OTP Bank revealed on March 1, 2024, a pivotal partnership with Iliad Solutions, aimed at advancing FinTech developments. This collaboration signifies OTP Bank’s dedication to innovation within the financial technology sector, enhancing its service offerings across Central and Eastern Europe.
Banking & finance
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Sberbank announced on February 28, 2024, plans to pay dividends worth 50% of its record 2023 net profit of 1.5 trillion roubles ($16.3 billion), reflecting a substantial increase over the previous year’s earnings.
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President Vladimir Putin approved HSBC’s sale of its Russian unit to Expobank, facilitating the British lender’s exit from the Russian market following negotiations that began in June 2022.
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On September 28, 2020, Cardpay, a licensed e-commerce and payment services company based in the U.K., became the first direct member of the Russian payment system Mir. By joining Mir, Cardpay plans to introduce Mir cards to electronic commerce on four continents: Asia, Latin America, Europe, and North America. The move comes after the first pilot transactions with Mir cards using the Mir Accept 2.0 security protocol were conducted during the week preceding the announcement.
Mir was launched in 2015 and is the Russian Federation’s national payment system with 275 participating banks and 154 issuing banks. Mir cards are accepted throughout Russia and in eight foreign nations, including Turkey, Armenia, Kyrgyzstan, Belarus, Uzbekistan, and Vietnam.
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Sberbank has opened its first next-generation location in Moscow at 2 Tsvetnoy Boulevard. This is more than just a bank branch; it’s a space where one gets a unique customer experience that is unparalleled anywhere in the world and brings together the best practices of customer interaction.
Customers will receive all the financial services they could access earlier, but the level of service will be different at the new branch. Biometrics allows customers to be served without a passport. ATMs combine modern design, materials, technologies, and a user-friendly interface. An ATM’s shape is reminiscent of a smartphone, and the interface looks like a well-known mobile app from Sberbank. One can withdraw money with a card or a smartphone and be contactless using a voice assistant or just a smile, as the ATMs have facial recognition. This unique technology has been used for the first time in ATMs worldwide.
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On September 30, 2020, Alfa Bank has announced its partnership with Plug and Play, the Silicon Valley-based global innovation platform.
Along with 80 other financial institutions in the United States, Frankfurt, Amsterdam, Milan, Paris, Abu Dhabi, Shanghai, Singapore, and Tokyo, Alfa Bank will join the global plug-and-play ecosystem and use the platform to support its comprehensive strategy of digital transformation in the fintech sector.
Alfa Bank will strengthen its contacts with fintech startups on a global scale. According to Markswebb, the bank has already developed the best banking application in Russia. Alfa Bank is also developing a “new generation branch network” with biometric and geographical recognition, all while preserving live communications with its customers. The bank’s fintech partnerships and continuous innovation have allowed it to build a sizeable network.
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On September 27, 2020, Huobi Global, the world’s leading exchange for digital assets, has released a native mobile app for the Russian market.
Available for iOS and Android, Huobi’s spot market can now be accessed by Russian users via a simple and intuitive mobile app. The users would then be able to trade hundreds of digital assets and cryptocurrencies.
While Huobi wants to strengthen its presence in emerging markets around the world, Russia remains one of the company’s key markets in the European region. Russian users already account for 10 percent of Huobi’s total spot trading volume, but Huobi wants to expand its market share further by offering locals a professional, secure, and transparent trading service in a fully native mobile format.
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Special features of the country’s banking system might impact U.S. business.
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The Russian banking sector is dominated by large, state-owned banks, with the top five banks controlling over 50 percent of assets.
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Credit institutions (and banking groups) will now need to disclose to users certain information about estimated adjustments to the fair value of financial instruments floating in a thin market with low liquidity. The disclosure must also include the lender’s global systemic performance indicators, along with the geographical breakdown of credit and market risks used to calculate the countercyclical capital buffer. The relevant ordinance has been registered by the Ministry of Justice of the Russian Federation.
Non-bank credit institutions will be obligated to disclose information on the risks assumed and the respective risk management procedures as part of their financial reporting.
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The Bank of Russia has set the requirements for investment adviser activity and the procedure for the accreditation of computer programs that are used to give individual investment recommendations. The corresponding regulations were registered by the Ministry of Justice.
The requirements stipulate that an investment adviser should give advice in accordance with their client’s investment profile determined based on the information obtained from the client and recorded in a special document.
To compile the investment profile, the adviser needs to have information about the client’s age, education, average monthly income and expenses for at least 12 months, and the amount of savings (if any). Should the investment adviser become aware of any changes in the information used to compile the existing investment profile, a new profile must be drawn up.
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Russian financial markets were on a much surer footing in January. Investor sentiment gained a boost from softening U.S. Federal Reserve rhetoric over forthcoming monetary tightening, the advances in U.S.-China trade talks, and oil prices, with Brent upwards of USD60 a barrel, according to the 35th issue of the commentary “Banking Sector Liquidity and Financial Markets.”
