentions of entering the list of the top-ten players. We will try our best to create an independent private bank that will operate with market clients. The base of corporate clients of Standard Bank will expand as Troika Dialog’s clients are added to it.

We were planning on this back before the crisis, but in 2008 the situation on the market changed considerably, and not only in Russia and the West, but on Asian markets as well. GDP in Singapore dropped considerably, and it would be wrong to enter a new market in such conditions, so we revised our plans. Now, thanks to the recently-concluded partnership with Standard Bank, the need to create our own offices has abated, since the bank has branch offices in Singapore and Hong Kong. The partnership provides our Russian clients with access to emerging markets, including markets in Africa and Asia, where Standard Bank has strong positions. It’s entirely possible that we will have Troika representatives working at Standard Bank’s offices in Africa and Asia.

We are currently exploring these plans, but this is a very closed-off market. Therefore, we don’t rule out the possibility of an alliance with financial institutes in India.

We don’t think this is necessary, especially for the Russian market. Furthermore, we intend to rename Standard Bank as Troika Dialog Bank. It will enter the group on an equal footing with the other companies. Both businesses will operate on the Russian market under the single brand Troika Dialog.

I don’t rule out that it will be sold or merged with Standard Bank.

This was a challenging year. Our financial year begins on October 1, just when the peak of the crisis occurred last year. But this year still turned out well on the whole: we managed to defend our financial independence, secure a strong partner, and attract a subordinated loan from the EBRD under very favorable terms. A lot was done in terms of optimizing the company’s business processes. Therefore, my expectations are quite good. I can say that the financial position of Troika Dialog has never been so strong.

I think it will take a long time to return to former levels. And this process will entail many more rises and falls on the market.