Archive for Thursday, June 19, 2003

Russians learn about U.S. banking

June 19, 2003

For two bankers from Russia, Tonganoxie is a perfect spot to learn more about American banking practices.

The duo, who are spending two weeks working with employees at First State Bank and Trust, hope to take their experiences in Tonganoxie and apply them to their banks in Russia.

Gennady Mescheryakov and Andrei Babin said Russian banks are working hard to capture the trust of the public. Before the breakup of the Soviet Union in the early 1990s, all banking operations were held by the government. So private banking is in its infancy.

"It's a very new concept," said Kent Needham, president of First State Bank.

And an August 1998 banking crisis eroded citizens' trust in the privatization of banking. Now, Russian banks are looking to attract citizens' funds, rather than depending on other companies for business. But that process won't be easy.

"It's a tremendous potential in Russia to develop this particular field of Russian banking," said Babin, 33. "A lot of Russian households just save dollars under the pillow."

And while Russian financial institutions want to attract foreign investments, the visiting bankers said too much foreign investment can mean that Russian banks can't compete.

While in Tonganoxie, Mescheryakov and Babin have visited First State's branches and met with employees in charge of a variety of areas in banking. One day, they learned about mortgages, and observed the process from start to finish. And then they saw a house under construction, financed by a First State loan.

"You can touch it and see it," said Babin, who is the executive director and advisor to the chairman of the Moscow Bank for Reconstruction and Development.

Mescheryakov has been interested in the Federal Deposit Insurance Corp., which insures most customers' bank deposits. And the two wanted to focus on bank budgeting issues.

It's these experiences, and many others, that Babin and Mescheryakov will use when they bring together all they've learned and try to apply some of it to their banks.

"We can't just copy this experience into Russia because the infrastructure is not ready yet," Babin said. ''... Once we get these ideas in Russia, things will, I hope, change dramatically."

The State Savings Bank handles from 70 percent to 80 percent of all dollars in savings in Russia. So there's room for private banks to attract more savings dollars.

Before arriving June 8 in Tonganoxie, the two men spent a week in New York City, attending classes and meeting with bankers, as well as visiting the Federal Reserve Bank of New York.

And when they leave Kansas at the end of this week, they'll stop in New York, where they will make a presentation to American bankers about how they will use the knowledge they've gained in Tonganoxie.

"It's been a unique experience for us," said Mescheryakov, who is vice president and chief financial officer of the International Bank of St. Petersburg.

And it's been a valuable experience for Needham, who is hosting the Russian bankers at First State and at his family's home.

"They're delightful, and I'm learning so much about their culture and banking in Russia," Needham said. "It's been very rewarding to date, and I'm sure that will continue. I think the benefits are tremendous."

The visit has included trips to area attractions, including baseball games, the state capitol, the Country Club Plaza and Cabela's. They've even jogged with Needham.

Needham anticipates he'll stay in touch with his visitors once they've returned to Russia.

"And I certainly hope to visit them some day," he said.

Their visit was arranged by the not-for-profit Financial Services Volunteer Corps, a private-public partnership that has as its mission to help build sound banking and financial systems in countries seeking to develop open, market-oriented economies.

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