The document discusses what makes a bank trustworthy. It argues that a trustworthy bank provides accessible services to customers across Russia, including in small towns. The bank discussed has expanded to 45 branches across Russia, including many new branches in small towns. A trustworthy bank also builds trust through transparency about fees and providing good customer service. The bank aims to be trustworthy by having a solid capitalization and serving customers responsibly.

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Dmitry Leus: What is a trustworthy bank?
09:00 20 May 2013
Originally published in: Arguments and Facts
Dmitry Leus
The new law “On Consumer Lending” has passed its first reading
in the Russian State Duma. It is expected to make retail banking
services more convenient for the general public and is likely to
result in an increase in the number of lending requests. It is
therefore of paramount importance to rise the level of “financial
literacy” among the population. There are currently over 1000
credit institutions in the Russian Federation. But what precisely
makes a bank trustworthy? The answer to this question will help millions of
borrowers to decide whether to keep their existing banking relationship or to
switch to a new one.
Dmitry Leus, Director of the Board of ZAO Bank Zapadny:
First of all, I would like to attract your attention to the problem of the
geographical availability of banking services, in particular in a country as large as
Russia. For obvious reasons, most banks prefer to work in big cities. This makes
it sometimes difficult for residents of smaller agglomerations to open a bank
account and have access to personalized financial advice. We decided to fill this
gap.
Last year, we launched a pilot project to establish mini branches in Russia’s small
towns. The number of loans issued at these mini branches has already exceeded
the number of loans issued at big branches in major cities for the same period of
time. Overall, 2012 was a breakthrough year for the Bank, as our retail credit
portfolio has more than doubled.
As of today, we operate 45 branches - 9 in the greater Moscow area, and 36 in
the Russian regions. Only in the past six months we opened over 22 regional
offices - which is some kind of a record. From the point of view of economic
development, these branches represent a new resource capacity allowing us to
scale up the Bank’s business. From a social point of view, it means new
employments in the regions and job security for our staff.
We have already started to work not only in bigger regional centres, but also in
small agglomerations with populations over 50 thousand inhabitants. For
example, recently we inaugurated a branch in the small town of Gryazi in the

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Lipetsk Oblast. Its population does not exceed 46 thousand people, and another
70 thousand live in the nearby villages. It would be unfair to deprive these
people of the possibility to open a bank account, make payments, and receive
credit.
Let me add that the problem of access to banking services is not only restricted
to Russia. The European Union has recently published a proposal to make bank
accounts accessible to all European citizens and has spoken of a right to a basic
bank account. In its press release, the EU Commission justified the proposal
explaining that bank accounts have become essential to participating fully in the
economic and social life of a modern society in which the use of cash is
decreasing. In fact, studies have shown that over 58 million EU citizens over the
age of 15 do not have a payment account.
In this context, a trustworthy bank is a bank which satisfies the right of everyone
to a simple bank account irrespective of a person’s place of residence and
financial situation. We try to build trust on our general openness and
transparency, including the transparency related to the fees we charge.
Returning to Russia and the Russian regions, I would also like to highlight the
strong financial discipline of small-town borrowers. Their positive credit history
allows us to award them additional loans at preferential rates.
A banking product which was until now only rarely available in small towns are
pensioner loans. When I started to work with elderly people I immediately
noticed that they behaved very responsibly. Put differently, they practically did
not delay their loan payments. We have therefore no difficulties in providing
them with new lending products best tailored to their needs.
It is very important to us that our clients are not losing their time in long waiting
lines. To this effect, we monitor in our branches the very possibility of the
emergence of a waiting line, for example through an infrastructure of self-
servicing terminals allowing our customers to make interest payments
independently.
People entrust the bank with one of their most valuable material assets - their
lifelong earnings. Against this emotional background, it is important that when
visiting the Bank, customers experience a quality of service matching their
expectations. Therefore, a trustworthy bank is a bank whose employees, in their
everyday customer dealings, give concrete meaning to the notion of trust. It goes
without saying that this also implies an attractive compensation plan for our
staff.
By way of digression, our clients were the first to appreciate the benefits of our
back office reorganization. We set up a new client service center in Voronezh,

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thereby successfully integrating our call center, credit research center, IT
department, and operations. Streamlining these processes has been instrumental
in enhancing the client’s overall service experience.
It is not necessary to have a financial education to understand that a trustworthy
bank in the financial sense of the term is a bank with a solid capitalisation. has
recently increased its share capital by almost RUB 1bn, thereby improve its
creditworthiness before its customers.
Currently, our Board of Directors is considering the issue of another 2.5bn of
ordinary shares at RUB 1 each, to be placed on the Moscow Stock Exchange. Once
done, anyone can become one of the Bank’s owners. By raising RUB 2.5bn, we
expect to increase the Bank’s capital by 127% and the Bank’s total capitalisation
will amount to RUB 5.5bn.
With a clear business structure and a flat hierarchy, was able to attract new
shareholders in the form of its own regional staff. The bank is also in the process
of attracting a number of institutional investors.
With regard to our development plans, over the next two years, we are planning
to reach a return on equity ranging from 35-40%. To achieve this objective, top
management has a worked out a clear road map for business development. In
addition, a revised long-term strategy of the Bank is in the approval process.
Let me conclude with some questions which are being asked on a regular basis
by our customers themselves: Why should we become your clients? What makes
you trustworthy? Why should we not switch to another bank?
My answer is transparency. The growth of our business is obvious. Each month
we attract more than ten thousand new customers. These are private individuals,
entrepreneurs, representatives of small and medium-sized businesses. By
increasing our network of regional branches, we are in the process of doubling
our customer base. On a qualitative level, we are observing that the average
customer stays with the bank not only longer, but also has recourse to a wider
product offering. All this goes hand in hand with increased productivity. Each
quarter we see an increase in profit items not related to our lending activities,
but rather to our universal banking offering.
All these factors give us self-assurance and confidence. Our shareholders and
employees believe in the Bank’s future, and this may be another distinctive
feature of a trustworthy bank.