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Andrey Kostin: “Growth is not possible without the active role of the banks”


Anchorman: A big Russian contingent of this year’s Davos — we’ve talked to a number of guests about Russia already this morning. Andrey Kostin is chairman and CEO of VTB Bank. He’s on a panel later this morning together with JP Morgan’s Jamie Diamond and Axel Weber (UBS) on shaping the global financial context. Andrey, glad to see you in this studio again.

Andrey Kostin: Morning.

Anchorman: This must be the 4th time you’ve been back here. Let’s start with the panel — global financial context. You’ve got some other big banking players on this panel as well. What are the biggest risks? What do you think are some of the risks or issues that you might be skirting?

Andrey Kostin: I think this year’s Davos’ main subject is growth. And that’s why we experience another problem — I mean the whole economy. The growth is not possible without the active role of the banks. So here’s the major concern now — how to make banks to become more active in lending, how to make them a more important factor for the economic growth because without this…

Anchorman: Who’s making the right sounds right now in this area, would you say, in terms of lending?

Andrey Kostin: I think, one of the problems is that after the crisis everybody was too concerned about regulations and how to avoid the risks, how to leverage. But there should be a proper balance, there should be a proper compromise between the growth and curbing the risk. So I think that the debates started in Davos about 5 years ago were a positive process, regulators, the government officials and bankers set together and started to discuss the issue. And I think at the moment we’re still trying to find a proper balance. Decisions to actually soften liquidity issue in the Basel — I think one example that the process has not ended yet.

«One of the problems is that after the crisis everybody was too concerned about regulations and how to avoid the risks, how to leverage. But there should be a proper balance, there should be a proper compromise between the growth and curbing the risk. I think that the debates started in Davos about 5 years ago were a positive process, regulators, the government officials and bankers set together and started to discuss the issue. And at the moment we’re still trying to find a proper balance. Decisions to actually soften liquidity issue in the Basel — I think one example that the process has not ended yet».
Andrey Kostin,
President and Chairman of the Management Board, VTB Bank

Anchorman: Where’s new business can come from VTB?

Andrey Kostin: Well, any new business can come from the economic growth. Unfortunately, what we see at the end of last year — the slowdowns of Russian economy. If we started with nearly 5 per cent growth in 2012, we finished with something below 2 per cent. And to change this trend we are looking for new opportunities. And new opportunities basically come from investment climate because the government is not ready to spend much more of the government money.

Anchorman: How difficult is the context in Russia right now? We have talked about Magnitsky this morning, we’re going to talk about Syria as well. Does that hamper your growth?

Andrey Kostin: Well, it does. Unfortunately, the image, the investment image of Russia is much worse than reality. And how Syria relates to investment opportunities, how the Syrian issue can prevent investments of any money in Russia, I don’t understand.

Anchorman: But the difficulty is clarifying the reality to the outside world.

Andrey Kostin: I agree. That’s why I’m here.

Anchorman: And you don’t seem to be doing… but are you being successful?

Andrey Kostin: Well, partially, I’m afraid.

Anchorman: Is the government being successful? We have Mister Dvorkovich coming on in just a few minutes. What would you want to ask him?

Andrey Kostin: Well, the government is trying hard, I think. But, I agree, the most important thing is to do things. Because to translate them, you know, to report on them to the outside world — that’s…

Anchorman: But what are you doing?

Andrey Kostin: Well, I think that a lot has been done in legislation, in improving Russian financial market. If you take Basel, if you take banking sector, Russia now is introducing at the same time Basel-II and Basel-III which is truly difficult for the banks. But if we look on the prospect of more attractiveness, transparency, I think that’s the right thing.

Anchorman: I apologize. I’m going to come back to this Russia image issue. Because clearly that is one of the big problems here. Is enough being done in your view to change that image, to help Russian business, to help international investors see Russia in different light?

Andrey Kostin: I think, not enough.

Anchorman: OK. And is that something you are going to talk about this morning on the panel?

Andrey Kostin: Absolutely. I mean, the subject is of course more general: about the situation in the world. But I’ll try to say a few words about Russia as well.

Anchorman: Very good! Andrey, thank you very much indeed for coming back here! Andrey Kostin from VTB Bank.

Reuters TV

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