The Bank continues to improve its performance by offering a wide range of cutting-edge banking services to small, medium and large-sized enterprises, taking into account each client group’s particular requirements and interests.
To date, the Bank has 52 000 corporate customers. Bank Saint Petersburg’s corporate banking business remains primarily focused on the regional market of St. Petersburg. In addition, the Bank strengthened its positions in Kaliningrad in 2015 through the creation of its Evropeisky Branch, which currently has over 9 000 corporate customers (Bank Saint Petersburg completed the integration of Bank Evropeisky in Kaliningrad, reorganizing it together with the Bank's Kaliningrad Branch into the new Evropeisky Branch). In 2016, Bank Saint Petersburg also strengthened its presence outside the home Northwest region: the Bank opened a representative office in Novosibirsk, focused on working with corporate clients.
Loans to legal entities represent 83.0% of the total loan portfolio. The breakdown of the Bank’s corporate portfolio by sector reflects St. Petersburg’s economic structure, which has a high proportion of construction, real estate, trade and production, allowing the Bank to benefit from all the advantages of the region’s economic structure, as well as to contribute to its development.
During 2016, the corporate loan portfolio decreased by 7.1% to RUB 294.2 bn. The Bank pays particular attention to developing a high quality and well-balanced loan portfolio.
Corporate customer deposits remain the principal source of funding for the Bank, representing 47.6% of total customer deposits. Throughout the reporting year, corporate customer deposits increased by 10.0% and amounted to RUB 170.4 bn.
Bank Saint Petersburg is striving to become the main clearing bank for residents and enterprises in St. Petersburg that are engaged in payments and settlements with customers and suppliers.
In 2016, Bank Saint Petersburg was listed among the official partner banks of the state defence procurement program. Companies cooperating with public contracting authorities are offered services involving the opening and management of separate accounts and transaction banking services for public contracts. Specifically for these customers, the Bank launched the State Defence Procurement tariff plan, which includes the free opening and support of a separate account, the execution of electronic payment orders, cash collection and disbursement, the issuance of checkbooks, as well as a number of other services. The Bank’s official website, www.bspb.ru, has a special feature for booking a separate account number online, while certain upgrades made in the i2B online banking system allow the customers to handle paperwork for their transactions in separate accounts.
The Bank issues Visa Business and MasterCard Business corporate cards to be used by company employees to cover their travel expenses and current expenses related to the company’s business. Payments for products and services can also be made online. The corporate card is a universal tool for accessing company funds round-the-clock without the need to visit the Bank’s office: cash can be added or withdrawn at any time through 24/7 ATMs. All cards issued by the Bank support MasterCard PayPass or Visa payWave technology, enabling instant payments for products and services.
As part of strengthening its card payment infrastructure, the Bank offers to its corporate customers merchant and e-commerce acquiring services, enabling legal entities and sole proprietors to accept bank card payments for their goods and services, with the added benefit of contactless payments reducing the time required to serve their customers. By the end of 2015, the Bank’s POS-terminals were accepting Visa, MasterCard and UnionPay cards, and in 2016, two more payment systems were added to this list: Russian MIR National Payment System and JCB international system (Japan). The Bank continues to further promote its e-commerce acquiring services that allow online merchants to accept bank card payments.
The main priority for the Bank’s correspondent relations network in 2016 was stability. In the context of sanctions imposed by the USA and the EU, and in spite of strict compliance standards maintained by foreign banks, the Bank supports customer settlements in all major foreign currencies. New payment routes through European and CIS banks added in 2016 enable the clearing of USD without the involvement of US correspondent banks. The most popular foreign currencies presently used in customer settlements are, in descending order, EUR, USD, PLN, GBP and CNY.
The Bank provides a wide range of banking services connected with cash transactions in the regional markets of both St. Petersburg and the Leningrad Region, including receipt collection, cash re-counting, the delivery of cash wages to clients, and loading ATMs and payment kiosks. Cash recycler ATMs, which were installed in 2016, support cash turnover without any additional costs by using banknotes deposited by customers.
