"The Far East is being greatly supported, but businesses should also be more active"
Dmitry Sukhoverkhov discusses the priorities of Sberbank in the developing East of the country
In April 2017, Dmitry Sukhoverkhov became the Chairman of the Far Eastern Bank of Sberbank of Russia. He previously managed the bank's Rostov branch. Nearly six months since his appointment, Mr. Sukhoverkhov for the first time shares his vision on how to conduct the banking business in the Far East. On whether the existing measures of state business support are sufficient and whether it makes sense to propagate tax benefits throughout the whole macroregion, which prospects have the development of high-tech industries and cooperation with China, why shares of non-cash payments are growing and mortgages are becoming easier to take — all this in EastRussia's interview.
"There are more opportunities in the Far East to grow business"
- You have been in the region since spring. What is your overall impression?
- The first impressions: the people living here are energetic, driven and have a keen interest in their business and their surroundings. This is, by the way, very reminiscent of the South of Russia. In addition, the Far East territory is still young from a development standpoint, and it consists of vastly different regions. What I see in the business environment has very good potential. The second feature of the Far East which cannot but strike the eye is the huge number of local businesses. The European part of Russia to a much greater extent has been taken over by network companies, from barbershops to grocery chains. And this, I believe, is one of the advantages of our economy — that there are a great deal more economic actors in the Far East. There are more people here who make decisions in the field. This also has an influence on the banking business.
- Seeing that you have already managed to communicate with local businesses, what to your mind do companies in the Far East need more: to get the infrastructure that the supportive measures of the past few years have been focused on, in particular the Advanced Special Economic Zone, or the possibility of concessional lending?
- You know, firstly, the Far East regions, and this is clearly evident, have more support from the state than any other region in Russia, if we exclude Moscow, St. Petersburg and, perhaps, Sochi. These are huge investments, and they become very noticeable when you move here. In Vladivostok alone they have recently built more bridges than across the River Don in a very long time. With regard to the forms of state support, I believe that it strongly depends on the project itself. There is no general prescription for everyone. Someone, of course, needs infrastructure above all if they have production sites. And there are very good financing tools that only work in the Far East — loans on investment projects of the Far East and Baikal Region Development Fund (FEDF) and the Corporation for the Development of the Sakhalin Region. In cooperation with FEDF, Sberbank also implements the "Available credit for SMEs" program in which there are no restrictions by industry and a minimum credit amount is commensurable with the needs of small business. Together with Corporation of SMEs JSC, a 6.5 program is being realized in which the maximum rate limit is no more than 10.6% per annum, and the amount of funding — from 10 million rubles. For the year 2017, businesses in the Far East received more than 1.2 billion rubles as part of the program.
- What key consulting tools you can offer to businesses in the Far East?
- If we are talking about investment projects, then Sberbank, undoubtedly, is one of the leaders in investment lending: not a lot of financial institutions in the country have long-term resources, ready-to-use programs and, most importantly, experience in their implementation. We have already implemented enough projects in the territory of the Far East but we have even more global plans. And working with Sberbank isn't working with a window where you submit documents and then get a ready-made result. It's always a dialog. We also provide a financial evaluation of the project and indicate the pros and cons to the client to save him or her from making a mistake, as well as help to attract advisers if our competence is not enough, for example, with respect to the production activity.
- Can you also teach something without someone applying for a loan?
- Not only that: we already actively teach entrepreneurs. Together with Google, Sberbank is carrying out a program for the development of entrepreneurial skills called Business Class. The course includes eight online modules and four full-time master classes in Vladivostok and Khabarovsk. It consists of video lessons, tests, additional materials and webinars, as well as mentoring and meeting with experienced experts. At the moment, on the official website of the program — business-class.pro — more than 8 thousand people from various subjects of the Far Eastern Federal District have registered. The average age of participants who have joined the project is 30 years. Business interests are extremely extensive: from retail sales to the food service industry. In July, the first workshop for entrepreneurs took place. It was attended by more than 300 businesspeople from Khabarovsk and Vladivostok. It was led by Konstantin Kholstinin, a well-known Moscow expert in marketing and business modeling. He told the meeting's participants about the study of consumers and the application of design thinking to improve business models. The client feedback was very positive.
