Said Aminov , Novikombank - Новикомбанк
Release Date: 2010-10-07
Said Aminov, Vice President and Head of the Department for Engineering and High Technologies of Novikombank, has been interviewed by Russianavia.net to discuss the history of Novikombank in Russia, the challenges of working with strategic companies, and its current and future prospects on the market, including the new strategy approved for 2010-2014.Novikombank was founded in 1993 as a private bank for the real sector. How was its specialization chosen and how has its positioning changed?
Novikombank was created for active engagement in financing the Russian economy. Its general strategic focus was to establish cooperation with the military and industrial complex, engineering and high technologies. This vector has not changed over the last 16 years.
Many of Novikombank’s managers have significant experience of working in these industries, and their valuable expertise and knowledge of the technology of the projects and the risks involved has been one of the important aspects of the success and has helped to form and enhance the client base. Due to this solid base and strategic focus, Novikombank has been pursuing stable growth in the last three years, outperforming the Russian banking sector. The increase of assets in 2009 was about 25% and. we are maintaining the same growth rate this year - for instance, the loan book in defence and engineering industry grew 50% over the 8 months of 2010.
According to the targets set in the Development strategy for 2010-2014, working as a bank for the military and industrial complex remains one of Novikombank’s priorities. I have to say that this industry is quite specific and conservative but our expertise, quick reaction and the attractive and competitive conditions that we offer makes us a partner of choice for our clients, in some cases more efficient than the bigger state banks.
What are the challenges of working with the strategic state-owned enterprises, in particular in the defense sector?
Generally working with state enterprises does not differ dramatically from servicing private companies, although it has its own definite specific. That’s why there are very few banks – not more than 30 of them - working with the defense sector. In this industry, we position Novikombank basing on the professionalism of the people working in Novikombank – people who can speak the same language with the defense enterprises and know how to structure the deals and how the decision making procedure is organized across the sector.
Besides, Novikombank, according to our perception, is also virtually a state bank. We are very enthusiastic about the state making efforts to structure the business in this sector and see a clear perspective of our defense and engineering industries becoming a major driving force of modernization of the national economy. With that in mind, on the solid base of our established cooperation with the leading corporations of this sector – Russian Technologies State Corporation being the major of them – we are ready to support this innovative development financially.
The industrial projects sometimes require risky and long-term investments. As a bank, how do you support the financial tonus of the Bank and choose the best alternative between the possible investments?
Novikombank mostly engages in short-term or mid-term projects with familiar companies and predictable cash-flows. Besides, we always reasonably asses the legal and financial risks. As a result, we keep ourselves secure from losses even if we are required to produce our maximum output.
In general, we apply a full-fledged approach regarding each project in terms of the prospects of getting additional business, cross-selling or enhancing the client base through the subsidiaries or partners. We are focused on building long-term relations with our customers for our mutual benefit.
Novikombank was the strategic partner of the International Forum “Engineering Technologies 2010”. Why was this event chosen, and what important agreements were made during the Forum?
Novikombank, as a partner of the Russian Engineering Union and the State Corporation Russian Technologies, was one of the first to be invited to participate. This was a very successful event where Novikombank was represented in the united pavilion of Russian Technologies and took part in a round table on investments in engineering. We also made optimal use of the forum’s opportunities to develop business contacts. New agreements reached record highs; agreements on cooperation were signed with leading Russian defence and machine building companies, including FSUE Central Aerohyrodynamic Institute (TsAGI), Production Association Urals Optical & Mechanical Plant, JSC Russian Electronics, FSUE Pribor, Federal Government Scientific Testing Area of Aircraft Systems (FKP GkNIPAS), Tulamashzavod Joint-Stock Company, and ZAO Tekhnopromenergo. The Bank’s partnership with these organisations should develop along various lines, including servicing and current lending, organising financing for long-term production programmes, developing payment systems, finance management etc.
The format of exhibitions and forums is very helpful to get to know other companies and broaden our customer base. Our first experience of positioning Novikombank at high profile events in Russia was at the last International Aviation & Space Salon (MAKS) in 2009 where we signed important agreements with major companies. For instance, our cooperation with Oboronprom Corporation has given us a lot of projects with Russian Helicopters and the United Engine Building Corporation.
Novikombank was also the partner of “Defense and Security 2010” exhibition at the Institute of Metal Testing in Nizhny Tagil in the Urals.
It is often said that the development of the Russian aerospace complex is not predictable… What makes you believe in the potential of the companies representing it?
Aviation and space are strategic industries that will always be important for Russia because their products support the national security, have high export potential and are unique technologically. It’s logical for us to believe in it, especially now that the state vector has been strengthened again after integration of the military industry started in early 2000s. At this point, the defense sector is the pillar to develop the innovative economy however it will be a very big challenge to return to that powerful defense sector again.
Could you mention the key points of the new strategy approved for 2010-2014?
The main guideline of the strategy is to pursue the policy of “the Bank for the Industry” reaching high operational targets in terms of assets and liabilities and qualitative growth focusing on both engineering and defense and joint projects with civil companies as strategic partners. Besides, we will deliver complex finance products. We have a hard business plan and a potential for its fulfillment. Nevertheless, the requirements to the final result are very high.
Our strategy also envisages developing a regional network in the largest industrial cities and scientific centers of Russia – Zhukovsky, Tolyatti, Nizhny Novgorod, Rostov-na-Donu, Yekaterinburg… Within the regional network, we will develop new retail products such as a retail lending program for AvtoVAZ cars. We also implement attractive payroll projects with our clients and the widest possible range of other services.
Thirdly, we have to diversify the risks between our industrial and military clients and our civil clients: Novikombank is the authorized bank of Transneft and the Federal Customs Service; we also work with food manufacturers, public utilities and textile and energy companies.
The civil companies are apparently ‘easier’ to deal with but, as the recent financial crisis has shown, the state and defense companies do not violate the deadlines and comply with the terms of the credit loans. Commercial enterprises have higher risks whereas defense products have a more stable demand and the money is always there. Private business requires more structured deals, the financial sources are not always clear, consideration is longer and the risks of business are higher. Nevertheless, our clients among the private companies are developing with us, and the client base is growing. Private clients account for 20% of our client pool. It is important to say that these clients have remained loyal to us even during of the crisis.
What would be your last message to the readers of Russianavia.net interested in the Russian strategic enterprises?
Novikombank acts as not only a financial institute but the partner of choice of the industrial and military sector aiming to generate positive progress over the economy and support the defense sector, the industry and aerospace. Seeing ourselves as part of Russia, we implement innovative ideas and make our contribution in enhancing the potential of the military and industrial complex in Russia. We’re very positive about moving forward and developing our cooperation with our partners and colleagues in order to improve our product portfolio and provide complex solutions.
We will ensure growth to increase the capacity of Novikombank to implement more global projects. We have diversified our activities to implement different projects and make up technologies to promote new products.
| Company: | Novikombank - Новикомбанк |
| Position: | Vice President and Head of the Department for Engineering and High Technologies |
| Country: | Russian Federation |