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Andrey Kostin: “This privatization should be transparent and clear”


APEC 2012 @ РИА Новости, Григорий Сысоев

KAORI ENJOJI: Andrey Kostin is the Chairman and President of the number 2 lender in the country, VTB Bank, he is also the Chairman of the APEC CEO Summit and kindly joins us this morning here. Andrey, thank you so much for joining us, it’s good to have you here.

ANDREY KOSTIN: Good afternoon.

KAORI ENJOJI: Tell me about this 3-year drag from the Eurozone that everyone’s been talking about. When do you think the recovery is really going to start to take place?

ANDREY KOSTIN: Well, I am afraid we will have to witness the situation for another 2, 3 or 5 years. I think it is not the end of the world, of course, and though Europe might have a negative economic growth this year, we believe that starting from next year Europe will start to have may be a small but positive economic growth. Of course, the sovereign debt issue should be resolved, and it takes time, because it’s not only the problem of Greece, its’s a problem of many other countries, particularly in the South of Europe, but I still believe that integrity of the European Union will be preserved, and that united Europe stays.

«We are focusing on new economies mainly. We actually are present at 6 economies of APEC, including China, Vietnam and Singapore, so we would like to build up our international business focusing on new markets, which include emerging markets mainly.»
Andrey Kostin,
VTB Bank President and Chairman of the Management Board

KAORI ENJOJI: Tell me about your bank, the banking industry per se in Russia. We still don’t have a proper debt market here, what kind of economic reforms in the financial markets do we need to see, especially given that now Russia is in the WTO?

ANDREY KOSTIN: Well, you see, Russian banking sector is not directly exposed to European, for example, so Russian banking sector has been developing quite fast and successfully this year. We have a rate of about 40% growth in retail loans, for example, and around 15–20% on corporate loan books. So, it’s good, I think, particularly taking into account the not very favorable global environment. But of course, I think the key issue for Russian banking sector is not liquidity issue, and not the quality of loan books. I think, the main problem is access to capital markets, because developing further and also you should take into account that there are stricter regulations on the part of the Central Bank. Russian banks will require new capital, it’s not now, maybe in 12 months’ time, and the markets are still closed, there is no access to IPO, SPOs in Europe or in America, or even in Asia.

KAORI ENJOJI: Please, talk to me about your expansion strategy for VTB Bank outside of Russia. I mean, there’s a lot of distressed assets everywhere in Europe, what about your growth strategy in Europe, are you looking to purchase into that, or maybe… What about choices?

ANDREY KOSTIN: Our bank has a little bit different strategy, we are focusing on new economies mainly. Beside Russia, we are present in most of the ex-Soviet Union countries, as well as in Asia. We actually are present at 6 economies of APEC, including China, Vietnam and Singapore, so we would like to build up our international business focusing on new markets, which include, as I mentioned, emerging markets mainly.

KAORI ENJOJI: I also wanted to ask you about the privatization process. What lessons has Russia learned from the 1990-ies, I mean, this is related to the lack of interest or risk appetite towards Russia and investments?

ANDREY KOSTIN: Well, Russia is on the eve of the massive privatization, the government made it quite clear that it does want privatization, so ideologically all major bureaucratic decisions have been taken. The problem, of course, is the market, which is not favorable for privatization. You know, it’s very volatile, it’s very uncertain, there is a lot of anxiety on the market. But it’s very important that this privatization should be very transparent and clear for international investors as well as locals, because the first privatization which we had in the second half of the 1990-ies was not such. Of course, it is understandable, probably, to a certain extent, because it was transition from the state-controlled economy to the market economy, but today we can’t afford it. We need a good, clean privatization, which will be transparent to everybody.

KAORI ENJOJI: Great to have you on the show, Andrey, thanks for joining us. Andrey Kostin, the head of VTB Bank.

Kaori Enjoji , CNBC

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