"The innovativeness of the Far East needs to be supported"
- You have mentioned cooperation with China. Sberbank and Harbin Bank have recently decided to create the $50 million MT2 investment fund, which is aimed at investing in startups. Are you going to enter the Chinese market, which attracts everyone with its low interest rate, in some deeper way?
- Sberbank is actually one of the leaders in crediting startups and the creation of funds for investing. And here, joining forces with Chinese partners, we will definitely be able to achieve synergy. However, the bulk of our interaction with China for now remains payment and conversion operations. Yes, we have had positive cases of attracting funding. There were transactions last year, but these are just the first steps so far. We can see that our Chinese partners are interested in the expansion of our cooperation: despite the relatively short duration of my stay in the Far East, I've managed to visit China, being present at a meeting of the Russian-Chinese Financial Council, and there we signed a number of agreements and traced new paths for development.
- What innovations will you present at the Eastern Economic Forum?
- Sberbank always takes an active part in the EEF. We plan to hold a series of multilateral meetings, with the participation of the bank's foreign partners, the governments of subjects of the Russian Federation and regional businesses, the result of which will be the signing of agreements on cooperation, including the implementation of major investment projects.Herman Gref, the President and Chairman of the Executive Board of Sberbank, will act as moderator of the session with representatives of SMEs the Far East, entitled "Easy start! Development of small business." At that meeting, the discussion will focus on business development, including through new banking services. At the session "Cybercrime — a key threat to the digital economy," which will be held by Stanislav Kuznetsov, the Deputy Chairman of the Executive Board of Sberbank, the discussion will be on how to ensure the safe integration of macroregion companies in the digital business ecosystem.
Besides that, Sberbank is organizing meetings for clients interested in exporting the products manufactured in the Far East with their prospective foreign partners from countries of the Asia-Pacific Region. Harbin Bank is currently searching for Chinese counterparties for our clients. The signing of multilateral and bilateral agreements is possible.
Also, at our office on the campus of the Far Eastern Federal University, we will introduce new digital solutions for clients. These include the application Sberbank Investor for buying and selling shares and bonds on the stock market, a 3D real estate tour, the virtual game Cybersecurity, and an interactive business simulator.
"We have huge potential to introduce advanced products"
- What special products can Sberbank offer to the population of the Far East?
- On the one hand, the vast distances between places raise the issue of the accessibility of financial services. But, on the other hand, these distances make the use of modern products highly advantageous. The digitalization of the banking business is not the future, it's already the reality. And I think that here we have the best opportunities in the Far East. Say, for example, I walk into a store in some remote village. Because of the poor Internet connection, bank cards aren't the most reliable payment method. But there's a sign there that says, "In order to transfer money to a Sberbank card, the phone number is such and such." People realized that money can be transfered with the speed of SMS. And where there is cellular coverage, Sberbank provides opportunities for payments much more convenient than via cash. Generally I see huge potential for reducing the proportion of cash payments in the Far East more than in any other region at that, and we will definitely do it sooner than the rest. Even taxi drivers have for a long time been saying, "Don't look for change, you can send it over the phone." These tools are not new, they have been available for a long time. People have a hard time accepting innovations when it comes to finances. But now we're seeing how all of this is becoming more and more a part of everyday life.
- Is it already possible to take out a loan online, without visiting the bank at all?
- You can apply for a loan through Sberbank Online without visiting the office by filling out a form. Through the DomClick service, any client can apply for a mortgage loan and obtain a decision on the application anytime anywhere. The client can visit the office directly to obtain the loan. The app for iOS and Android lets you track stages of transaction, share your documents by simply photographing them on your smartphone and communicate with your mortgage manager. Since the beginning of 2017, 8% of clients of the Far Eastern Bank of Sberbank have drawn up applications for mortgages with the help of DomClick, through which 4% of credit volume was granted. Through the same portal, you can ask a question and get advice on your mortgage 24/7, as well as select real estate. One more breakthrough — in August last year, Sberbank and Rosreestr launched a joint service of electronic registration of real estate ownership. It has already been used by more than 50% of the clients of Sberbank in the Far East, including those who bought real estate without credit facilities or in another region of Russia. The service allows you to submit documents for registration of transfer of ownership electronically, in order to save on the state duty and reduce the interest on the mortgage. Dmitry Shcherbakov