CREDIT OF TRUST

Lending is the essence of banking, its alpha and omega. The point of application of its forces and a source of income

CREDIT OF TRUST

As at March 1, 2002 in the Russian market of banking services Ak Bars Bank was on the 11th place in terms of the volume of loans issued to private persons, and on the 40th in terms of the amount of private deposits.

— I can't believe it, — exclaimed an elderly man in outrage looking at the mechanic digging deeper and deeper into the bowels of his «Lada». — Why is it that we can't do anything properly? I bought this car a month ago, and it broke down already.

— This isn't a car, — replied the mechanic from under the hood. — How much did you pay for it?

— Forty five hundred.

— Well, for forty five hundred dollars you can't even build a normal car, let alone buying one. For this money, you can only put together a Lego. This is exactly what you've got. A good car cannot cost less than ten thousand dollars. This is for real.

— Where am I supposed to get this much money?

— Nobody in the world has to pay this much right away. Everything is done with bank loans, old man.

The mechanic is right: the whole world today lives on credits. A modern American, for example, for the most part of his life has to pay off loans: education loans, car loans, house mortgages... An average loan can be paid off within 10-12 years, with real estate this term extends by several times and sometimes reaches 50 years. Nobody in the world thinks about the fact that during the period of repayment the amount of installments can exceed the actual cost of the purchase by two or three times.

Health of any society can be determined by the health of its banking system. Banks and the state were always marching hand in hand. Even in the long-gone times when the main and only responsibility of our bankers was to exchange foreign currency for our money, it would be hard to imagine normal international trade without them. The world was dominated by two counter flows, one of them carries the products, and the other one the money.

The leading lending institution in Tatarstan is Ak Bars Bank. Its share in the total banking assets of the republic is more than 35%. This means that the bank obtained more than one third of all the loans issued by the republican banks to commercial banks, and attracted more then one third of all resources issued by the republican banks to commercial banks, as well as attracted more than 1/3 of all deposits that the residents of Togliatti entrusted to the bankers.

Although, such preferences of private depositors are not hard to understand. At the end of last year Ak Bars Bank became the first of Tatarstan banks that received a credit rating of the leading rating agency «RusRating,» which means that the Russian Government trusts this bank. At the beginning of this year, the System of Complex Opening of Information SCREEN.RU rated the bank as an «A» for all payment obligations to the bank, which means «very reliable».

For many years, Ak Bars Bank has been one of the leading Russian bank. According to the main financial reports the Bank has long passed all the other banks in the republic and became one of the thirty leading banks in Russia. According to the rating published on March 18, 2002, as at the beginning of this year the bank was in the 30th place among all Russian banks in terms of volume of assets, 27th in terms of the loan portfolio volume, 29th in terms of attracting means of corporate clients, and 34th in terms of the amount of profit earned. Considering that the bank was less than 10 years old, and it was founded on November 29, 1993 when the Central Bank of the Russian Federation issued to the bank a Banking License No. 2590, the results are absolutely fantastic. This tremendous growth deserves sincere respect.

Pursuant to a decree issued by the President of Tatarstan, in July of 2001 Ak Bars Bank entered the list of companies that bear strategic importance for the economy of the republic. The bank managed to maintain its positive development dynamics. During the last year the banks assets increased by 33% and amounted to 12.4 billion Rubles. The growth of assets can be mostly attributed to growth of the loan portfolio. The amount of disbursed loans increased by more than 49% and exceeded 8 billion Rubles.

Lending in the real sector of economy always was and remains being one of the priority areas in the operations of Ak Bars Bank. Last year Ak Bars was the first of Tatarstan banks to implement on practice the technology of attracting investment resources for the local enterprises by floating their bonds in the Russian securities market. The bank is actively attracting loan resources outside of the Russian Federation as well. Currently Ak Bars is the only bank in Tatarstan with open credit limits at Western banks. Using the funds obtained from non-resident banks, Ak Bars is able to finance investment projects of the largest companies in the republic, such as OAO Nizhnekamskneftekhim, Tatneft, KamAZ etc.

Providing loans to the largest subjects of the local economy is not the only priority in the credit policy of the bank. Ak Bars is actively disbursing loans to small and medium businesses.

At this time, the amount of outstanding loan balance issued to small and medium businesses exceeds 770 mln rubles. Small business lending is the main area of activities of Volzhsko-Kamsky Shareholding Bank, which is an affiliate of Ak Bars Bank. The lending technology used by Volzhsko-Kamsky Bank providing financing to start-up businesses is based on wide experience of American banks.

The main feature of Ak Bars Bank is its universality. The bank works both with large corporate clients and with private entities. Last year the volume of private deposits attracted by the bank grew from 519 to

656 million Rubles, and the volume of loans issued to the public increased by more than

4 times — from 87 to 373 million Rubles.

As of May 1st of this year, the Bank had approximately 1 bln Rubles in private deposits. At the same time, it issued consumer loans for 525 million Rubles and small business loans for 196 million Rubles. These figures demonstrate that Ak Bars Bank is the peoples bank in Tatarstan at this moment.

Ak Bars has a well-developed branch network in the republic. It includes 20 branches and 43 additional offices. Being a federal-scale bank, currently Ak Bars is setting up a branch network beyond Tatarstan as well. Offices of branches in Moscow and Saint Petersburg are nearing completion. According to the management of Ak Bars Bank, the strategy of territorial expansion is the most optimal solution for boosting reliability of the bank and attracting investment resources to the republic.

By the way, Ak Bars Bank issues rather substantial car loans. Even without a guarantee from the third party.

Kliment ROKOSOVSKY