Keeping the risks under control
Finnish bankers were held up by their own crisis in the 1990s
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By Kari Räisänen
Finnish bankers moved east among the first pioneers in the Soviet era. The former Kansallisbank (KOP) was even among the very first Western banks to open up representation in Moscow, back in 1974.
Then, when the early 1990s came along, the Finns had their hands full with their own banking crisis and with a round of mergers and fusions and collapses, so that they did not actively seek growth from the markets to the east after the disintegration of the Soviet Union.
Now, however, things are starting to happen once again: Sampo recently acquired a bank in St. Petersburg, and Nordea is looking around for a suitable bank to buy. OKOBank already has a base in Moscow and in St. Petersburg, from which it is able to service Finnish corporate clients operating in Russia.
Nordea owned around 23% of the International Moscow Bank (IMB), and sold off this minority holding in the summer to IMB's largest shareholder, the Italian UniCredit. Nordea is not stepping out of the ring, but now wants to buy a Russian bank with its own ready-made branch network.
Ari Kaperi, who is leading the Russian project from within Nordea's retail banking units, is ready to admit that the task is a difficult one.
"We want to be in Russia and to get our share of the growth in the Russian market. The risks have to be kept under control, but at the same time we are keen to get into the fray as quickly as possible."
If no suitable bank appears on the horizon, Nordea will have to apply for a licence of its own.
Then it could take as long as three years before the bank could operate in the retail market and access the Russian households with their growing prosperity and yen to borrow money.
Sampo negotiated its own licence through the purchase in the spring of the St. Petersburg-based Profibank. Sampo now has one branch in St. Petersburg.
This is only a beginning, however. Expansion - at least to Moscow - is practically obligatory.
"We have to go to Moscow if we want to serve the interests of Finnish companies in Russia", explains Sampo's Georg Schubiger, Head of East European Banking.
Sampo hopes by the beginning of next year to be in a position to supply investment products, consumer loans, and also housing loans. The idea is not merely to service Finnish corporate clients but also to take a share of the Russian private consumer market.
"At least for the time being we will not be targeting Russian corporations, since it is very hard to estimate the risks involved", says Schubiger.
Sampo did not rush helter-skelter into the Russian market, but watched carefully from a distance until it was clear that the necessary legislative safeguards were in place.
Key among these are the improvements made in deposit insurance and the protection of private property. These days the bank feels comfortable about taking a house or an apartment as collateral for a loan.
"It is quite clear that there will be setbacks along the Russian road. For all that, our intention is to be here for the long haul", says Schubiger.
Helsingin Sanomat / First published in print 22.10.2006
More on this subject:
 Bankers on the road to Russia
KARI RÄISÄNEN / Helsingin Sanomat
kari.raisanen@hs.fi
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