According to a report in the Moscow Times, OAO Sberbank, the largest bank in Russia, has announced it will begin offering two-year microloans ranging from 30,000 rubles (USD 880) up to 1 million rubles (USD 29,000) to small businesses. Business owners will have to back the loans with personal collateral the bank said.
“At a time when smaller banks are focused on self-preservation, it is really just big banks like Sberbank that can afford not to tighten credit lines”, said Mark Rubenstein, a banking analyst at Metropol, a Russian financial company. “For the loan recipients that are now cut off from smaller banks, it’s a lifeline.”
As reported in a recent MicroCapital story, recently a Russian delegation visited the Grameen Bank of Bangladesh in an effort to scale up its microfinance industry and mitigate the financial crisis. As mentioned in the story, according to the 2008 “Russia Microfinance Analysis and Benchmarking Trends Report” produced jointly by the Microfinance Information Exchange (MIX) and the Russian Microfinance Center (RMC), Russia has approximately 2000 microfinance institutions (MFIs) serving approximately 700 thousand customers (borrowers and savers). The report estimated the aggregate loan portfolio of non-bank Russian MFIs to be USD 625 million, and the aggregate loan portfolio of microfinance banks to be between USD 2.4 and 3 billion at the end of 2008. Despite the numerous MFIs operating in Russia, they are far from fulfilling the demand estimated for microloans, estimated by the report to be USD 10 billion.
Although typically microloans throughout the developing world are of smaller size and duration and usually are backed by little or no collateral, according to the MIX report, Russian MFIs have some of the highest average loan balances when compared to their peers, on par only with Central and Eastern Europe. As of 2007 the median loan balance of Russian MFIs was 87,291 rubles (USD 2,573). On a relative basis Russia has a smaller percentage of its population living below the poverty line (defined here as less than USD 2 per day) than many other countries where microfinance plays a large role in expanding financial services to the poor. According to Wikipedia, Russia ranks 71st out of a list of 86 countries in terms of population living below the poverty line, with 12.1 percent of its population living on less than USD 2 per day.
The Russian government has instituted several programs aimed at propping up small and midsized businesses, including subsidized loans, and state guarantees. In February, the government gave 30 billion rubles (USD 896.7 million) to Vneshekonombank in a program, run by the Russian Bank for Development, intended to help refinance small business loans. For more information on this program, click here. The credit crunch and financial turmoil has not left Russian banks unscathed. According to a report by UniCredit SPA on Bloomberg, Russian banks face an “avalanche” of bad loans this year with 20 percent of their debt likely to be in, or close to, default this year. “Russian banks are experiencing a 20 percent increase in delinquent debt every month” German Gref, Chief Executive Officer of OAO Sberbank, said April 8.
Sberbank, established in 1841 and the oldest bank in Russia, is majority owned by the Central Bank of Russia (60.25 percent of voting shares). The remaining shares of Sberbank are owned by investors with approximately 28 percent owned by foreigners. The bank has approximately 20,000 branches with 242,000 employees and revenues of USD 8 billion. As of March 1, 2009 Sberbank’s total loan book, excluding loans to banks, amounted to RUB 5.4 trillion (USD 161.4 billion). As of 1 February 2009, Sberbank accounted for more than 50 percent of retail deposits and had a 30 percent share in Russian loan market. Sberbank has a “BBB” long term issuer default rating from Fitch Ratings and a long term foreign currency deposit rating of “Baa1” from Moody’s Investors Service.
By Laura Anderson, Research Associate
Additional Resources:
The Moscow Times: Sberbank to Offer ‘MicroCredit’
OAO Sberbank: Home
Metropol: Home
Wikipedia: Sberbank, List of Countries By Percentage of Population Living in Poverty
Bloomberg: Russia Risks Bad Loan ‘Avalanche’ With 20% in Default
Vnesheconombank: Home
Russian Bank for Development: Support Program for Small and Medium Businesses
UniCredit SPA: Home
Russian Microfinance Center: Home
The MIX Market: Home
The MIX Market and the Russian Microfinance Center (RMC): November 2008 “Russian Microfinance Analysis and Benchmarking Trends Report 2008? by Maria Baum and Ralitsa Sapundzhieva
MicroCapital Story: Russian Delegation Visits Grameen Bank of Bangladesh in Efforts to Scale-Up Microfinance Industry and Mitigate Financial Crisis
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