Alfa Bank was registered in January 1991 in Moscow. The bank was founded by renowned Russian businessman Mikhail Fridman and his partners. The bank has been a member of the national deposit insurance system since December 2004. The Bank of Russia decided to rehabilitate Bank Baltiyskiy in 2014. The rehabilitation procedure was initiated by the Deposit Insurance Agency after the financial institutions inspection in 2014. As a result of the victory at a tender held in August 2014 the Bank of Russia announced Baltiyskiy Banks rehabilitation with the participation of Alfa Bank. This way Baltiyskiy Bank PJSC joined Alfa Banks banking group. As a separate note, this is the first lending institution that Alfa Bank decided to rescue since the 2008 crisis when it rehabilitated Severnaya Kazna. According to media reports, apart from Alfa Bank, Otkritie Bank, MDM Bank, B&N Bank, Vneshprombank and Novicombank were initially interested in rescuing the bank. The DIA granted a Rub 57.4 bln 10-year loan at a rate of 0.51% to rehabilitate Baltiyskiy Bank, which became necessary as a result of a long ownership conflict. The Bank of Russia provided the DIA with these funds. The banks rehabilitation plan suggests that it will be folded into Alfa Bank before 2020. For this purpose Baltiyskiy Banks charter capital will be reduced to Rub 1.00, and later as a result of recapitalization Alfa Bank will become the banks majority shareholder. Reducing capital to Rub 1.00 is provided for in the rehabilitation law.
As of October 2016 the banks shareholders was AB Holding JSC (99.89%), which is owned by Alfa Groups ABH Financial Limited (Cyprus) that is controlled by ABH Holdings S. A. (Luxembourg), and the remaining 0.11% is in the hands of Alfa Capital Holdings (Cyprus) Limited. The beneficial owners of ABH Holdings S. A. (Luxembourg), the main owner of ABH Financial Ltd., are Alfa Group* co-owners Mikhail Fridman, German Khan and Alexey Kusmichev (holding 32.86%, 20.97% and 16.32%, respectively), and also the banking groups board chairman Pyotr Aven (12.40%), and Andrey Kosogov (3.67%). A 9.9% stake is held by UniCredit S.p.a. (the shares are publicly traded), and another 3.87% interest is controlled by a charity fund that was established under the laws of the Cayman Islands (the shares are held on trust management terms in favor of charitable organizations).
Russia-based Alfa Bank is the core of banking group Alfa Bank that also comprises businesses operating in Kazakhstan, Ukraine, Belarus, the Netherlands, the United States, the UK and Cyprus.
Alfa Bank is a universal bank, serving over 255,000 corporate and more than 13.6 mln private customers. In Russia and abroad the bank runs 804 offices and branches, including a subsidiary bank in the Netherlands (Amsterdam Trade Bank N. V.) and Baltiyskiy Bank PJSC.
In Russia, the bank operates 351 offices for households, 79 of them in Moscow, and the rest in the regions. Around 3,000 ATMs are in operation for cardholders. Alfa Bank signed agreements to unite its ATM network with such banks as Promsvyazbank, Rosselkhozbank, Rosbank, and Baltiyskiy Bank (to withdraw cash) and (to withdraw cash and credit accounts) with MDM Bank, Gazprombank, B&N Bank, Credit Bank of Moscow, and Urals Bank for Reconstruction and Development. The united ATM network (including its own machines) consists of over 22,800 machines in more than 2,800 localities in Russia. In addition, the banks customers can put funds on card accounts and repay loans without any commission fees at over 9,600 terminals. As of October 1, 2016 Alfa Bank headcount stood at around 20,600.
Alfa Bank conducts all main banking operations in the financial services market, including retail and corporate services, investment banking, trade finance and asset management. The bank issued over 6 mln bank cards. As part of payroll projects the bank issued more than 1.3 mln cards in 2014.
The banks clients are financial and investment firms, retailers and trade firms, manufacturers and home builders, energy and O&G companies, state and public organizations. Customers include such businesses as diamond giant Alrosa, air carriers Aeroflot and Poveda Airlines, athletic goods retailer Sportmaster, Nazarovskaya HPP of Siberian Generating Company, Nizhpharm, Makfa, Alfa Leasing, Mospromstroy, Lenspetssmu, Element Leasing, Inter RAO UES, Mosenergosbyt, TDL Tekstil, United Wagon Company, Yuzhproektkommunstroy Design Institute, etc.
From January through November 2016 the banks net assets rose 2%, or by Rub 48.7 bln, to Rub 2.3 tln as of November 2016. As for liabilities, the main reason for a rise in grand total was an increase (19%) in the funds drawn in the inter-bank lending market, and also an inflow of household funds (+2.5%). These sources helped the bank easily offset an outflow of corporate resources, a decline in capital (-10.6%) and a decrease in balances held on loro accounts. On the assets side, the biggest rise was seen in high-liquidity assets (funds held on the correspondent account at the Bank of Russia) and the money deposited at banks amid a contraction in the credit portfolio and the securities portfolio.