At year-end 2016, the total number of places being serviced by the Bank reached 2 045 (compared to 1 903 in 2015), of which 64% were customer service points, 33% the Bank’s ATMs and payment kiosks, and 3% the Bank’s outlet offices. The amount of cash transported by the Bank's cash collection teams increased in the reporting year, totalling RUB 557 bn (a 3% rise compared to 2015).
Total cash transported by the Bank’s cash collection teams, RUB bn
To reach its strategic goals, Bank Saint Petersburg is striving to create a product range that matches the interests of its corporate clients as much as possible. Despite the challenging macroeconomic situation, the Bank continues to provide corporate lending to companies from various industry sectors and is strengthening its positions in this market segment. In addition to granting new loans, the Bank is also improving the terms of already existing loans, which indicates general financial sector recovery.
In the reporting year, Bank Saint Petersburg set a RUB 6.5 bn credit limit for PEREKRYOSTOK Trading House CJSC, one of Russia’s leading retail chains and member of the X5 Retail Group.
The Bank introduced a credit limit of RUB 5 bn for the Power Machines (Siloviye Mashiny) group. According to the newly signed cooperation agreement, the Bank will issue guarantees for up to 5 years in favour of the power machine supplier’s customers.
Bank Saint Petersburg extended a loan to the TransFin-M leasing company in order to fund the purchase of 50 new low-deck buses to be leased out to the Saransk Gorelectrotrans municipal enterprise. Featuring advanced motors and transmission lines and requiring environmentally friendly manufacturing components, these vehicles comply with enhanced environmental standards. The loan of RUB 338 mln was made available for 5 years. Starting from 2015, TransFin-M has received a total of RUB 3.5 bn of funding.
The Bank and LSR Group entered into a Master Agreement, establishing the general terms of lending in the total amount of RUB 2 bn for 3 years, to fund the operations of the borrower and LSR Group companies. LSR is an all-segment real estate developer with projects ranging from mass-market housing to luxury properties designed by leading Russian and international architects.
Bank Saint Petersburg won the bid for opening two non-revolving credit facilities, in a total amount of RUB 1.9 bn for 3 years, to finance the working capital of Saint Petersburg Vodokanal State Unitary Enterprise.
For Khimprom PJSC, one of Russia’s key chemical manufacturers and part of the Renova group, the Bank opened a 3-year credit facility with a limit of RUB 650 mln for working capital purposes.
The Bank advanced RUB 500 mln, within the established credit limit, to Sovfrakht PJSC in order to finance the borrower’s current business. Sovfrakht PJSC is a domestic and international cargo carrier operating in sea and river transport, railway freight traffic, the transportation of overweight and oversize loads, and Arctic logistics.
Bank Saint Petersburg opened an 18-month, RUB 200 mln line of revolving credit for the NEVA MILK Group. The group intends to use the borrowed funds for working capital purposes; in particular, to purchase the raw materials and ingredients needed to further expand its manufacturing capacities. The group’s products are available in more than 2 000 cities in Russia. The NEVA MILK Group manufactures approximately 20% of the butter and 15% of cheeses sold in the Russia’s Northwest region.
INVESTMENT BANKING SERVICES
In 2016, the Bank’s investment banking services offered major customers investment lending, project financing, syndicated loans, investment and corporate consulting services, M&A transactions support, and other types of structural finance.
Project financing is the provision of funds for investment projects that rely on cash flows generated by a project for debt servicing. Project financing funds made available by the Bank have a strictly limited permitted use, i.e. they may only be spent after relevant documentation of designs, contracts and work acceptance certificates have been submitted. The Bank has a designated team in charge of monthly construction monitoring, while the real estate developer uses funds within the set limit.
Cooperation with developers is one of the Bank’s business priorities, and it continues to promote partnerships with the most reliable market players. In 2016, Bank Saint Petersburg became a strategic financial partner of the LEGENDA Company; the developer received project financing in the amount of RUB 2.2 bn to implement its project “LEGENDA on 58 Komendantsky”. The first stage of the project spans 50 000 square meters of residential space and RUB 6 bn of investments.
A further development for the Bank in 2016 was its active involvement in private equity and venture capital investments. The total amount of planned investments is USD 150 mln, USD 120 mln and USD 30 mln of which have been earmarked for private equity and technology investment funds respectively.
