Uniastrum took top honors at the annual Montenegro National Bank Festival competition to find the bank with the most successful crunch-defying strategies
The jury’s decision was underpinned by three key factors:
1. the Russian banking sector’s only investment tie-up between a Russian lender and a foreign investor at the height of the global liquidity crunch – and, what’s more, at a pre-crisis price. On October 31, 2008, the Bank of Cyprus acquired an 80% stake in Uniastrum Bank for $576 mn, simultaneously bumping up Uniastrum’s charter capital a healthy $50 mn. The acquisition is the heftiest investment by Greek and Cypriot financial entities in Russia’s banking system to date.
2. the only up banking-sector upgrade during the financial crisis. On November 24, 2008, Moody’s Investors Service raised Uniastrum long-term credit rating three notches to Ba2 with a stable outlook, while Moody’s Interfax Rating Agency lifted the Bank’s long-term national scale rating from Baa1 to Aa2. Meantime, the lender’s financial strength rating held fast at E+, with its short-term foreign and local deposit rating remaining at NP.
3. vigorous roll-out of credit schemes, notwithstanding global financial turmoil. Against the backdrop of talks between Cypriot President Demitrios Christofias and Russian President Dmitri Medvedev, on 19 November, 2008 Uniastrum and the Bank of Cyprus signed a memorandum to execute a joint three-year (2009-2011) SME lending program in Russia totaling Rb 15 bn.
For the record, other notable factors accounting for Uniastrum’s high degree of stability include:
a) a prudent, far-sighted policy of minimizing investments in the securities market, which took the full brunt of the credit crisis. As of September 1, 2008, stock investments accounted for less than 0.1% of total assets, which, needless to say, is a miniscule proportion. In other words, it is a safe bet that securities investments will exert no tangible impact on the Bank’s financial results.
b) a strong focus on borrowing domestically, consequent on Uniastrum’s core line of business. A breakdown of the Bank’s liability mix shows the bulk of borrowings falling to retail and corporate deposits, as well as funds raised from bond issues. Importantly, Uniastrum faces none of the problems encountered by banks dependent upon Western sources of finance
c) a cogent client-diversification strategy. Uniastrum remains committed to its original business concept, i.e. to rendering traditional banking services. Today, the Bank is one of Russia’s Top-20 retail lenders with hundreds of thousands of household deposits totaling over Rb 29 bn as of July 1, 2009. Also, Uniastrum has a large SME clientele covering a wide range of business sectors throughout the length and breadth of Russia. The Bank’s extensive network is made up of 43 branches in 47 regions. Uniastrum has not a single mega client, be it a standalone enterprise or major holding, whose financial problems could potentially take a toll on the Bank’s overall showing. At present, its client base of over half a million SME and retail customers, without doubt, affords Uniastrum a conspicuous competitive advantage over its market rivals.
The Third National Bank Festival saw Uniastrum parent bank the Bank of Cyprus honored with a special diploma marking 110 years since its inception.
Established in 1899, the Bank of Cyprus Group has enjoyed more than a century of growth and is today a major international holding organization commanding leadership positions in Cyprus’s banking and financial services market. The Bank currently accounts for over 30% of the Republic’s deposits and 29.2% of total loans issued.
At present, the Group totals more than 575 branches, with offices in Cyprus, Greece, the United Kingdom, Australia, the Channel Islands, Romania, and Ukraine. The Bank of Cyprus Group also has representative offices in Russia, Canada, and South Africa and employs over 12,127 people worldwide. At year-end 2008, the Group’s total assets and shareholder equity totaled ?36.11 bn and ?2.04 bn, respectively.
For more information call or write Olga Kurganova:
744 04 04, ext. 1066
kurganova@uniastrum.com