Clash of Russia State Bank Giants Deepens as VTB Arm Hires 7,000By
VTB’s Pochta Bank to open branches in 20,000 post offices
Lender will overtake Sberbank branch count in regional push
VTB Group’s re-branded Russian consumer lender will hire 7,000 employees this year in a push into thousands of regional post offices, aiming to supplant Sberbank PJSC as the rival state-owned bank retrenches.
Pochta Bank plans to double the number of its branches this year and boost its staff count to 18,000, while attracting cash stashed in Russian “piggy banks” to increase deposits, Dmitry Rudenko, chairman of the division’s executive board, said in an interview.
The division, whose name means “postal bank” in Russian, is ramping up a push into the regions amid the retrenchment of Sberbank, which closed more than 1,300 of more than 16,400 branches in 2016 and is pushing customers to do their banking online. Pochta Bank was created from Leto Bank, VTB’s former consumer lender, last year and is a joint venture with the nation’s post office.
“The mass segment is often underestimated, but we think that it has high potential and that’s why we pay attention to working with the regions,” Rudenko said. “Let it be small deposits, but we will have a huge number of them.”
Sberbank and VTB, which also runs Russia’s biggest investment bank, are the nation’s two biggest lenders.
The strategy for Pochta Bank has been to coax deposit growth from Russians’ pension payments and personal cash hoards, and the post office is a natural partner: 40 percent of pension payments are distributed through post offices, VTB said in its three-year strategy presentation in January.
Individual savings between 1.7 trillion and 2.9 trillion rubles ($30 billion to $50 billion) may be held outside Russia’s banking system, Natalia Orlova, chief economist of Alfa Bank JSC, said by phone. About 24 trillion rubles were held in individual deposits at the end of January, according to central bank data, of which Sberbank held 11.4 trillion rubles.
Russia has about 42,000 post offices and Pochta bank plans to start operating in almost half of those by the end of 2019. It will start operations in at least 6,000 offices this year, doubling the network, Rudenko said.
It plans to grow its loan book by a quarter this year, and boost deposits as much as sixfold, to 150 billion rubles. Its longer-term target is 1.6 trillion rubles in deposits by 2023.
By that time, Pochta Bank can be a “donor of deposits” for the market and attract Russians’ individual cash hoards which aren’t yet being put to work, Rudenko said. That may be in line with the goals of the Russian central bank, which is keen to push the nation to save rather than spend in order to control inflation.
As for Sberbank, it plans to keep closing its branches, some inherited from the Soviet era, and cut 8 percent of its staff this year amid the online and smartphone banking push. Rudenko said that’s a problem for Russians in more remote regions, who will lack direct access to banking infrastructure.
"I’m fine with digital technologies, and think that they are the future," Rudenko said. "But I don’t think that the future is limited by that. Digital development won’t displace physical presence. They will complement each other."
— With assistance by Maria Kolesnikova