The private equity investment fund focuses on well-established and growing mid-size businesses with an annual turnover of USD 10-100 mln on the forefront of the banking, industrial and medical technologies sectors and are highly competitive both in the domestic and international markets. The average investment in a single project will range from USD 5 to 10 mln.
The technology investment fund is intended for emerging companies developing innovative projects or possessing know-how in such areas as financial and banking technologies (so-called “fintechs”), asset management technologies, bioengineering, new materials, eHealth, energy efficiency, IT security, Big Data, cloud computing, and smart systems.
The key aims of the technology investment fund are to support technological innovations available in the market through investments and empower Bank Saint Petersburg with new technologies that would not only give momentum to certain areas of the Bank’s business, but also create a significant synergistic effect when combined with the Bank’s principal operations. One of the indicators in the early stages of a company’s investment potential is the demand for its products or services in the market, i.e. its existing customer base and sales.
The average amount invested in a single company by the technology fund is USD 1 to 3 mln. The fund is targeted at acquiring minority interest (around 25%) in the investees together with the associated rights and guarantees regulated by shareholders’ agreements.
One of the priority areas for Bank Saint Petersburg is to devise efficient solutions that allow its customers to expertly manage their currency, commodity and interest rate risks while maintaining and increasing the profitability of their businesses. Our extensive product range of speculative and hedging strategies for various market segments enables the Bank’s clients to select a solution that aligns with their price/earnings rate.
Following a system upgrade in 2016, Quotation Board service became part of the standard business banking services package. Online banking services moved to the next level of excellence, offering competitive pricing, rapidly expanding capacities and high reliability. This solution guarantees outstanding service quality for the currency market.
As in the previous years, the Bank organized a number of large-scale events in cooperation with the regulatory and supervisory authorities, as well as with such partners as Bloomberg, Thomson Reuters, EY, SPIBA, and Engel & Wolkers, to name just a few.
One of the strategic priorities of the Bank’s deposit business is to gradually transfer standard deposit products to digital sales channels. This substantially reduces the workload of branch network employees who will be able to focus instead on individually tailored deposits and devote more time to other products for corporate customers. More than 80% of deposits in the standard range are already placed through Internet Bank i2B. One of the Bank’s strategic goals is to make all standard range deposits (placed on standard terms and conditions) available only online or through the corporate contact centre.
Among the important developments of 2016 is a deposit calculator, a new handy tool for corporate customers that has been added to the Bank’s official website, www.bspb.ru. Customers no longer need to study numerous tables detailing deposit terms: all it takes now is to choose a placement period (1 month to 2 years), input a deposit amount (RUB 100 thou to 100 mln) and select any additional parameters, such as options for partial withdrawal or early termination. The calculator will not only display all matching choices from the standard deposit range and highlight the most profitable one, but it will also calculate the customer’s profit at the end of the deposit period.
PROGRAMS TARGETED AT SMALL AND MEDIUM ENTERPRISES
Loans to small and medium enterprises are strategically important for the Bank and allow SMEs to finance their working capital, purchase equipment, vehicles, real estate and other property required to develop their business, as well as to start new lines of business.
The volume of the Bank’s loans granted to SMEs in 2016 amounted to RUB 81.4 bn.
The Bank remains an active participant in government programs for SME support. In particular, the Bank signed agreements with the Small and Medium Enterprises Credit Support Fund Non-Profit Microcredit Company (St. Petersburg) and JSC Small and Medium Enterprises Support Agency, the Regional Microlender of the Leningrad Region. Such funds act as sureties for the borrower's obligations in cases where the available liquid collateral is insufficient. The surety processing procedure is fast and simple, with the relevant decision made within 3 business days after the Bank's application is submitted. In 2016, the volume of loans disbursed with one of these two funds acting as surety amounted to RUB 413 mln.
Additionally in 2016, the Bank signed an agreement with the Guarantee Fund of the Kaliningrad Region. The Fund is a part of the state’s support infrastructure aimed at developing a system of guarantees and sureties to give all SMEs of the Kaliningrad Region equal access to lending resources, notwithstanding insufficient collateral.