The lenders resource base is well diversified, with 33% falling to the money of corporate customers, 27% to household funds, and roughly 9.2% to the money of banks (inter-bank loans drawn). Meanwhile, funds borrowed from the Bank of Russia fell sharply, and 13.8% falls to equity. Also, around 3% falls to issued bonds and promissory notes. The banks clientele is broad, mainly real estate developers, retailers and manufacturers. A flow of payments from the banks clientele is heavy, with monthly turnover on client accounts of Rub 2—2.7 tln. The banks dependence on household funds is assessed as moderate, and the level of concentration is conservative, with ten biggest deposit holders accounting for 13.2% of total client funds.
As of the balance sheet date the banks capital stood at Rub 321.6 bln, down 10.9% YTD mainly because of a contraction in additional capital due to losses.
The core of the banks net assets is the credit portfolio (61.4%), 14.4% falls to the securities portfolio, high-liquidity assets and inter-bank loans placed (8.5% and 14%, respectively).
The credit portfolio is equal to Rub 1.4 tln (61.4% of net assets), and during the period under consideration it shrank (down 3.5%, or Rub 52.7 bln in absolute terms). Also, 84% of the securities portfolio falls to corporate loans, and the rest to retail loans (the share of retail loans has been falling).
The credit portfolio is mainly long-term, with 12M+ loans accounting for 67.4%. As of the balance sheet date overdue debt equaled 10.2% (10.7% at the beginning of the year), a market average. The credit portfolios provisions are conservative (16.6%, and 16.7% at year-start 2016), i.e. fully cover overdue debt. The credit portfolio is collateralized by Rub 918.1 bln (64% of the total credit portfolio), which is not sufficient. Notably, in January-September 2016 the provisions were restored by Rub 8 bln following a decrease in the credit portfolio and improved quality of separate borrowers. The credit portfolios concentration is moderate. As of June 30, 2016 ten leading borrowers accounted for 32.8% of the banks total loans granted.
In line with the banks IFRS interim financial statement for January-June 2016, 12.7% of the credit portfolio fell to retail loans, 13% to commercial real estate, 9% to oil producers, 8.8% to financial and investment firms, 7.8% to retailers, and 5% to chemicals and petrochemicals.
The securities portfolio is equal to Rub 335.8 bln (14.4% of net assets), and during the period under analysis it shrank by Rub 5.5 bln (-1.6%). As for the portfolios breakdown, 94.8% falls to bonds, 5.2% to stocks and 0.05% to promissory notes. Every month a small share of securities (no more than 2%) is provided for repurchase transactions in order to obtain short liquidity.
Alfa Bank is quite a big player in the inter-bank lending market, usually as a heavy borrower. Notably, the bank is also aggressive in the currency market, with turnover of conversion operations reaching Rub 15 tln.
The lending institutions FY15 net profit totaled Rub 49.6 bln under RAS (Rub 48.8 bln in 2014). In January-September 2016, the bank suffered a loss of Rub 11.6 bln compared to Rub 27.7 bln profit in the year-earlier period.
During the first nine months of 2016 the banks operating income dove 60.7% y-o-y. The main reason for the banks negative financial performance was a loss from foreign currency revaluation (Rub 45.2 bln as the ruble firmed during this period) and a net loss from operations with financial assets (Rub 13.9 bln).
The Board of Directors: Petr Smida (chairman), Oleg Sysuev, Petr Aven (board chairman at the banking group), Andrew Baxter, Andrey Elinson, Edward Kaufman, Andrey Kosogov, Alexey Marey, Mikhail Fridman, and Rushan Khvesyuk.
The Management Board: Andrey Sokolov (chairman), Mikhail Grishin, Alexey Marey (Chief Executive Officer), Maxim Pershin, Alexey Chukhlov, and Mikhail Povaly.
* Alfa Group carries on business in such economic segments as commercial and investment banking, asset management, insurance, retailing, water supply and removal, and also special investment cases. The groups beneficial owners are Mikhail Fridman, German Khan and Alexey Kuzmichev.
Through ABH Holdings S. A. and CTF Holdings Ltd. Alfa Group controls 100% or majority stakes in the companies that operate under the single brand — Alfa Bank, i.e. Russian and Kazakh banks, and also a bank in the Netherlands, and also AlfaInsurance (insurance premiums totaled $1.09 bln in 2015), Alfa Capital (as of December 31, 2016 assets under management at Alfa Capital Management Company exceeded Rub 150 bln), and some others. Furthermore, Alfa Group shareholders own stakes in X5 Retail Group, investment fund A1 and Rosvodokanal Group. Hide