http://www.aif.

ru/money/business/43470

Dmitry Leus: What is a trustworthy

bank?
09:00 20 May 2013

Originally published in: Arguments and Facts

Dmitry Leus
The new law On Consumer Lending has passed its first reading in
the Russian State Duma. It is expected to make retail banking
services more convenient for the general public and is likely to
result in an increase in the number of lending
requests. It is therefore of paramount importance to
rise the level of financial literacy among the
population. There are currently over 1000 credit
institutions in the Russian Federation. But what
precisely makes a bank trustworthy? The answer to
this question will help millions of borrowers to decide
whether to keep their existing banking relationship or to switch to a
new one.
Dmitry Leus, Director of the Board of ZAO Bank Zapadny:
First of all, I would like to attract your attention to the problem of the
geographical availability of banking services, in particular in a
country as large as Russia. For obvious reasons, most banks prefer
to work in big cities. This makes it sometimes difficult for residents
of smaller agglomerations to open a bank account and have access
to personalized financial advice. We decided to fill this gap.
Last year, we launched a pilot project to establish mini branches in
Russias small towns. The number of loans issued at these mini
branches has already exceeded the number of loans issued at big
branches in major cities for the same period of time. Overall, 2012
was a breakthrough year for the Bank, as our retail credit portfolio
has more than doubled.
As of today, we operate 45 branches - 9 in the greater Moscow area,
and 36 in the Russian regions. Only in the past six months we
opened over 22 regional offices - which is some kind of a record.
From the point of view of economic development, these branches
represent a new resource capacity allowing us to scale up the
Banks business. From a social point of view, it means new
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employments in the regions and job security for our staff.

We have already started to work not only in bigger regional centres,
but also in small agglomerations with populations over 50 thousand
inhabitants. For example, recently we inaugurated a branch in the
small town of Gryazi in the Lipetsk Oblast. Its population does not
exceed 46 thousand people, and another 70 thousand live in the
nearby villages. It would be unfair to deprive these people of the
possibility to open a bank account, make payments, and receive
credit.
Let me add that the problem of access to banking services is not
only restricted to Russia. The European Union has recently published
a proposal to make bank accounts accessible to all European
citizens and has spoken of a right to a basic bank account. In its
press release, the EU Commission justified the proposal explaining
that bank accounts have become essential to participating fully in
the economic and social life of a modern society in which the use of
cash is decreasing. In fact, studies have shown that over 58 million
EU citizens over the age of 15 do not have a payment account.
In this context, a trustworthy bank is a bank which satisfies the right
of everyone to a simple bank account irrespective of a persons
place of residence and financial situation. We try to build trust on
our general openness and transparency, including the transparency
related to the fees we charge.
Returning to Russia and the Russian regions, I would also like to
highlight the strong financial discipline of small-town borrowers.
Their positive credit history allows us to award them additional loans
at preferential rates.
A banking product which was until now only rarely available in small
towns are pensioner loans. When I started to work with elderly
people I immediately noticed that they behaved very responsibly.
Put differently, they practically did not delay their loan payments.
We have therefore no difficulties in providing them with new lending
products best tailored to their needs.
It is very important to us that our clients are not losing their time in
long waiting lines. To this effect, we monitor in our branches the
very possibility of the emergence of a waiting line, for example
through an infrastructure of self-servicing terminals allowing our
customers to make interest payments independently.
People entrust the bank with one of their most valuable material
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assets - their lifelong earnings. Against this emotional background, it

is important that when visiting the Bank, customers experience a
quality of service matching their expectations. Therefore, a
trustworthy bank is a bank whose employees, in their everyday
customer dealings, give concrete meaning to the notion of trust. It
goes without saying that this also implies an attractive
compensation plan for our staff.
By way of digression, our clients were the first to appreciate the
benefits of our back office reorganization. We set up a new client
service center in Voronezh, thereby successfully integrating our call
center, credit research center, IT department, and operations.
Streamlining these processes has been instrumental in enhancing
the clients overall service experience.
It is not necessary to have a financial education to understand that
a trustworthy bank in the financial sense of the term is a bank with
a solid capitalisation. has recently increased its share capital by
almost RUB 1bn, thereby improve its creditworthiness before its
customers.
Currently, our Board of Directors is considering the issue of another
2.5bn of ordinary shares at RUB 1 each, to be placed on the Moscow
Stock Exchange. Once done, anyone can become one of the Banks
owners. By raising RUB 2.5bn, we expect to increase the Banks
capital by 127% and the Banks total capitalisation will amount to
RUB 5.5bn.
With a clear business structure and a flat hierarchy, was able to
attract new shareholders in the form of its own regional staff. The
bank is also in the process of attracting a number of institutional
investors.
With regard to our development plans, over the next two years, we
are planning to reach a return on equity ranging from 35-40%. To
achieve this objective, top management has a worked out a clear
road map for business development. In addition, a revised long-term
strategy of the Bank is in the approval process.
Let me conclude with some questions which are being asked on a
regular basis by our customers themselves: Why should we become
your clients? What makes you trustworthy? Why should we not
switch to another bank?
My answer is transparency. The growth of our business is obvious.
Each month we attract more than ten thousand new customers.
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These are private individuals, entrepreneurs, representatives of

small and medium-sized businesses. By increasing our network of
regional branches, we are in the process of doubling our customer
base. On a qualitative level, we are observing that the average
customer stays with the bank not only longer, but also has recourse
to a wider product offering. All this goes hand in hand with increased
productivity. Each quarter we see an increase in profit items not
related to our lending activities, but rather to our universal banking
offering.
All these factors give us self-assurance and confidence. Our
shareholders and employees believe in the Banks future, and this
may be another distinctive feature of a trustworthy bank.