The bank was registered as Agroopttorg in March 1993. After the 1998 financial crisis the lending institution was bought for around $100,000 by entities affiliated with vodka brand Russian Standard owner Rustam Tariko and was given its current corporate name. The bank entered the deposit insurance system in September 2004.
Bank Russian Standard owners pursued the business idea of Mezhcombank that collapsed during the 1998 financial meltdown, i.e. focused on retail lending based on scoring models, and also hired former Mezhcombank professionals. The new banks concept was worked out with the participation of professionals from consultancy McKinsey who also developed the concept of the Russian Standard vodka brand. Alexander Zurabov of Menatep and the deceased Andrey Kozlov worked at the bank for a while.
Bank Russian Standard was one of the first to blaze a trail in the consumer lending market and, in fact, laid groundwork in Russia for a new line of business for banks, namely high-margin consumer lending (unsecured retail loans provided at high rates).
For a long time the banks business expansion was funded by a heavy flow of public borrowings (bonds and Eurobonds) on both domestic and foreign markets. Professionals from American Express and the International Finance Corporation (IFC), which held a minor interest in the bank from 2003 through 2006, helped the lender gain access to foreign capital markets. Many times the banks foreign partners tried to buy into the bank, but its beneficial owner preferred to develop the bank himself and rejected offers.
Once the consumer lending market developed, reached saturation and encountered tougher competition, the bank launched new projects, namely to roll out auto lending and credit cards. At present, the lending institution is one of the largest players on the Russian retail credit card market. Notably, a team of executives, which was in charge of Bank Russian Standards consumer lending programs and made the bank number-one in this niche, has been busy with the same at Sberbank for several years already.
The banks beneficial owner is board chairman Rustam Tariko who owns 100% of the bank through businesses under his control.
Rustam Tariko is also a primary co-owner of Russian Standard Holding which, apart from the bank and insurer Russian Standard Insurance, comprises the namesake premium vodka producer and also Rust Inc., a leading Russian distributor of premium foreign alcohol. Russian Standard Group also consists of Ukraine-based Joint Stock Commercial Bank Forward (former Joint Stock Commercial Bank Russian Standard).
As of late June 2017, Bank Russian Standards network comprised over 150 offices. As of July 1, 2017 the banks self-service terminal network consisted of 512 multi-function ATMs in Moscow and in the regions of operation, 150 payment machines, 8 cash-in ATMs, and 22 ATMs for cash withdrawals. As of June 30, 2017 the banks headcount averaged 8,881 (8,556 a year ago).
Retail consumer loans, including card loans, are still the banks priority area of business. As of late June 2017 the lending institution issued over 46 mln credit and debit cards. At present, the bank offers over 20 types of credit cards, including premium American Express and Diners Club cards. The bank holds exclusive merchant acquiring rights for American Express cards in Russian territory, and is also a Diners Club International strategic partner to issue and service payment system cards in Russia and Ukraine. In addition, the financial institution provides merchant acquiring services for such payment systems as Visa, MasterCard, Discover, JCB International, China Union Pay and Golden Crown. On balance, the banks retail services include card issuance, consumer loans, a lineup of deposits, remote services, money transfers and payment processing solutions.
The lenders corporate customer policy focuses on banking services for retailers, manufacturers and those that operate a lot on the consumer market, and also on entities involved in exports and imports. The banks corporate services include online banking, merchant acquiring, money transfers and payments in a customers payment infrastructure, credit products, cash settlement services, deposit services, payroll projects, asset management, consumer loans to employees of its corporate customers, etc.
From January through August 2017 the banks net assets decreased 5.3% to Rub 403.4 bln as of August 1, 2017. During this period the lender fully repaid its debt to the Bank of Russia, and reduced borrowing in the inter-bank lending market (by 17%, or Rub 14.8 bln). The money held by households declined as well (-7.5%, or Rub 12.8 bln), and so did funds of corporate customers (-7.3%, or Rub 3.8 bln). On the assets side, a primary decline in absolute terms was recorded in securities investment (down Rub 22.6 bln) against which inter-bank loans were taken out. A substantial decline in relative terms was seen in high-liquidity balances (off 30%), corporate loans and retail loans. Against the backdrop of the above declines the bank increased investment in other businesses (+28.2% or Rub 7.9 bln was invested in Russian Standard — Service in January-June 2017) and fixed assets (+72%, or Rub 2.9 bln).
