FUIB's Chairman of the Board about what happens to the main banking asset of SCM

Forbes interview with the chairman of the First Ukrainian International Bank (FUIB) Serhiy Chernenko took place two weeks ago. At the meeting, the head of one of the largest banks in the country and of the main financial asset of Rinat Akhmetov's SCM told about the development strategy of the bank into an all-Ukrainian one on the background of the crisis.

Chernenko himself is a veteran of the bank; he started his career in 1997 in the Department of risks, and rose to the level of the head of the bank, leading the board of FUIB since 2012. Right now, under the leadership of Chernenko takes place the amalgamation of FUIB with "Renaissance Capital", the retail bank of SCM. SerhiyChernenko spoke with Forbes about what objectives the amalgamation is dedicated to; about the damage resulting from the conflict in Donbas, and about the challenges that the Bank is currently facing.

- In the group of largest banks, FUIB is one of the few private Ukrainian banks, which at the moment are dealing relatively well. Thanks to what?

- I would say that today, FUIB is the only such bank. I was very pleased to hear in a recent interview with Valeriya Gontareva, when she said that she does not know in person only one shareholder of banks from the group of the largest – Rinat Akhmetov, since it was not necessary. And it is right. NBU and the shareholder are lenders of the final recourse. We have to cope with all the challenges on our own. We are professionals, and the criterion of professionalism is how well we were able to build the business that is can adapt to external realities, to make long-term forecasts and to respond to the challenges. I believe that we have coped with the task and built such a business model.

Insider loan portfolio makes about 16%, these are the companies of the SCM Group. Today there are two standards in the banking system concerning the insiders. The first one means there is one insider, who can not account for more than 5%. The second one is 25% for a group of insiders. The paradox is that all of our insiders are different legal entities but they are treated as one insider. Precisely because of this, we have successfully completed the last year, despite all the difficulties

- Tell me the difference between the reality of 2014 and your expectations?

- 2014 was a year of challenges. The new reality which we faced, and the enormous emotional strain associated with it became a complete surprise to us. I will not dissemble - we were not psychologically ready for it.

After Maidan and the events following it, it became difficult to carry out our daily work. It was dangerous to transport valuables, to carry out cash collection. Even the security guards were afraid and refused to help us in the transportation. It was a period of chaos. As FUIB was previously "registered" in Donetsk, there was also our data center. With the onset of deterioration of the situation in the east, we decided to transport the data center from the ATO zone. Now, our data center is in a safe place. In addition, we responded quickly when the first work stoppages occurred in Donetsk branch of the National Bank of Ukraine in connection with the aggravation of the situation in the region. We have organized an alternative channel in Kyiv, and in that moment we were the only bank in the region, which could make payments. By the way, on the basis of the decision, the NBU later offered to all other banks in the East region to ensure these alternative channels through Kyiv.

- What are the most difficult events of the past year in terms of impact on your business.

- These are definitely the factors of the Crimea and the Donbas. Our losses in the Crimea amounted to about 300 million hryvnia. This was a very unpleasant fact, but it was a trifle compared with what consequences the events in the east of the country entailed. These are the war and the prohibition of banking activities in the area of ​​the ATO. As a result, many enterprises in the region have stopped to function, the infrastructure of the region has suffered enormous damage.

The East of Ukraine is quite a rich industrial region with a high population density and, therefore, great potential for the development of the banking industry. It was possible to count on a good performance by opening an outlet in a city of 100,000 people. Of course, the stopping of such a large region was bound to affect the portfolio of the banks. And especially FUIB for which historically Donbas has been the parent market and a key region in terms of business.

- About 20% of your assets were concentrated in the Donbas. How do you solve the problem with these loans?

- In fact, 20% of the bank's assets are concentrated in the Donbas as their place of registration. At the same time, the portfolio, which is there, is still working. Recently, we analyzed the performance of the established reserves, and we were pleasantly surprised, because it was expected that the portfolio of the Eastern region will be much "harder". But in reality, these reserves were much lower than we expected. It's now difficult for me to find an explanation for this phenomenon, you need time to acknowledge. I think one of the reasons is that the business itself may be located in other regions, in Zaporizhzhya, Kharkiv and other cities. This means that the business adapts, it finds resources and other sites.

In any case, the first thing that needs to be done when starting the work with these assets is to identify the place of business and the reason for which the customer does not pay. It gives an understanding of whether the borrower is willing to cooperate and to compromise or just using the situation to evade the fulfillment of their obligations.

Please find full text of the interview at Forbes Ukraine