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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: Real Man who wrote (163)5/19/1998 5:45:00 PM
From: Thomas Haegin  Read Replies (2) of 1301
 
Vi and all: On the Russian Banking system:

Just today I looked at a copy of the Financial Section of the 1997 Annual Report of Rossiky Kredit Bank. This bank which is among the big 10 in Russia has a Eurobond outstanding (3 or 5 year maturity, have the details in the office) that at times yielded about 14% over LIBOR, implying that the bank was as good as bankrupt and dead. Also rumors I heard from colleagues, Russians among them, were always negative, almost every bank in the West sold their RKB assets or wanted to last fall....

Guess what: The above cited report is audited by KPMG according to IAS standards: Assets increased, DEPOSITS INCREASED, equity increased, the bank was profitable on an operating basis in 1997... Hey, if anything, deposits should go down or be flat, especially since this bank caters to retail customers also.

Either depositors and/or KPMG are completely off or the market had it completely wrong... I tend to beliebve the second (the latter?). And 1997 was a difficult year for Russian banks: As far as I have seen (so far seen reports of about 8 banks or so), profits generally are below 1996 and these were below 1995 already... but RKB still put together a decent year. I was quite astonished.

Thomas
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