Central & Eastern Europe Awards

Russia
Best Domestic Bank: Moscow Business World Bank
Highly Commended: Alfa-Bank
Best Foreign Bank: Citibank
Highly Commended: RZB
Best Domestic Securities House: Troika Dialog
Highly Commended: Renaissance Capital
Best Foreign Securities House: Brunswick Warburg Moscow

Business World Bank (Moskovsky Delovoy Mir) is often unfairly described as a one-man show. True, chairman Andrei Melnichencko has been an indispensible marketing tool, but the bank has established impressive senior and middle management. It began as a trading bank in December 1993 with links to the aluminium industry. It still has ties with the coal and non-ferrous metals industries, but this is reckoned to be more of a strength than a weakness, given the legal uncertainties of lending in Russia. Its major clients are export enterprises in the Kuzbass and Urals regions — the Kuzbassrazrezugol (coal mining) company and the Kachkanarsky mining and enrichment works. MDM Bank's good fortune was to come relatively unscathed through the crisis of 1998, although it took some hits on its loan book, and then picked up business in the flight to quality. Last year MDM Bank radically expanded its strategy by aiming for the retail market, opening small branches throughout Moscow. The bank is involved in the financial institution development project (FIDP) of the European Bank for Reconstruction & Development and the World Bank. At the end of 1999, MDM Bank's assets totalled Rb10.2 billion ($360 million). It had Rb2.6 billion ($91 million) of capital and reserves. The bank is one of the biggest operators on Russia's currency, interbank and stock markets. It says that an important business is intermediating in the servicing of up to 20% of Russo-Indian debt. According to central bank data, MDM Bank is one of the top 10 commercial banks operating on the precious metals market, and is also one of the top 20 in the corporate securities market. Alfa-Bank comes a close second in terms of its management and strategy, although its loan book its not so strong. Analysts fear that is has a bigger exposure to its parent group, in terms of guarantees, than the 10% that shows up on its balance sheet. Citibank calculates its market share with multinational companies operating in Russia is 65%. It has also been offering long-tenor rouble loan structures and arranged some of the first pre-export financing deals with oil and steel companies after the 1998 crisis. With the added strength of Salomon Smith Barney, which has had an investment-banking group in Moscow since 1995, Citibank offers an unmatched range of services to major corporates operating in Russia. Raiffeisenbank Austria has 200 staff in Russia and grew its assets 2.4 times in US dollar terms in 1999 to $301 million. It is the top foreign bank in payments; it has a 15% share of the foreign exchange market and around 10% of money market turnover; its loan portfolio is default free and has grown 2.6 times in the past year. The bank also has the largest correspondent banking network of any foreign bank in Russia and is one of few to have successfully penetrated the Russian wholesale market. Troika Dialog, founded in 1991, is one of the few Russian brokers to come through the 1998 Russia crisis bloodied but unbowed. It has since set up a brokerage office in New York and expanded its operations in Russia to Rostov-on-Don and Yekaterinburg. Troika Dialog says it is the acknowledged leader on the Russian Trading System (RTS) over-the-counter equities market, with around 25% market share. It says it has 10% to 15% of rouble transactions on the Moscow Interbank Currency Exchange (Micex). Troika Dialog offers good economic and political-risk research on Russia. It recently hired Oleg Vyugin, former deputy finance minister, as its chief economist. In investment banking Troika Dialog in the past year underwrote several domestic bond issues — for OAO Mostotrest and Samaraenergo — and advised on several telecom and internet deals. In February 2000, Switzerland-based Hansa AG, owned by Georg von Opel, bought a 5% stake in Troika Dialog. Renaissance Capital has rebuilt its business after setbacks during the 1998 crisis. Its research on Russia is excellent. Brunswick Warburg is the outstanding foreign broker in Moscow. It enjoys a high volume of business from foreign investment institutions. Some foreign funds stipulate that their business must be done through a broker backed by an investment-grade rating, which works to Brunswick Warburg's advantage.

Ukraine
Best Domestic Bank: Privatbank
Best Foreign Bank: Raiffeisenbank Ukraine
Best Domestic Bond House: Pravex Bank
Best Foreign Securities House: Alfa-Bank

Banking in Ukraine is frontier stuff. Bank presidents are held in solitary confinement by the tax authorities; leading institutions sue the central bank — again over tax issues. And it's not as though anyone makes much money. Privatbank's great advantage in Ukraine has been weak competition — the other big banks are Ukrainian Credit Bank, FUIB and Slaviansky Bank. “They are able to manage their risks well and avoided major losses during and after the 1998 Russia crisis,” says one analyst. From its headquarters in Dnepropretrovsk it runs 286 domestic branches and offices, a branch in Cyprus, has two subsidiary banks in Ukraine, one in Russia, one in Belarus, and rep offices in Moldova and Kazakhstan. Its main businesses are corporate and consumer banking, with 78,000 corporate accounts and 277,000 personal accounts. It had total assets of $570 million at the end of October, and capital and reserves of $55 million. Profits for the year were modest at $3.3 million. Raiffeisenbank Ukraine wins the award for best foreign bank. It was a latecomer among the six foreign banks operating there but, since its arrival in 1998 has built up the biggest portfolio of corporate loans and is reckoned to be one of those with a real appetite for Ukrainian risk. With the help of $10 million subordinated debt from the EBRD to boost its capital base it engages in pre-export financing for Ukrainian firms, mostly in the sunflower, wheat, and steel and chemical products business. It also provides working capital for local firms, mostly in food-processing and confectionery — “the Ukrainians have a rather sweet tooth,” says board member for corporate lending Johann Jonach. The bank's capital was officially increased to 74 million hryvnas ($14 million) on May 31 this year giving it the most capital of all the foreign banks except Citibank. Although profits have been sluggish since the Russian crisis, Raiffeisenbank's returns have been more consistent than its rivals. Citibank, Soci?t? G?n?rale and Cr?dit Lyonnais saw a big dip in profits at the end of 1998 and again in 1999. Since the end of 1998 Bank Austria Creditanstalt Ukraine and ING Ukraine have lost money almost every quarter. Total assets of Raiffeisenbank Ukraine grew in 1999 by 419% to $46 million. By the end of the first quarter this year it was the biggest bank in terms of assets among all foreign-owned banks in Ukraine. Its operating profit amounted to $600,000 representing an increase of 38%, and its workforce grew last year by 31% to total 71. RBU says its client base increased three-fold in 1999, offering them electronic banking. It is the first foreign-owned bank in Ukraine to provide medium-term lending, thanks to the EBRD's subordinated loan. Alfa Capital Ukraine is the leading broker on Ukraine's over-the-counter PFTS stock trading system, with a market share of around 8%. Its nearest rivals are Wood & Co, subsidiary of the Prague-based broker, and Prospect Investment. Alfa's parent is Alfa-Bank in Russia and the plan is in time to merge Alfa's banking and brokerage operations in Kiev. It advised foreign investors on the $11 million acquisition of a controlling stake in Kyivsky Cardboard and Paper Mill. It provided financial services to telecoms, Noyyi TV channel, Nashe Radio, and pharmaceutical company Galychfarm OJSC. Alfa Capital Ukraina employs over 130 people. The brokerage operations of metals to car-loans to nuclear fuels bank Pravex is the bond market's biggest player by volume. The bank is a high-profile player in the markets though it has suffered from a management merry-go-round recently. It has extensive links with western payment systems and institutions and is one of the more conservative banks in the Ukraine, relatively speaking. DS