1.
Dmitry Leus talks about the potential in reviving small to
medium-sized businesses in the Russian regions.
(Interview by By Natalia Trushina, Bankir.ru)
DMITRY LEUS INTERVIEWS

2.
Dmitry Leus, what is your assessment of the current state of the Russian economy? Is
the banking sector feeling the stagnation announced by certain analysts?
“In my view, at the present moment, both a crisis and a sudden breakdown are equally unlikely. I rather
expect a situation of slow stagnation requiring some time for adaptation. The banking sector, the regulator,
and private enterprises will need to renew their focus on their core activities. In such circumstances, it is
necessary for market participants to adjust their behavior in order to work effectively and survive.
We must keep in mind that the popularity of any bank’s core products is in many ways a function of the
general market situation. How to explain otherwise the fact that in the recent years almost all financial
institutions rushed into consumer credits? Banks are only prepared to take risks if they are rewarded by
profits. If, however, costs of funds are high, banks need to play by different rules in order to develop in a
sustainable way”.

3.
Dmity Leus, what motivated your decision to develop SMB lending and which are the most
popular products your bank Zapadny offers for SMBs?
“First and foremost, we came to the conclusion that our financial positions would allow such an
undertaking. Secondly, we already had in-depth knowledge of this market and had the feeling that we
understood our future customers well. In addition, the platform was already in place – a professional team,
our prior expertise, functioning IT solutions, in addition to regional presence.
Our lending solutions for SMBs do not exceed RUB 3m - with a minimal amount of RUB 30k and durations
not exceeding 3 years. Interest rates are calculated on a case-by-case basis reflecting the client’s financial
indicators, with a minimal interest rate of 15% p.a. For seasonal businesses, we may even provide for
individual repayment schedules.
To qualify for a loan, a company must have been on the market for over a year, and state participation
should not exceed 25%. Also, the company’s headcount should not be over 250 people. The company must
have met all its tax and social obligations. On the other hand, we do not have any preference with regard to
the nature of the business and are prepared to deal with companies operating in such various sectors as
shops, restaurants, hotels, software firms, building companies, and car service stations. In short, everyone
is welcome”.

4.
DmitryLeus, BankZapadny has lived through more than one crisis. Based on your experience,
which should be the strategy of today’s commercial banks in Russia?
“The survival strategy for niche commercial banks in contemporary Russia with its economic uncertainties consists in
sound risk management.
From a business perspective, the secret of success for weathering any crisis consists in the strong will of the bank’s
owners and stakeholders to preserve and develop their business. The first thing which is being taught in business
administration courses is the theory of economic choice – that is, the choice one must make when faced with two or
more alternative uses of a resource. Crisis economics simply dramatizes this basic economic choice.
The banking industry today presents higher risks than other economic sectors. To take these risks is the choice of every
shareholder and manager. I arrive at work before 8 am and leave the bank after 8 pm. This is the only way to work in
order to achieve good results. The banking industry consists of a multitude of little things hardly recognizable to
outsiders. However, taken together they critically impact the bank’s financial results. Every aspect of the business must
receive its due attention, starting with administrative tasks and ending with the closure of big transactions. There are a
million of details which may escape the attention of the bank’s managing director. A permanently heightened state of
alert should therefore become the responsible banker’s second nature. In my opinion, a bank controlled and managed by
its owners is the best guarantee of success”.

5.
DmitryLeus, over the last year, Bank Zapadny has significantly increased its presencein the
Russian regions. What dictated such a move?Is it the smaller amount of initial capital
investments, thelower level of competition with other financialmarket players, or a
heightened focus on the revival of SMBs in the Russian regions?
“This choice was determined by a whole range of factors. First of all, corporate borrowers in the regions are
much more disciplined – their default rate is below 1 percent. Secondly, in opposition to the capital, the
regional credit market is not overheated. There is a lack of financial institutions in small Russian towns, and
clients are far more attentive to new opportunities.
Our regional network counts over 70 branches, with a rising tendency. Our strategy in this regard is very
simple: we open a branch, take it to its break-even point, and then we open a new one. Finally, with regard
to organizational issues, it is easier to set up a new business in the Russian regions. Our managers have the
opportunity to visit their customers, evaluate their businesses, and establish a personal relationship.
In the long run, I see great potential in the revival of small and medium-sized businesses in the Russian
regions”.