Sergey Belousov (Bank GPB International S.A., Member of Gazprombank Group): Linking Russia and the world in volatile times
Sergey Belousov, Managing Director of Bank GPB International S.A., says the Gazprombank Group sees Luxembourg as a strategic location for access to the European market and cooperation with EU entrepreneurs targeting business in Russia.
Why does Gazprombank Group consider Luxembourg a strategic location for banking activities?
Luxembourg is one of the world’s leading financial centres, with its AAA rating, more than 125 international banks, very sound and transparent regulatory environment, wide range of corporate structures ideal for customizing solutions for corporate and private clients, location in the centre of Europe and free access to the European market. These factors make this country a perfect place to run a bank in Europe, follow the needs of our Russian clients in Europe and act as a strategic link to the Russian market for our European customers. The main activities of Bank GPB International S.A., 100% subsidiary of Gazprombank (Joint Stock Company), which was established in Luxembourg in 2013 and enjoys the same credit rating from S&P as the parent bank in Russia, are corporate banking, investment banking and global markets, and private banking. Corporate banking services include a wide range of lending solutions, modern payment and settlement services, while in investment banking and global markets, we provide treasury services with access to competitive interest rates for deposits in various currencies, foreign exchange, including rouble, commodities trading, MiFID II compliant sales and trading activities since we operate as a leading market maker and underwriter in Russian & CIS Eurobonds and equities. As for the long-term ESG trend on the capital markets, we can provide a full advisory and underwriting services package to the corporate clients willing to finance their ESG projects and build the public transparent investor story. Luxembourg Green Exchange welcomes our clients to use the opportunity of enlarging their investor base by ESG-focused accounts. Finally, our private banking business offers execution services, securities lending, tailor-made structured solutions and traditional advisory and asset management services.
“In a very diverse and complex regulatory environment, we are a trusted partner for cross-border activities.”
Gazprom is mainly known as an energy provider. What is Gazprombank and what makes it different?
Gazprombank, which has just celebrated its 30th anniversary and where I have worked since 2008, is now a universal bank, the third largest in Russia. People sometimes think of us as a bank serving only Gazprom. Our backbone is corporate banking thanks to strategic partnership with the Gazprom Group. As a universal financial institution, the bank provides services to other important sectors of the Russian economy – nuclear, chemical and petrochemical, ferrous and nonferrous metallurgy, engineering and metalworking, transportation, construction, communications, agriculture, etc. At the same time, the bank is the absolute leader in the number of customers and the volume of portfolios in a number of industry types. In addition, we are active in investment banking and retail banking. The Bank implements a strategy for the development of retail banking, increasing its efficiency due to the active digitalization of key processes, as well as synergy with corporate banking. The Gazprombank Group has a global presence in Russia, Europe, Africa and Asia. We have one of the largest private banking franchises in Russia, we are a recognized leader among project finance arrangers and financial advisors in EMEA/CEE, Russian and CIS markets, we are one of the largest asset managers in Russia and leading bookrunner in the local market and Eurobond market for Russian and CIS issuers. Our ambition is to develop and diversify further. And Bank GPB International S.A. as a part of the Gazprombank Group plays a key role in this strategy – being in the forefront of operations in Europe we offer a high level of solidity to our partners
In the current environment, what are the main challenges for corporate treasurers and how is Bank GPB International S.A. adapting to them?
In a very diverse and complex regulatory environment, we are a trusted partner for cross-border activities. For example, unprecedented volatility has forced several institutions to exit the commodity-related financing market, but we believe corporate treasurers need banks to access this market and we will stay in it. Unprecedented volatility in currencies and commodities obliges treasurers to hedge their risks; we offer hedging services across many asset classes and help treasurers manage their exposures effectively. We remain committed to provide a broad range of lending and corporate finance solutions, focussing particularly on working with EU-based manufacturers supplying goods to customers located in Russia and the CIS. Regarding cash management, treasurers need to manage liquidity across many entities, for which we offer master cash pooling solutions. We also help with the set-up of clients’ securities treasury portfolios and can work with physical commodities, financing them against a physical stock. This is a very specialised business, but it helps our clients navigate these challenging times.
“Luxembourg is the perfect place to run a Bank in Europe, follow the needs of our Russian clients in Europe and act as a strategic link to the Russian market for our European customers.”
How would you advise entrepreneurs seeking to do business in Russia?
First, do not be afraid of discovering the Russian market and launching projects there. Over the last six years, Russia has enjoyed sustainable positive growth dynamics, and its business environment has been ranked ahead of countries such as Poland, Portugal, the Netherlands and Belgium. In the Doing Business ranking for 2019, based on 10 parameters, Russia is in the top position among the BRICS countries. Second, find a reliable and trustworthy local partner to identify the potential risks and act as a guide for the project. The Gazprombank Group welcomes European business in Russia and tries to develop long-term relationships with EU partners, including a wide range of joint projects in areas where we are traditionally strong such as oil and gas, heavy machine building, chemistry and infrastructure construction. For instance, in 2016, we completed financing for the construction of a therapy and rehabilitation centre under a St Petersburg hospital, in partnership with Italy’s Pizzarotti. In 2019, we agreed a co-operation project with Italy’s Maire Tecnimont for funding projects in the natural resources processing industry in Russia and other CIS countries. For many years, Gazprombank has been a leading consultant on M&A transactions on the Russian market, including deals involving foreign capital. Moreover, we do bring foreign and Russian investors together when it comes to landmark bond and/or equity deals on the Russian capital market, including foreign issuers` placements. As well as developing a merchant banking business taking minority stakes in non-public fast-growing companies, the bank’s representatives are involved in the management of portfolio companies of MIR Capital – a joint fund with Italy’s Intesa Group.