In 2016, the Bank became one of the banks authorized by the JSC Federal Corporation for the Development of Small and Medium Enterprises (MSP Corporation) for the purposes of the SME Finance Incentive Program. The Program is implemented by MSP Corporation, in cooperation with the Bank of Russia, as a state-supported arrangement for the provision of concessional loans to small and medium businesses involved in investment projects in priority economic sectors. The loans are intended to fund projects related to the purchase of premises and equipment, to the upgrade and renovation of manufacturing facilities, to the launch of new projects or production lines, as well as for working capital purposes.
Furthermore, by working with small and medium enterprises, and focusing on offering an ever-increasing range of related services (legal, accounting, insurance, etc.), the Bank is becoming a universal (instead of a strictly financial) service provider.
FOR EXIM COMPANIES
In 2016, many efforts were directed at developing and implementing projects and services targeted at ExIm companies.
The new ExIm Business tariff plan, introduced in May 2016, offers the companies involved in cross-border transactions a package of free services in roubles and foreign currencies, as well as up to a 40% discount on foreign currency interbank transfers and foreign exchange control services.
Customized services were also added to Internet Bank i2B, including ExIm Business, a separate interface within the system that brings together all information needed by foreign trade participants in their daily operations; and Quotation Board, a multifunctional solution that enables the tracking of currency exchange rates in real time and the execution of various types of FX transactions, including forwards.
One of the most important tasks in supporting cross-border transactions was to increase the customers’ international business expertise. ExIm business experts who have been trained throughout the year are able to assist the customers not only with selecting and applying for various banking services, but also with gaining insight into the nuances of monetary and customs legislation. A series of training events were held for this purpose: 12 webinars dedicated to different aspects of ExIm business and 2 open conferences titled “Foreign Currency Contracts and the New Economic Environment,” with experts representing the Bank of Russia, the Customs Authority and the Federal Tax Service of the Russian Federation.
The number of new ExIm contracts serviced by the Bank grew by 30% compared to 2015.
TRADE FINANCE OPERATIONS
Bank Saint Petersburg offers its customers a wide range of high-quality services related to documentary operations and international trade finance. The Bank continues to maintain and strengthen its positions in this market segment, by supporting and expanding the list of its foreign contractor banks.
Under the Cooperation Agreement signed with AO EXIAR, the Bank provides loans to small and medium export-oriented enterprises using AO EXIAR’s insurance coverage as security. The year 2016 witnessed a number of transactions, with a total value of USD 15 mln (compared to USD 12 mln in 2015). Moreover, the coverage of the loan provided by AO EXIAR rose from 70% to 90%.
One of the landmarks of 2016 was the Agreement on the General Terms of Trade Finance Transactions, signed between Bank Saint Petersburg and the Industrial and Commercial Bank of China (ICBC) to further promote trade between Russia and China.
Bank Saint Petersburg and Rossiya Airlines JSC signed a 3-year master agreement, following which the Bank issued 5 standby letters of credit with a total value of USD 12.5 mln to secure the obligations of Rossiya Airlines JSC towards the Irish leasing companies AerCap Ireland Limited and Altair Aviation No.3 Limited, under hire purchase agreements through which the carrier acquired five Boeing-777-300ER aircrafts.
Bank Saint Petersburg also broadened the scope of services offered to counterparty banks. For instance, Belgazprombank (Republic of Belarus) received 2 tranches in the total amount of EUR 6.2 mln to fund oil product deliveries from Russia to Belarus.
The Bank's trade finance and documentary operations in the reporting year were characterized by the growing number of foreign trade transactions: 267 in 2016 when compared to the 235 transactions arranged in 2015. Of particular note were the increased number and volume of guarantees issued by the Bank: 88 transactions with a total value of USD 47 mln (compared to 76 guarantees with a total of USD 25 mln in 2015). After last year’s sharp decline in number and volume of import letter of credit transactions (including post-financing), 2016 demonstrated a growth to 70 transactions, with a total of USD 18 mln (compared to 21 transactions with a total of USD 4 mln in 2015).
Geography of trade and structured finance arranged by the Bank