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Andrey Kostin: “There will be certain compromise between the increasing regulators’ demands on the capital adequacy and the task to develop business”

 
25.01.2013

LIZ CLAYMAN: It is a familiar story that US bankers are in a pressure cooker since the financial crisis began, but what about Russian bankers? You might be surprised that Russian bankers are rushing to meet with US bankers here in Davos, Switzerland, at the World Economic Forum and one of them is Russia’s second largest lender, VTB bank. We are with the Chairman and President Andrey Kostin. Who have you been meeting with?

ANDREY KOSTIN: Well, I think, there are a lot of American bankers, so I am meeting with the chairmen of JPMorgan, Morgan Stanley, Goldman Sachs, Citigroup, Bank of America.

LIZ CLAYMAN: Do you sit around and complain about how everybody beats up on you and is negative about bankers? What do you talk about when you are with them?

ANDREY KOSTIN: I think, we definitely have an exchange of views on what’s happening in our countries, and I think the American banking sector is doing quite well, Russian as well, of course, we have an exchange of views, on what’s happening in regulations of the banking sector, where there are Basel III and other initiatives, and we discuss the financial business, because we have a lot of financial business with American banks.

 
 
 
 
«The Russian Central Bank is planning to introduce key elements of Basel II and Basel III at the same time during this year. Of course, there is a certain period of time, during which principles of Basel II and Basel III will be introduced, but that’s quite a substantial change for Russian banking sector».
Andrey Kostin,
President and Chairman of VTB Bank Management Board

LIZ CLAYMAN: Do Russian banks have to comply with Basel III?

ANDREY KOSTIN: Well yes, the Russian Central Bank is planning to introduce key elements of Basel II and Basel III at the same time during this year. Of course, there is a certain period of time, during which principles of Basel II and Basel III will be introduced, but that’s quite a substantial change for Russian banking sector.

LIZ CLAYMAN: Is it going to be making life more difficult for you, you know, more regulation sometimes means fewer profits?

ANDREY KOSTIN: Well, definitely. It will mean that Russian banking sector will require more capital, and that’s, of course, a difficult task, because the present markets are not very good, and to get new capital for the banking sector is not an easy task. But we’re trying to find the proper compromise with the Central Bank of the Russian Federation. We are claiming that actually the interest of the economic growth requires further lending process on the part of the Russian banks. I think there will be certain compromise between the increasing regulators’ demands on the capital adequacy and the task to develop business.

LIZ CLAYMAN: How big a stake does the Russian government still have in VTB?

ANDREY KOSTIN: It’s 75%.

LIZ CLAYMAN: Now, I see when I go online and I’m researching you, I see that there are these moments where you have to stand in front of Russian president Vladimir Putin and talk to him about the business and he’s saying «Are you lending more to the military members, are you doing military mortgages, are you doing such and such type of mortgage?» What’s it like to have to answer to the president of Russia? You smile.

ANDREY KOSTIN: Well, you shouldn’t forget, there’s always a good chance to address your clients also for the banker, when you see the President. We are a commercial bank. Our policy is defined no by any political targets, but our aim is to maximize our profit. And of course, we are looking for more opportunities, and lending to military sector is just one of them. Though the Russian military sector is not dominating the Russian economy, like it was during the Soviet era, it’s still, particularly with the new program of now, it’s quite profitable, could be profitable, because the government is paying for this, so it’s just a part of our activity, no more, no less, but yes, I mean, you, mass media people, are trying to find what is more interesting for the public, probably, they selected this because it was the most interesting part of our discussions.

LIZ CLAYMAN: Andrey Kostin of VTB bank, we know you are extremely busy meeting with all of the American bankers and global bankers, it’s nice of you to stop by Fox Business.

ANDREY KOSTIN: Thanks.

Liz Clayman , FOX Business

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