Strategy

Strategy

VTB Group's main goal is to increase value for its shareholders. In order to do so, it:

  • aims to become the leader on the Russian and CIS corporate and retail banking markets by leveraging its:
    • competitive advantages in evaluating Russian customers and willingness to accept the risks associated with them;
    • experience operating in emerging markets;
    • ability to execute exclusive deals for major corporate customers; and
    • extensive regional branch network.
  • can use its unique position as one of the leading Russian financial groups to offer services to its customers in the CIS, Europe, Asia and Africa;
  • is improving operating efficiency at each bank and company, as well as within VTB Group as a whole.

VTB Group sees the current crisis in the global financial markets as a unique opportunity to strengthen its positions in key regions and customer segments.

  1. Top priority region is Russia, where VTB Group has an aggressive growth strategy to expand faster than the national banking system as a whole. In order to do so, VTB Group intends to:
    • strengthen its leading positions in serving major corporate customers and financial institutions through JSC VTB Bank;
    • diversify its business and ensure higher-than-average growth rates in the medium and small business segments;
    • gain leadership in the retail market through its specialised bank, CJSC Bank VTB24, by actively expanding its sales network and remote banking services, implementing new products and technologies, and improving service quality. In 2007, the share of retail business in VTB Group's total business volume increased substantially, and will continue to grow;
    • actively develop its investment banking business, with a view to occupying leading positions in this segment of the Russian market by the medium term, by:
      • forming a team of highly qualified professionals with experience of working in the world's leading investment banks;
      • developing a wide range of investment banking services;
      • utilising its extensive corporate customer base; and
      • leveraging its partnerships with major international players.
    • set up two main centres for providing investment banking services (Moscow and London, on the basis of VTB Bank Europe Plc);
    • streamline JSC VTB Bank North-West business by having it specialised on corporate customers in Russia's North-West Federal Constituency. Its retail business will gradually be transferred to VTB24, while corporate operations in other federal districts will be conducted by VTB Bank.
  2. After Russia, VTB Group's second priority region is the Commonwealth of Independent States, where it is aggressively expanding its footprint by acquiring and opening new banks. By 2010, VTB Group will have opened representative offices in all CIS countries where it deems such presence to be economically viable. VTB will be developing universal banks in these countries and they will, among other functions, provide banking services to Russian, local and international corporate customers as well as actively develop their retail business based on experience from, and the technology used by, VTB24. In addition to banking services, VTB Group will be offering other financial services in the CIS markets, including leasing services. In each CIS country, VTB Group's local branch will aim to become a leader in that market.
  3. VTB Group's third priority region, particularly in the mid-term term, is emerging markets, primarily in Asia and Africa. In these markets, VTB intends to serve the interests of customers from Russia and the CIS, foreign customers doing business with Russia and the CIS, and to participate in joint investment projects. Therefore, the choice of host country will be dictated first and foremost by whether the country is, or will be, of interest to Russian and CIS businesses.
  4. In Western Europe, VTB Group plans to continue serving Russian businesses and assisting Russian companies as they expand their business in the European capital markets. Subsidiary banks will become specialised: corporate business will be consolidated through VTB Bank (Austria) AG, while VTB Bank Europe Plc. (UK, Singapore) will focus on investment banking services.

    In 2007, VTB Bank conducted an IPO, during which 22.5% of the Bank's shares were acquired by Russian and international institutions, as well as more than 120,000 retail investors. Now that it has become a public company, VTB Bank must comply with stricter requirements in such areas as growth rates, operating efficiency, transparency and corporate governance. In order to meet the expectations of the market and investors, VTB Bank will bring its corporate governance standards into line with Russian and international best practices.
    VTB Group intends to increase operating efficiency in all business segments by improving control over, and coordination between, the banks and companies in VTB Group. In order to achieve this, they will all start using the same standards, methods and approaches (covering, for example, the same management policies for risks, A&L, and HR, the same internal control systems and branding, etc.).
    Therefore, the main tasks facing VTB Group are to:

    • develop its business faster than the rate at which the Russian market is growing;
    • expand its presence in both the corporate and retail segments;
    • actively develop its investment banking business and secure leading market positions;
    • further diversify its business by proactively cultivating medium and small business customers and increasing the share of retail business in the Bank's portfolio;
    • ensure business efficiency by maintaining the current net interest margin and significantly boosting commission income;
    • reduce dependency on the capital markets as the main source of funding and increase the share of customer deposits in the total funding base;
    • further develop related financial services (leasing, asset management, insurance);
    • continue the active development of VTB Group's foreign business by, inter alia, gaining access to new CIS markets and increasing the volume of retail business in CIS countries;
    • complete the integration of VTB Group's banks in Russia and Europe; and
    • improve corporate governance systems.