KOMMERSANT. Sweden’s Swedbank has decided to adopt a new operating concept for its Russian subsidiary, Swedbank, Kommersant wrote Friday quoting the banking group’s financial statement for Q110. Now the Russian bank will focus on dealings with businesses operating on the parent group’s domestic markets, i.e. North Europe and the Baltic States, and also on retail services offered to their employees. Currently the proportion of these clients in the bank’s assets is no more than 10%, head of Swedbank Russia Raimo Valo said, but, as the report said, the group’s current credit portfolio will not drop because of this.
Russia-based Swedbank along with the Ukrainian bank of the group is one of the most troubled assets: starting this year the group has even consolidated them into one business segment in financial statements. During the crisis year of 2009 and January-March 2010 Swedbank virtually froze lending, focusing on NPLs (during the year NPLs climbed 10x and presently account for around 20% of the credit portfolio). Swedbank’s Q110 losses amounted to Rub 365.5 mln (under RAS).
The operating concept worked out by the group for Swedbank greatly differs from what was announced at the time when the group entered the Russian market. Since 2005 Swedbank rolled out in Russia universal banking business oriented to big corporate clients and households. The bank lent developers heavily (as of early 2009 these credit facilities accounted for roughly 80% of the portfolio). In 2007 the bank entered the Top 100 of Russian banks and in 2008 it began Russia to aggressively roll out retail operations focusing primarily on mortgage and auto loans.
The adoption of the new operating concept means the bank’s actual refusal from dynamic lending and asset increment, experts point out. “Similar banks usually engage in providing settlement services to a parent bank’s clients, which enables them to maintain normal business conditions, but generates no high profit," head of UniCredit Bank’s corporate operations department Alexei Grenkov said. According to VTB Capital analyst Mikhail Shlemov, Swedbank “is looking to freeze Russian operations while hammering out a final strategy for Russian assets, with the bank’s sale to a strategic investor being one of the possible scenarios”.
