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| Home > News & events > 2007 feature stories > Russia’s Spurt Bank grows with Tatar SM... | ||||||||||
Russia’s Spurt Bank grows with Tatar SMEs |
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In a small two-floor office in Kazan, capital of Russia’s Tatarstan region, eight workers sit over metal lathes, peering through magnifying glasses as they fashion precision medical instruments ranging from scalpels to tweezers. Surgical Titan is a global leader in its field, making skilfully-crafted surgical instruments out of light-weight titanium, of which Russia is the world’s leading producer. The company has an enviable list of loyal clients who trust it to produce the bespoke equipment they require. “For example we have one doctor in California who likes his instruments to be pink, rather than our normal blue,” says Titan General Director Yuri Kolpakov. “He says it makes them more visible.” Surgical Titan may not be the biggest company in Russia, but its clientele stretches across the globe. Mr Kolpakov says: “We have customers in Europe, Asia, the US, even Brazil.” That makes Surgical Titan arguably more international than Gazprom. Such small and medium-sized enterprises (SMEs), particularly those making and selling niche products worldwide, are considered vital in helping Russia to diversify its oil-dependent economy and to build wealth from the grassroots upward. Backing SMEs and other innovative enterprises is a central pillar in the EBRD’s new Russia investment strategy, approved in 2006. Backing small business Surgical Titan was set up in 1995 and was helped onto its feet by a one-year, one million rouble ($37,000) loan from Spurt Bank, one of Tatarstan’s leading local banks. In just two years Spurt Bank has made such small business lending one of its most important business activities. It has done so with the help of a four-year, 280 million rouble ($10 million) loan from the EBRD in September 2005, to be disbursed to local SMEs. Yevgenia Daoutova, Spurt Bank CEO, says: “Two years ago, we hardly had an SME credit portfolio. Now it’s 1.8 billion roubles ($67 million), which is about 40 per cent of our total credit portfolio.” She credits the EBRD’s input, in capital and advice, for this expansion in their business. “The term of the EBRD loan is longer than we’d get from private banks, which has helped us to make longer-term loans to small businesses.” For example, Spurt Bank made a three-year loan for 1 million roubles ($37,000) to Juventa, a Kazan dentistry clinic set up four years ago by general director Dmitry Marasinsky. He says: “The loan helped us buy an x-ray machine from Italy. There’s quite strong competition in the dentistry sector but technology like the x-ray machine makes us a high-end competitor. We’re like a Mercedes, the others are more like Ladas.” As an extra draw for clients, he also runs a tanning salon beside the dental practice. Teaching banks the ropes “The EBRD has a lot of experience helping regional banks set up SME programmes,” says Yuri Nikishev, Deputy Chair of Spurt Bank’s Board. “They don’t just provide us with money, but also with technical assistance. We were impressed with their success with SibAkademBank in Novosibirsk, for example, which has shown how profitable SME lending can be.” He admits that the SME lending market is getting more competitive. “There’s a lot of activity in the sector. Several other banks are entering the market. The key is to be quick in your decision-making. We’ve updated our risk management system to make credit decisions quickly – in a maximum of two to three days, if clients have all their paper work in order.” The EBRD is working closely with Spurt Bank to encourage it to make smaller loans, sometimes without demanding collateral as back-up, and particularly to the services sector. Another of Spurt Bank’s clients, Center Dis, which makes and installs metal pipes, says demands for collateral are one of the key problems for SMEs seeking bank credit. “It’s quite easy to find credit now,” says Center Dis General Director Kamil Minabydinov. “But it is difficult to find credit without having to pledge collateral for the loan. Some banks accept land as collateral, but then you have to secure the rights to the land, which can be quite difficult in Russia.” Center Dis took out a two-year three million rouble ($113,000) loan from Spurt Bank, with which it is building a new headquarters. Just the beginning Mr Minabydinov says the business environment for SMEs is challenging in Russia but is certainly better than in the 1990s. “It was a nightmare then. No-one was building anything.” Now, with the oil sector booming, Center Dis is prospecting for opportunities in huge pipe-building projects being launched by companies such as Gazprom and Transneft. Mr Minabydinov takes visitors on a tour of several of his company’s projects, as his workers lay down pipes in the fields outside Kazan for everyone from the ubiquitous Gazprom to local mayonnaise producers. Seemingly unbothered by the minus 25-degree temperature, he waves his hand over the mile or so of piping and says excitedly: “This is just the beginning. You know how big Russia is? It’s an enormous country, with enormous projects being launched. Things are finally happening!”
By Julian Evans, freelance writer
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