The structural liquidity surplus dropped in January to 2.7 trillion rubles, as budget-channel funds saw a seasonal outflow. Short-term interbank rates were close to the Bank of Russia’s key rate, with the spread between them slightly negative. The forex liquidity position remained strong. The resumed fiscal rule-based purchases of foreign currency had no major implications for either forex liquidity or ruble exchange rate movements.
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In 2018, the Bank of Russia identified over 400 thousand unauthorized transactions totaling 1.38 billion rubles. The previous year, 317 thousand such transactions were identified totaling 961 million rubles. This growth is related to increased transparency of information that banks provide to the regulator about unauthorized transactions.
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On June 9, 2018, Sberbank Investment Research, the research department of Sberbank’s corporate and investment banking business, has taken the first place in five of the nine categories of the Extel Survey 2018 and was recognized as having some of the best analysts in Russia and the C.I.S.
Sberbank CIB’s team also took the first place in the equity sales category and Olga Klimova, head of equity and managing director, was recognized as the best in her field.
Sberbank CIB’s annual conference Russia: The Inside Track was recognized as the top pan-European brokerage event.
Sberbank Investment Research analysts secured the first place in five of the nine categories available: telecommunications and media, small and mid-cap research, metals and mining, equity strategy, banks and other financials.
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On June 7, 2018, research company The Nilson Report announced that Sberbank became the largest acquirer in Europe for the second year in a row. In 2017, Sberbank handled more than nine billion transactions in its acquiring network. This number increased by 20 percent compared to the figure for the previous year. The report took into account the data on Sberbank’s business in Russia. As in the previous year, Worldpay (7.91 billion transactions) was the second largest acquirer in Europe, and Barclays (6.89 billion transactions) was third.
In 2011, Sberbank took the 12th spot in The Nilson Report; a year later, it reached the sixth spot (1.3 billion transactions). In 2014, Sberbank became one of the three largest acquirers in Europe (3.6 billion transactions), and, in 2015, it was ranked second (5.3 billion transactions).
The Nilson Report takes into account the transactions made in-store, online, and on a mobile web application.
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On May 31, 2018, Sberbank launched a Visa credit card on the occasion of the 2018 FIFA World Cup Russia™ in partnership with Visa. The card will be offered as part of the promotion from May 16 to July 31, 2018.
In anticipation of the 2018 FIFA World Cup™, Visa, which is a worldwide partner of FIFA in the payments category, granted Sberbank the exclusive right to issue Visa cards with the championship’s mascot – the wolf Zabivaka™ – within Russia.
With this card, one can get 20 percent cash back for purchases at sports stores and five percent when paying bills in cafes and restaurants. Increased bonuses are awarded for transactions made before December 31, 2018 at the above outlets around the world.
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On June 7, 2018, Sberbank released its key highlights for the first five months of 2018. The numbers were calculated in accordance with Sberbank’s internal methodology, which was updated effective January 1, 2018. The numbers for 2017 have been calculated in accordance with the updated methodology as well for comparison purposes.
Sberbank earned about RUB67 billion in net profit in May. Sberbank extended over RUB1.1 trillion in loans to corporate and over RUB270 billion to retail clients in May. The loan portfolio continued expanding in May, growing by 1.3 percent in the corporate segment and by 2.1 percent in the retail segment. The bank’s net fee and commission income grew 23.7 percent in the first five months of the year as compared to the corresponding period of 2017.
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Sberbank has taken part in the Russian Small and Medium-size Enterprises Forum (SME Forum) that is traditionally held before the St. Petersburg International Economic Forum.
During the forum, Sberbank’s senior vice president and the head of the bank’s corporate business block Anatoly Popov announced that as of early May 2018, Sberbank’s portfolio of SME loans amounted to RUB1.3 trillion, which is higher than the pre-recession level.
Over the four initial months of 2018, lending to SMEs increased by 74.4 percent against the corresponding period of 2017, reaching RUB535 billion.
Sberbank has cut its lending rates for these loans three times since the year began. The average rate for SME loans has fallen by 0.4 percentage points since the year began and now amounts to 10.8 percent, which is considerably lower than the pre-recession level of 12.1 percent seen in 2014.
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The sale transaction of Essar Oil to a consortium of investors, where VTB Capital acted as sole financial advisor to the seller, won in the “M&A Deal of the Year in Asia” nomination by The Banker magazine’s “Deals of the Year 2018” awards. VTB announced its victory on May 4, 2018. The transaction amounted to USD12.9 billion.
The competition’s winners are selected based on a range of criteria, including the complexity of the transaction, its innovativeness, and the deal’s environment.
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In 2017, clients of online stores made more than 200 million purchases using Sberbank’s payment infrastructure, the bank announced on April 12, 2018. The group of online stores using Sberbank’s acquiring services grew fivefold in 2017 to 42,000. According to Sberbank’s estimates, it now has a 30-percent share of the online acquiring market.
