RI in Russia WHAT'S News Issue 6 June 1997 info exchange 13 Last year saw the opening of a rep office in the Russian capital. At the time, there were ambitious plans for development, but the key to what could be a potentially very attractive market for RI was having the right people on the spot. Earlier this year, Alexey Belyayev and Rodolphe Evangelisti were recruited to man the office. What's NewS caught up with them at a special 'Russia day' organized specifica11y to assist our new colleagues in building their network. Although Belyayev and Evangelisti talked the 20-plus audience through current economie situation, competition and opportunities in the Russian market and both Guus Rozendaal (country limits) and ^^erard van Empel (RIAS) made brief presentations, this was no formal or passive event. 'It is a new approach to enabling new colleagues to create networks,' confirms NDS's Bram Kruimel. 'The idea is that we all meet together and exchange information and knowledge that could be useful to other people working in the same or similar fields elsewhere in the bank. But this afternoon was definitely designed to make sure Alexey and Rodolphe start off with a solid base here at Utrecht branch and in head office.' RESTRUCTURING MARKET The meeting was very much a transfer of knowledge. Over recent months, the Moscow team - which includes Lena Koubanova - had put together a paper «vhich provides a succinct, but clear l'erview of what is happening in the Russian market. 'I think the important thing to remember,' says Evangelisti, 'is that the Russian market is not an emerging market, but rather is undergoing restructuring. So you must look at it in that way. Plus, it has some of the world's highest reserves of natural resources, such as oil and natural gas, copper and nickel, iron, gold and diamonds.' SIGNS A LIFE At the same time, after a period of real economie instability and political uncertainty, Russia appears to be refinding its feet. 'It is true that the past few years have been tough,' confirms Belyayev, 'but in spite of glaring imperfections and abuses, in spite of real hardship and insecurity, the majority of Russian voters want to preserve the reforms which have pushed through the transition to democracy. I think the reality today is that there is still political struggle in Russia, but the struggle is now within the system and not about the system. This is one reason why our economy is starting to show signs of life.' GOOD NUMBERS The numbers are very promising - inflation has fallen sharply from 135 to 22 percent in 1996. Russia's deficit is 3.3 percent of GDP in the 1997 budget against 7.7 last year. Annual interest rates feil from 120 to 36 percent, which is encouraging growth. The ruble is stable, and growth looks possible for the first time in four years. Russia's budget is now financed from cash instruments, not in money surrogates, such as promissory An introduction about the Global strategy for Rabobank in Russia. RI IN RUSLAND Vorig jaar opende RI een vertegenwoordiging in Rusland.Tijdens een 'Ruslanddag'onlangs in Utrecht,konden onze Russische collega's hun netwerk uitbreiden. Wij spraken Alexey Belyayev en Rodolphe Evangelisti over hun verwachtingen. 'Ik denk dat er nog steeds een politiek gevecht in Rusland gaande is,' zegt Belyayev. 'Maar het gevecht is nu binnen het systeem in plaats van óver het systeem. Dit is een van de redenen waarom onze economie nu levenstekenen vertoont.' notes, and - the icing on the cake - Russia has received an international credit rating - BB-. NICHE ADVANTAGE Given this environment, and an increasingly well regulated financial services sector - not least as a result of the appointment of a strong chairman to the Russian Central Bank, Dubinin - Russia appears to be a - very huge - land of opportunity. 'There are areas where we really could make a difference,' says Evangelisti. 'The banking environment is extremely competitive, but all the Western banks - and there are a lot of them - are focusing on fairly obvious areas, such as oil and gas. No one is looking at F&A, except for some focus on the retail sector. If we can maintain our niche strategy in F&A, then this could represent a real competitive advantage for us. Agriculture is a priority with government - national, regional and local. Our expertise could add great value, especially in sectors like logistics and storage.' PROBLEMS AND PROFITS Says Belyayev: 'Margins elsewhere are under pressure, but in F&A they are still high. As a dedicated F&A bank there are in fact no limits to what we can do - all products and specializations, such as syndication, M&A, forfeiting, trade finance - there really are numerous opportunities.' But neither Belyayev, who is a Russian national, nor Evangelisti, who was recruited from Paribas in Moscow, disregard the risks. 'No one is saying there are no problems in Russia,' Belyayev says frankly, 'there are certainly dangers and risks. But we would argue that these are management risks. If we are very cautious and apply the kind of risk management that has made Rabobank a triple-A organization, then all activities are not only very possible, they could also prove very profitable.'

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