OREANDA-NEWS. During a joint press conference in Moscow, Mr Andre Bergen, KBC Group CEO, and Mr Nikolay V. Sidorov, Absolut Bank CEO, will explain and detail their plans and initiatives for the Russian market, reported the press-centre of Absolut Bank.

Nikolay V. Sidorov, CEO of Absolut Bank: "The business plan of Absolut Bank for the next three years continues to focus on the development of the banking business in the retail and SME segments, as well as in the mid-sized corporates segment. The key focus in terms of products will remain on mortgages, car loans, credit cards and deposits for the retail segment, and on trade finance, working capital and term loans for the SME and mid-sized corporates segments . We expect that the proportion of retail business in the total business mix will increase from about 30% currently to around 45% by 2010. Absolut Bank aims to provide a wide range of products and services and to build long-term relationships with its customers, based on the excellence of its service."

Currently, Absolut Bank has 50 branches and is present in 18 regions. It is the intention of both KBC and Absolut Bank to (initially) increase the number of branches to around 130 and to increase the number of regions in which the bank has a presence to around 25 by the end of 2010. In addition, Absolut Bank aims to increase its market share in each region where the bank is present. Absolut Bank will accordingly continue to actively recruit new staff members both for its head office and for the regions in the years to come.

Andre Bergen, KBC Group CEO, added : "It is KBC and Absolut Bank’s ambition to become a leading player in the retail, SME and mid-sized corporate segments in Russia. To this end, KBC will build upon the local management team, strengthening it with KBC management and experience. KBC is in the process of enhancing Absolut Bank’s already strong risk governance by applying its own high standards.

KBC is fully committed to supporting the growth of Absolut Bank in terms of deeper regional penetration and cross-selling to the customer base. KBC is also ready to provide capital support and intercompany funding over the next few years. This clearly underlines KBC’s strategy of being a committed shareholder and partner for Absolut Bank in the fast-growing Russian market. Together, we want to ensure the growth and future of Absolut Bank for the benefit of retail and corporate customers, employees and shareholders."

Absolut Bank : a successful and fast-growing bank
Absolut Bank is one of the most successful privately owned banks in Russia. It is a well managed, fast-growing bank that constitutes an ideal platform for KBC’s long-term presence in this dynamic market. KBC wants to build on the local strengths of Absolut Bank and to contribute its expertise and resources.

Customer segments and products
The business plan of Absolut Bank for the 2007-2010 period focuses on developing the banking business in the retail and SME segments, as well as in the mid-sized corporates segment. The key focus in terms of products will remain on mortgages, car loans and credit cards for the retail segment, and on trade finance, working capital and term loans for the SME and mid-sized corporates segments. KBC and Absolut Bank expect that the proportion of retail business in the total business mix will increase from about 30% currently to around 45% in three years’ time.

Absolut Bank will continue to invest in the already strong small and medium-sized corporate segment. For instance, Absolut Bank is very active in trade finance (it occupies a leading position in trade finance for mid-sized companies) , and KBC would like to continue to expand this business as it has already done in eight other Central and Eastern European countries where it is present. KBC is also convinced that the internationally active clients of the KBC group (in Belgium, Western Europe and Central and Eastern Europe) will be able to benefit from Absolut Bank’s experience, know-how and excellent service.

Distribution network
Currently, Absolut Bank has 50 branches and is present in 18 regions. It is the intention of KBC and Absolut Bank to increase the number of branches to around 130 and to increase the number of regions in which the bank has a presence to around 25 by the end of 2010. In addition, Absolut Bank aims to increase its market share in each region where the bank is present. Consequently, Absolut Bank will continue to actively recruit new staff members to support these growth ambitions.

Capital structure & long-term commitment from KBC
KBC is strongly committed to the future of its group companies and gives them its full support in terms of capital investment, shared services, knowledge-sharing and products. KBC is fully committed to supporting the growth of Absolut Bank in terms of its geographical reach and cross-selling to the customer base. Given the strong growth of Absolut Bank, capital injections will be necessary to maintain the capital structure of the bank at acceptable levels. KBC has already granted Absolut Bank a loan of 300 million US dollars and it intends to provide capital support and intercompany funding over the next few years. This clearly underlines KBC’s strategy of being a committed shareholder and partner for Absolut Bank.

Other lines of business still being explored
Although not part of the current business plan, it is KBC’s intention to look into possibilities for and to develop other lines of business in future.

KBC intends to replicate in Russia the success it has achieved in other Central and Eastern European countries in the area of asset management.

Possibilities for engaging in other lines of business such as wealth management (private banking) and consumer finance are currently being explored.

It is also KBC’s intention to develop the insurance business over time. However, the key focus currently is on the growth of key banking products for Absolut Bank’s target segments. Insurance products that lend themselves to cross-selling may be introduced relatively early on, but KBC expects that the full bancassurance model will not be introduced in the next few years.

KBC also intends to develop its securities brokerage business in Russia through KBC Securities, which is already very active throughout Central and Eastern Europe. KBC Securities is the wholly owned broking and corporate finance subsidiary of KBC Group NV and focuses on both institutional and retail customers.