Finding the balance

Stepping Back from the Steppe @ 23.04.2010, 11:00

akotchubey

Financial Analyst

It is this balance that gives me great confidence that there is a right approach to working with Russians when it comes to wealth management and private banking. The mantra of changing times is perhaps at odds with the emergence of a post-Soviet nation as it is by definition in a constant state of change and evolution. Here too, one has to recognize that there are appropriate times and inappropriate times to embark on an expansion plan.  However, one thing is clear:  defining Russia within the confines of its geographic territory is a gross mistake that fails to recognize the global impact that Russia and the Russians have had on our world today. Russians cannot be defined as those living in Russia, for they live here in Switzerland, in France, the US, the UK and almost every country around the globe, too.

A question that has echoed in the past few days is why open a representative office or any office for that matter in Russia? This is an especially acute question when one observes that with the exception of a number of large commercial banks, few have made a huge success of their foray into the Russian banking market. Those who are building a commercial and retail banking business hopefully have an appetite to see the project through the next 10 years but by any measure it is a long time. Other more humble approaches may prove to be more appropriate.

When armies have set out to conquer Russia they were turned back sooner or later by the sheer size of the country, its oppressive weather and the indomitable spirit of its people. One could successfully argue that Ghenghis Khan and Napoleon “bit off more than they could chew” and did not think through the longer-term implications of their arrival in Russia. If an analogy were to be drawn to the corporate world which has been attracted to Russia’s emergence as an untapped marketplace for western goods and services then one could say that businessman have been far more successful than armies. Then again, it is still too early to say for sure. In either case to succeed in Russia, one needs to think small, be focused, be flexible and most importantly work within the cultural and structural framework of the country.

In the introduction, I mention the global impact that Russia and Russians have had on the world today. Whatever the measure, be it religious cultural or commercial, the traces in our backyard of Russia’s presence can be found in the Orthodox churches that dot the Swiss landscape or perhaps more recently the music festivals in Lucerne, Verbier and other places that exist because of the commitment of Russians and émigré Russians to the expression of musical talent at its highest level.

Opening an office in Russia is one of many important bridges between the developments on the Russian territory and the activities of Russians around the globe.  While the last 10 years have witnessed a remarkable growth in the Russian capital markets, there is still much to be accomplished in the way of diversification of the economy into other industries like healthcare and technology as well as the broadening of Moscow’s wealth to the regions. This does not happen in a vacuum and requires the willing participation of universities, Western and Asian companies as well as the talent and know-how of senior executives who can broaden the integration of Russian businesses into the global marketplace. Needless to say, banking on any level plays a very important role in securing the success of Russia’s emergence as a new marketplace from providing consumer loans to purchase cars to securing financing for large infrastructure investments or managing the pension funds of Russia’s labor force.