Page 35 - Buy Russia - bne IntelliNews monthly magazine April 2017

bne April 2017 Special report I 35
Best Trade Finance Bank in Eurasia
Sberbank Group
“The macroeconomic situation in Russia over recent
years and shrinking volumes of trade between Russia and European countries have created a challenge for Sberbank and are stimulating an accelerated evolution of financial services companies and their areas of operations,” says Evgeny Kravchenko, managing director, senior banker, acting head of trade finance and correspondence bank- ing division at Sberbank CIB. “To overcome this challenge Sberbank is diversifying its counterparty base by expand- ing its cooperation with banks from Asia and other BRICS countries. We believe that due to this we will manage to increase volumes and revenues each year. For example,
in 2016, the international Sberbank Group completed more than $31bn worth of trade finance and documen- tary business deals, an increase of 11% year-on-year.”
Over last year Sberbank developed its letters of credit line of business. A breakthrough was made in the docu- mentary business, with the most growth taking place
in settlements with ruble-denominated Russian letters of credit. In 2016, more than RUB420bn worth of these transactions were completed, a 45% increase compared to 2015. The bank continued to enhance its product suite: more than RUB2bn worth of payments were made using the new product of Russian unsecured letters of credit with advance payment. In total over RUB100bn worth
of unsecured letters of credit were issued in 2016.
The volume and number of deals involving export-import transactions have also grown: in particular the volume of letters of credit with post-import financing issued in 2016 increased by more than two-fold versus 2015.
As of the end of 2016, the overall portfolio of deals com- pleted by Sberbank with insurance coverage provided by the Russian Agency for Export Credit and Investment Insurance
Evgeny Kravchenko, head of trade finance and correspondence banking
(EXIAR) exceeded RUB226bn. Sberbank participated in the development of EXIAR’s programme to insure loans used to create export-focused enterprises. Under this programme the bank completed the largest transaction with EXIAR coverage – Yamal LNG (Sberbank’s participation amounts to €2.7bn). In addition to this, optimisation of other condi- tions of EXIAR’s programme to support exporters, including increasing the size of insurance coverage, helped clients from the SME segment to receive financing with more favourable conditions.
Sberbank consistently and actively developed coopera- tion with foreign banks and export credit agencies (ECAs) in Western Europe and Asia in 2016. Last year, Sberbank concluded around €250mn worth of loan agreements with ECA insurance coverage.
Sberbank is also confidently gaining ground on the interna- tional commodity trade finance market via Sberbank (Swit- zerland) AG: key indicators for this line of business, includ- ing income, grew threefold compared to 2015. As of the end of the year the volume of business exceeds $1.75bn.
Sberbank intensively developed digital channels in 2016, deploying its Sberbank FinLine remote banking system for financial institutions, and its new global trade finance plat- form, giving clients from all segments improved foreign eco- nomic activity via remote access channels. The platform also allows the majority of transactions to be performed online and complete information about transactions to be received.
“In 2017-18 we believe more technologies will be intro- duced to the trade finance and documentary operations business and that the geography of business will expand, while demand for commodity supply finance will increase,” says Kravchenko.
national, regional and global banks with trade finance functions – reported an increase in overall trade finance activity. While letters of credit are generally waning as a trade finance tool, there have been positive developments
in supply chain finance (SCF) as a business line, with nearly 35% of respondents reporting an increase
in SCF deals for import and export operations. Supply chain finance generally involves providing short-term credit via using a technology platform
to automate transactions and track the invoice approval and settlement process from initiation to completion.
According to Raiffeisen, global exports to Russia secured by letters of credit have nearly halved since the imposition of the sanctions: from €11.1bn in 2014 to €5.9bn in 2015. Meanwhile, there have been moderate growth rates in guarantees and double-digit growth rates with respect to supply chain finance products. Factoring – when a
first party of a debt sells it for less than the total amount, providing them with working capital to continue trading – is very much on the rise in many CEE and CIS countries, says the Austrian bank.
At the same time, Russia’s Sberbank Group stands by letters of credit as a mainstay of the financing toolbox, while continuing to adapt them in its product suite: Last year, more than RUB2bn (€32.5mn) worth of payments were made using a new
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