Interview with Sberbank management board chairman Edin Karabeg
In an interview for ‘Sarajevo Times’, management board chairman Edin Karabeg noted that even though Sberbank has been present in BiH for only a few months, he is able to already say that there are positive results. He bases the success of Sberbank here and in other places where the bank has expanded over the last 15 years on ‘organic growth’. Sberbank chooses to expand and operate in places it believes has potential for growth, and is in BiH because it sees possibilities for development. He attributes the consistent achievement of Sberbank since its founding on ‘steady institutional evolution’, which has given the bank the opportunity to acquire the experience and expertise necessary to succeed in today’s competitive market. Karabeg said that customer service is an area in which Sberbank thrives and is one of the cornerstones of its continued success, since it is based on an organic development of the relationship with clients and their needs. Karabeg highlighted that Sberbank is impressed with the regulatory regime of the banking sector in BiH, and that their biggest concern is the economic situation in BIH. Even though the BiH economy has stagnated, he believes that the possibility for rapid economic growth exists if the right steps are taken.
Sberbank, the largest bank in Russia and the third largest in Europe in terms of assets and capital base, is one of the fastest-growing financial institutions in the world. The bank has been operating in Bosnia and Herzegovina since February this year. What were the key factors for Sberbank to enter the BiH market? What are the advantages of the market in Bosnia and Herzegovina, and what makes the bank different from other banks in the BiH market?
You mention the size and dynamism of Sberbank and you’re absolutely right to do that and I would also add that Sberbank is not only large and expanding – it’s also one of the most profitable financial institutions in the world. This hasn’t happened by accident. The bank has a tradition in Russia going back more than 170 years, and it is this steady institutional evolution that has given us the experience and the expertise to prosper in today’s extraordinarily competitive market. A decade ago the bank was a leader in Russia and in neighboring countries, Kazakhstan, Ukraine and Belarus. Following the strategy of internationalization since last year, it has expanded from this market to nine countries in Central and Eastern Europe through its acquisition of Volksbank International and to Turkey via the acquisition of DenizBank.
I think the essence of Sberbank’s success can be found in one area where we have focused an enormous amount of energy and attention: customer service. Sberbank has modernized its infrastructure and technology in a focused effort to enhance the customer experience and at the same time we have invested heavily in human capacity. We know that banking is not just a matter of numbers: it’s built on human relationships. Effective interaction with clients to offer customized solutions, together with state-of-the-art technology, and modern and efficient branches all mean that we can create value for our shareholders.
Sberbank’s arrival in Bosnia and Herzegovina opens a new chapter for us, and this is exciting as well as challenging, because we have an opportunity to develop our customer-centric business in a market that has enormous potential. We have brought new resources in terms of technical and commercial expertise and we are already seeing a positive response not just among customers but among our own staff. I think it’s true – and I think it’s also important – to say that our staff enjoys working for Sberbank: the atmosphere is professional, forward-looking and constructive.
When I speak about customer relations I’m not just talking about courtesy and efficiency – although obviously those things are paramount – I’m also talking about listening to what our customers want. Our services will develop in response to our customers’ needs. That, I believe, is the key to developing strong and mutually beneficial relationships over the long term.
What are the business results of Sberbank in Bosnia and Herzegovina so far and what expectations do you have in the upcoming period? Can we expect a more aggressive expansion of the bank in the BiH market by opening new branches and acquiring other banks?
We are a new bank in this market and we have been operating here for just a matter of months but it is not too soon to say that we are already seeing positive results. The success of our expansion elsewhere over the last ten to fifteen years has been based on “organic growth”. We have not expanded for the sake of expansion. Rather, we have expanded in order to take advantage of new business opportunities. This will also apply in Bosnia and Herzegovina. We are in this market because we believe it can grow and we intend to grow with it, so yes, we expect to expand because we believe the BiH market can expand. Right now, our focus is on completing the rebranding process so that Sberbank is recognized and welcomed in the market, and completing the upgrading of infrastructure, and I can tell you that both of these activities are going well.
We just launched a media campaign with the headline “Your story. Your bank.” It is part of the country-wide campaign to introduce one of the largest, fastest growing, and dynamic banking organizations in the world. The video premieres in Bosnia and Herzegovina and will be aired across the region later.
Sberbank BH is a member of Sberbank Europe AG, which manages a network of nine universal banks in eight countries of Central and Eastern Europe. The group has nearly 280 branches and employs a staff of almost 4,400 people. What has been your experience with your employees in BiH? How do they contribute to the achievement of Sberbank goals?
I have held managerial positions at banks and other financial institutions in Austria, Croatia, and Macedonia, and prior to that I also worked for the OSCE in Bosnia and Herzegovina. Employees in this country are hardworking, passionate and committed. They are the greatest asset of the bank and we are relying very much on this creativity and dedication in order to fulfill our goals.
Some analysts predict that the Euro, as a currency, will no longer exist five years from now. How does the crisis in the Euro-zone affect the business operations of Sberbank? What are the biggest challenges that Sberbank faces in the banking sector?
In terms of the banking sector itself, we have been impressed, and so have our colleagues in other banks, by the efficiency and transparency of the BiH regulatory regime. This has been one of Bosnia and Herzegovina’s success stories and it is a success on which we want to build. Of course, there are some things that could be improved, for example in terms of technology infrastructure, but overall the BiH banking sector is well-regulated and robust. However, our biggest concern is the economic situation.
We are convinced that the potential for rapid economic growth exists in Bosnia and Herzegovina – we have seen it happen and we have helped it happen in other Central and Easter European economies, but the fact is that after a strong showing a decade ago, the BiH economy has stalled. We think this situation can be turned around and we stand ready to work with BiH stakeholders to invest in new businesses and new opportunities. The very best operating environment from our point of view is a well-regulated market, a dynamic private sector and a growing economy, so we want what most people in Bosnia and Herzegovina also want.
In mid-April the BiH-UK Investment Forum was held in London, and Sberbank was one of the partners. How did you present BiH as an attractive investment destination to potential British investors? Can you share with “Sarajevo Times” other ways that Sberbank plans to support the BiH economy?
Potential investors attended the forum because they wanted to hear more about the BiH market at first hand, and the forum offered an excellent opportunity to do this, bringing stakeholders from the BiH public and private sectors to London. Presentations focused on strategic sectors such as energy, agriculture, tourism, and infrastructure. The Forum brought together two things that are key to successful economic development – opportunity and capital. I believe we will see the results of this in projects that emerge over the coming period, and I can assure you that Sberbank will be on hand to support such projects.
In addition to this type of business development, Sberbank is active in promoting education and science. For example, we are the sponsor and organizer of the “Battle of the Banks”, which is a competition open to students in the Russian regions, the CIS countries and the CEE countries, including Bosnia and Herzegovina. Teams get together to run a simulated bank and the one that emerges at the end of the year with the most profitable performance wins the competition: it’s fun, it’s educational, and it’s a great introduction to the practice of responsible banking based on organic growth, competitive customer service and growing shareholder value.
The Battle of the Banks also reflects Sberbank’s commitment to young people – not just as clients and members of staff, although that is very important to us, but as the guiding force in changing patterns of consumption, demand and expectation. Sberbank’s philosophy is to grow together with the countries where it operates and that literally means growing with citizens. We are a young bank in Bosnia and Herzegovina and we believe we are ideally positioned to respond to the needs and aspirations of a new generation. We have an active policy of supporting educational programs and providing internships and career opportunities for young people, and we have a business culture that is innovative and open to new ideas.