The bank’s network of POS terminals totaled almost 1.4 million devices. They are all equipped with contactless technology. In 2017, Sberbank configured its network of POS terminals to accept China’s Union Pay-branded cards. These cards are mainly used by Chinese tourists and are utilized most often at stores selling clothing and shoes (28 percent of purchases), electronics (25 percent), cosmetics (19 percent), and jewelry (16 percent). The average purchase made using China’s Union Pay cards is around 2,500 rubles.
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On April 11, 2018, Sberbank and SAP have announced the completion of a major HR digital transformation project that utilizes the SAP Success Factors cloud solution.
The system is currently used by 230,000 of the bank’s employees in Russia. In the future it is planned to connect all of Sberbank’s subsidiaries. The project will cover a total pool of 270,000 employees. The transition to the new system was carried out by a joint team made up of SAP consultants and Sberbank employees over a year and has been recognized as the fastest project to deploy a cloud-based HR system of a major SAP client globally.
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On May 31, 2018, the parent company of the VTB Group VTB Bank released its unaudited consolidated International Financial Reporting Standards (IFRS) results for April 2018 and the four months that ended on April 30, 2018.
VTB Group’s net profit was RUB67.6 billion (91.5-percent increase year-on-year) in the first four months of 2018 and RUB12.1 billion (57.1-percent increase year-on-year) in April 2018 versus net profit of RUB35.3 billion in the first four months of 2017 and RUB7.7 billion in April 2017. Net operating income before provisioning grew 12 percent year-on-year in the first four months of 2018 and 33.9 percent year-on-year in April 2018.
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The number of cards being issued in Russia and the spending made with the cards’ use were on the rise in the first half of 2017, the country’s Central Bank announced. Russian banks issued almost 260 million payment cards in the first six months of 2017, which is 10 million up on the same period of the previous year. As of July 1, 2016, there were 133.5 million active cards, i.e., cards that were used by their holders to conduct transactions within the reporting period. This year, the number stands at 144 million active cards.
In the first six months of the year, as many as 10.9 billion transactions were processed with the use of plastic cards to the tune of RUB27.6 trillion (USD467 billion). Over eight billion transactions were performed for a total of 7.7 trillion rubles (USD130 billion) worth of products and services.
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The recapitalization of the Russian Direct Investment Fund (RDIF) will be performed using the resources from Russia’s National Welfare Fund (NWF), the TASS news agency reported on July 25, 2017. The relevant amendments to Russia’s federal budget were forthcoming during the fall session of the Federal Assembly. Similar allocation mechanisms are expected to be built into the federal budget for 2018 and for the planning period of 2019 to 2020. In line with the directives of the Russian President and the Prime Minister, the RDIF is to be replenished to USD10 billion.
On July 24, Russia’s President Vladimir Putin held a meeting with RDIF’s CEO Kirill Dmitriev. Mr. Dmitriev reported that more than one trillion rubles (USD16.6 billion) was invested in various Russian companies within the six years since the fund was launched.
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Citi, a U.S.-based bank, has seen its Russian business substantially diminish in the last few years, according to a Kommersant report published on September 29, 2017. Analysts are of the view that Citibank is getting ready to fold down its Russian operations altogether, especially if the tension in the U.S.-Russia relationship continues building up.
During the past couple of years, Citi cut the number of its branches in Russia by 50 percent to only 24 and significantly reduced the rate of issuing credit cards to Russian customers. Citibank also experienced a 40-percent reduction in its private client base.
Citi’s private banking department head Mikhael Berner earlier stated that the bank was reassessing its portfolio and closing accounts due to inactivity.
Berner said, however, that Citibank did not intend to sell its customer portfolio.
Aviation
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In a dramatic turn of events, the Russian new car market faced a sharp decline of 62.6% in 2022, plummeting to a market value of $21.9 billion and
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The Russian automotive manufacturing industry faced a significant downturn in 2022, with market values plummeting by 52.4% to $13.1 billion and pro
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The Russian airline industry experienced a significant downturn in 2022, with a market value decrease of 56.7% to $10,547 million, attributed to th
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TSAT Rostec announced on March 4, 2024, the impending deployment of a cutting-edge domestic 3D printer designed to manufacture heat-resistant compo
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The United Engine Corporation’s UEC-Saturn on February 26, 2024, initiated a new application round for the Wings of Rostec, aiming to nurture futur
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The Salyut production complex of the Rostec United Engine Corporation in Moscow is set to double its training intake in 2024, welcoming over 1,000
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Despite Western automakers exiting Russia due to economic sanctions related to the 2022 invasion of Ukraine, a ‘parallel import’ scheme initiated b
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Mercedes-Benz Group has completed the sale of its shares in Kamaz, the leading Russian truck manufacturer based in Naberezhnye Chelny, known for pr
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Rostec’s Obninsk Research and Production Enterprise “Technology” has initiated the serial production of domestically produced cockpit glazing for t
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In a significant shift in the automotive market, Chinese brands emerged as leaders in new car sales in Russia throughout 2023, according to data fr