OREANDA-NEWS. November 06, 2012. Sviaz-Bank and the International Analytics Unlimited Bank Club held, with support from the Moscow Chamber of Commerce and Industry, a conference “Regional Development Strategy of a Bank. Network Optimization,” in Moscow, reported the press-centre of Sviaz-Bank.

According to data from the Russian Central Bank, 963 lending institutions in Russia had, as of September1, 2012, 2,674 branches, over 22,700 backup offices, more than 10,200 over the counter offices, around 2,000 cash lending offices, and over 6,700 operational offices. Professional market participants discussed issues such as the sense of expanding the network of branches and opening more points of sale any further, or giving over more functions to the branches, the functions it was reasonable to centralize, and many others.

The first conference session was opened by Victor Chetverikov, General Director of the National Rating Agency, who provided an overview of banking operations in the regions. Aside from the Central District, he said, there are many bank branches in the Volga riverside areas and in the Southern Federal District because of concentration of industrial enterprises and population there. The number of branches, though, is decreasing in other regions as operating them requires significant resources to be allocated by their banks.

Mikhail Matovnikov, General Director of the Interfax Center for Economic Analysis, said the time for broad expansion was over and opening branches only made sense today if a bank intended to develop retail banking business. Today, though, three-quarters of Russian banks’ loan portfolios are loans made to corporate customers, and the corporate loan segment faces strong competition.

Vladimir Kievsky, Executive Vice President, Association of Russian Banks, said that the Central Bank’s firm line to toughen requirements on the size of Russian banks’ capital threatens to slow down development of the regional banking market and, in turn, will have a negative effect on competition in the banking business and accessibility of financial services to local enterprises and population.

Oleg Ivanov, Vice President of the Russia Association, said there is territorial division between federal and regional banks. Large banks prefer to open branches in cities of many millions, while regional banks follow a strategy of building their presence in all districts of a subfederal region and opening backup offices in all populated centers of over 10,000, and nearly all of them are earning profits.

Alexander Pushko, Deputy Director of the Banking Institute, National Research Institution, Higher School of Economics, pointed to the enormous disproportions existing in the banking system. Residents of the country’s central regions have a choice between services provided by different banking institutions, while rural dwellers who make up 25% of the country’s population are virtually deprived of access to financial services. This problem is resolved in other countries by developing mobile and Internet banking. Not so in Russia, where the opposite policy is pursued by providing innovative banking services mostly to city residents.

Sergey Tyrtsev, First Vice Chairman of the Asia-Pacific Bank’s Management Board, shared his bank’s experience in opening new offices and decentralizing branch function. Victor Shpringel, Vice President of Investbank, spoke about his bank’s experience in evaluating performance of backup offices and optimizing costs to maintain them.

Pavel Nikitin, Deputy Director of Sviaz-Bank’s Business Development Department, Moscow Region, focused on the quality of services provided by offices and shared his experience in the policy of banking products sales. Large offices are not needed for effective sales to be made, and big branches are to be replaced with small offices providing services to individuals and corporations alike, and customer service professionals are to be in the majority on their staffs. Quality of customer services must be given priority, of course. “Occasional local improvements in quality are not enough today; what we need now is a systemic approach bringing together all areas, standards, and ideas that will help improve transparency, management, and efficiency of sales many times over.”

The report presented by Ilya Pomigalov, Director of Sviaz-Bank’s Network Department, aroused considerable interest among conference participants. Sviaz-Bank has 51 branches, apart from the head office in Moscow, and everybody was curious to know how the operation and budgeting of this large network of branches was managed. Ilya Pomigalov spoke about existing management approaches in general, about the way management is exercised at the moment, and the direction in which the Bank’s network is developing. He gave an overview of the structural organization of the head bank’s office in charge of branch management, and told the audience about the changes made in the office’s structure and functions. His report was followed by lively discussion.

More than 60 representatives of banks in Russia and CIS countries attended the conference.