The banks liabilities are fairly well diversified, with 39.2% falling to household funds and retail deposits, 18% to the money of banks (inter-bank loans granted by Russian banks for various terms), 12.1% to funds of businesses and organizations, and slightly more than 14% to equity.
Due to the banks business focus on retail services, the financial institutions corporate clientele is modest, but is marked by a steady flow of payments, with monthly turnover on corporate accounts averaging Rub 25—30 bln YTD. The bulk of operations falls to households whose monthly turnover on check and card accounts has averaged Rub 35—40 bln in 2017. The bank is considered to be heavily dependent on household funds.
According to explanatory notes to the financial statements, as of June 30, 2017 the banks capital adequacy ratio (№ 1.0) stood at 12.5% (against the 8% minimum threshold), while main capital adequacy ratio (№ 1.2) came in at 9.1% (6% as minimum). It should be noted that previously the bank faced challenges to meet capital ratios at all levels. In the first half of 2015 the bank suffered a loss of Rub 22 bln (under IFRS), as a result of which capital slid from Rub 16 bln to Rub 600 mln. The banks majority shareholder Rustam Tariko had to inject a total of Rub 15 bln into the bank using equity stakes in his alcohol producers. The bank undertook some measures to stabilize the structure of liabilities and improve capital adequacy. Specifically, the holders of Bank Russian Standards $550 mln subordinated Eurobonds were offered a debt restructuring plan in September 2015. In October 2015, the Bank of Russia and the Higher Court of London approved the banks proposal to restructure Eurobonds maturing April 2020 and January 2024. Prior to the approval, over 80% of the Eurobond holders voted in favor of restructuring. In line with the terms of the deal, investors were paid accrued interest and 18% of nominal value of the Eurobonds, and the rest was swapped for bonds issued by a special vehicle that is controlled by Roust Holding Limited. Notably, 49% of the banks shares were used as collateral for the bonds. The new bonds will become due 2022, and they bear an interest of 13% payable on a semiannual basis. The restructuring deal helped the bank end 2015 with profit.
It should also be noted that Bank Russian Standard received Rub 5 bln from DIA via the OFZ-based capital lift program in December 2015.
As of June 30, 2017 the lenders equity stood at Rub 52.05 bln. As of the same date subordinated loans that are taken into account when calculating the banks equity (capital) amounted to Rub 7.5 bln (Rub 7.98 ln as of December 31, 2016).
As of August 1, 2017 the securities portfolio prevailed in the banks net assets (39.5%). Nearly all of the banks investments include bonds, 95% of which were collateralized against repurchase transactions on the record date. The bank regularly uses nearly all its debt portfolio in repurchase transactions. Over the past few months alone turnover of accounts designed for collateralized securities ranged from Rub 600 bln to Rub 1 tln.
During the period under review the banks total credit portfolio contracted by 4.5% to Rub 156.6 bln by August 1. Both retail (down Rub 3.6 bln) and corporate loans (off Rub 3.7 bln) declined in absolute terms. As of the balance sheet date retail loans accounted for 88.7% of the total credit portfolio (mainly credit card debt). NPLs are very high and keep rising (42% as of August 1, 2017 compared to 38% as of year-start). Provisions are also very high (which puts heavy pressure on the banks profit and capital), fully covering NPLs and accounting for 43% of the credit portfolio (38.4% as of start 2017). The credit portfolio is minimally collateralized (2.3%) as the bank specializes in granting retail unsecured loans.
The bank operates heavily in the inter-bank lending market. The lender is largely a net borrower, drawing liquidity from Russian banks against collateral of securities (under repurchase transactions), but it also offers excess liquidity, albeit in much smaller amounts. The lender is a market maker of conversion operations, with monthly turnover of foreign currency operations ranging from Rub 1.5 tln to Rub 3 tln in 2017.
According to the RAS financial statement, the bank generated Rub 5.9 bln in profit in January-July 2017 (losses totaled Rub 7.5 bln in the same period last year). The lending institution suffered a Rub 8.1 bln loss in 2016.
Board of Directors: Rustam Tariko (chairman), Alexander Zelenov, Larisa Tikhonova, Mikhail Khmel, Sergey Ikatov, and Sergey Berestovoy.
Management Board: Alexander Samokhvalov (chairman), Sergey Berestovoy, Evgeny Lapin, Denis Gubanov, and Anastasija Bushueva. Hide