establishing a factoring business in russia? factoring market in russia and cis: market trends and...
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Establishing a factoring business in Russia?Factoring market in Russia and CIS: market trends and future scenarios.
ILYA POKAMESTOVBusiness Development Director,
Financial Company POLITEKS(Russia)
• POLITEKS LLC was created in 2003 as an affiliate company of B&N BANK. POLITEKS offers financial lease (leasing) and a whole range of factoring services. In 2008 a limit of operation of financial lease reached 1,1 billion RUB. During operating time such companies became our clients: SBARRO, REN-TV, OOO “City Bowling”, OAO “Volgatelecom”, OAO “Ulyanovskenergo” and others.
• May 2011 POLITEKS commenced operations of factoring services.
• November 2011 POLITEKS member of IFG.
ABOUT POLITEKS
• B&N Bank – is a successfully developing universal bank with a wide sales network over 120 offices in different regions of the Russian Federation.
• B&N Bank is among TOP-50 Russian banks. As of included in TOP-30 biggest Russian banks according to CBR Consolidated Statistical Data.
• B&N Bank – is a successfully developing universal bank with a wide sales network over 120 offices in different regions of the Russian Federation.
• B&N Bank is among TOP-50 Russian banks. As of included in TOP-30 biggest Russian banks according to CBR Consolidated Statistical Data.
B&N BANK‘S NETWORKS
Moreover, the Bank’s sales network is supplemented by branches of two banks consolidated in the banking Group (14 points of Bashinvestbank and 27 points of Vyatka-Bank).
RUSSIA-Market size
0
20
40
60
80
100
120
140
0 100 000 200 000 300 000
Growth Rate [CAGR, 2005-2007]
Market Size, [mln. euros]
Bubble size shows GDP penetration
China
Russia
India
Brazil
UK
Market Volumes
30 576
23 520
14 700
8 420
4 633
2005 2006 2007 2008 2009
45 864
2010
+58%
0.8% 1.1% 1.6% 2.1% 2.7% 3.0%
Forecast
Source: Expert RA, AFC analysis
Market historical volumes and forecast [mln. euros]
Penetration [% to GDP]
882 bln. RUB-TURNOVER 2011, 165 bln. RUB-OUTSTANDING Dec. 2012,
Forecast 2012-1500 bln. RUB
1,8
5,0
8,9
10,0Germany
Finland
UK
Russia
Source: FCI, AFC analysis
Benchmarking against mature markets
Financing per client, mln. euros
Segmentation
10%
47%
43%
2011
49%
36%
14%
2011
LE
ME
SE
5700 Clients
17200 Debtors
73 Operators
Regional aspectsF
acto
ring
clie
nts
base
326 423 958 75,000
2002 2003 2003 2007
Source: Expert RA, AFC
High Coverage
Medium Coverage
Market players
Factoring market: breakdown by type of player [2011]
62%
35%
3%
Factoring departments under bank's umbrella
Factoring companies that operate with banking mother structure
Non banking factoring companies
Source: Expert RA, AFC analysis
Market players
Source: Expert RA, AFC analysis
Label
Label
Label
Label
Market Trends
• Consentration
• IT problems
• HR problems
• Legal aspects
• Risk issues
• No infrastructure
• Lobbying
Market Trends
•Russia's potential to play a major role in the world economy is to be underpinned through the establishment of a financial hub
•So far international factoring in Russia takes only 1% of the factoring turnover, far behind the world's 11%
•Tough Way suggests the appearance of the state regulator in the factoring market. I.E., the licence regime would appear that would be the main lever of the market
•Effectively this would bring the market under state control, undermining its flexibility and adaptability
Regulations-bound scenario
Regulations-free scenario
•Liberal Way means, that factoring market will be developed with a self-regulation scheme.
•In this case – The Russian Association of Factoring Companies will become the main regulation body on the market.
•Flexibility but "fair-play" rules followed
To start factoring business in Russia: Challenges
• Legislation
• Lack of professionals
• IT platforms
• Unstable macro and micro perfomance
• Political risks
• Gross margins
• Huge potential market
• Leading role in community
• CIS markets
• Low entrance barriers
To start factoring business in Russia: Benefits
• Affilate Company
• Factoring departments in international Banks
• Buy out Russian Factoring Company
• Joint venture with Russian Factors
• Joint venture with international investors
Ways to enter Russian Factoring market:
FACTORing in CIS
• Ukraine
• Belorussia
• Kazakhstan
• Moldova
• Armenia
Questions?
Many Thanks!
Contacts:• ILYA POKAMESTOVwww.politeks.ru• +7(495) 748-50-50Director of Business DevelopmentFinancial Company [email protected]
www.factoringpro.ru+7(499) 940-8798 General [email protected]