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Rostov’s mom-and-pop bank thrives

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Center-Invest's carrot ad about growing assets is popular in Rostov.

The Vysokovs, founders of Center-Invest.

The bank's well-known logo.

It would be impossible to live in or around Rostov in south-western Russia and be unaware of Bank Center-Invest, not least because their cute mouse-tail logo and advertising billboards featuring their famous giant carrot have already achieved iconic status.

The second-biggest bank in the Rostov region, Center-Invest has 90 branches -- and counting. Its founder and Chairman, Dr Vasiliy Vysokov, says: “We’re going to put southern Russia on the global economic map.”

This ‘mom and pop’ bank, established by Dr Vysokov and his wife, Tatiana, in the early 1990s, is not doing badly. Their bank has capital of nearly two billion roubles/$80 million, 10 times greater than the norm in the vast majority of credit institutions in Russia. 

Center-Invest’s corporate clientele has grown by 10 times since 1998, with 25 per cent growth in 2004-2005 alone. It plans to double its assets and increase profits by one-third between 2006-07, in part by adding 10 new branches. Only the powerful Sberbank, more than 60 per cent of which is government owned, is bigger.

How does Center-Invest do it? In a word, service. On an ordinary Friday morning in central Rostov, customers pour in to be met with genuine smiles, smart green uniforms, a clean and spacious retail area and enthusiastic service. The ‘Comments and Suggestions’ box, a final poke in the eye to the Soviet era, has apparently never been used. “Everyone’s satisfied!” laughs Ekaterina Goncharova who has worked on the customer services counter for two years.

EBRD bought a 25 per cent equity stake in the bank in 2004, increasing its equity to RUR325 million/$12 million in October 2005, and this summer signed an agreement to lend CIB a further RUR800 million/$30 million, primarily to expand its lending activity to large and small businesses and private individuals in the area.

It’s all part of EBRD’s efforts to promote growth in Russia’s regions by backing their local banks. “Center-Invest makes up its mind about a loan in just a week versus a month for the national banks,” says the EBRD’s Alexander Pavlov. “They have local market knowledge and a local mentality, lots of branches, a philosophy of building long-term relationships with clients, customised services and expertise in what’s important locally, like agriculture, trade and transport.”

The man who personally provides customers with their small loans at the central Rostov branch is Sergei Esenskiy. “I’ve done probably 400 mortgages this year,” he says proudly. Mortgages are a relatively new thing in Russia and Center-Invest has only been doing them for two years, during which time more than 1,000 customers have taken advantage of them.

“I also do about 300 personal loans every week starting at RUR10,000/$375, maybe for study or medicines,” says Mr Esenskiy. One popular type of loan is for gas connection to the mains for houses outside town. “That comes in at around RUR35,000/$1300.” On his desk there is a big advert for Center-Invest services depicting a huge teddy bear and a boxed present tied up in a bow – the kind of things on which a customer might spend his or her loan.

While Bank Center-Invest has a definite role in the Rostov region’s transition to the market economy, Dr Vysokov says it’s really nothing new. “Rostov is the gateway to the Caucasus, an 800-year-old trading centre where, before the Communist revolution, there were 130 businesses, 113 of which had foreign investment. Communism, you see, was just a blip. Now there are at least 1,000 businesses here and some 600 of them, like us, have foreign investment. This is a tradition with us.”

Out through the fields of sunflowers and past rows and rows of wooden fairytale houses with goats and ducks in the front yards is one of the businesses that has benefited from Center-Invest loans. The Pakovs, a couple whose company, Stil’ K, specialises in PVC panelling for homes and businesses, have 40 million roubles/$1.5 million worth of the bank’s loans.

“They really get things done so much more quickly than the other banks,” Oleg Pakov says, pouring out Armenian cognac for his guests. “Since we’ve started dealing with them, everything has got going. Basically, they make their decisions fast and do much longer-term loans than other local banks – though ours are mostly three to six months, it’s nice to know we can take our time if we need to.”

In the nearby town of Novocherkassk, baker Roman Vasiliev borrowed RUR10 million/$375,000 for a state-of-the-art Swiss gas oven that saves $19,000/ half a million roubles per year in energy costs. That loan is to be paid back over three years, and they have others amounting to RUR4 million/$150,000 for transportation and general renovations. “A whole portfolio!’ says Mr Vasiliev, beaming, clearly pleased with the way the phrase confers status on his business.

 Like their clients, the Vysokovs themselves symbolise the new vitality and optimism that is sweeping Russia’s regions today. “The EBRD is a bridge between western economies and regional economies,” says Dr Vysokov, tucking into a complicated fish dish in the Rostov restaurant he owns. “Now that EBRD has taken this serious interest in our area, we are getting a lot more attention – more investment,” he smiles, raising his glass of Chablis.

By Anna Blundy, EBRD Communications Consultant
Contact: EBRD Russia Office

13 December 2006