Sovcombank has grown in 17 years from a small bank with a capital of 2 million rubles with the only branch in the village of Buoy (a town 100 kilometers from Kostroma with a population of 24 thousand) to the 4th largest and most profitable privately-owned bank in the country with a capital of 127 billion rubles. The Bank currently has 15 thousand employees in 2.4 thousand offices in 1027 towns across the country.
The Group believes that a disciplined execution of its strategy enables it to maintain high profitability and excess capital through the economic cycles and to take advantage of market opportunities as they occur.
Stages of development
In August 2018, the Bank increased its capital by ₽9.5 billion due to investments of the consortium of sovereign funds of Russia, China, the Middle East countries, as well as the SBI Holdings Inc. (Japan). In April 2019, the Bank attracted additional investments of ₽6.1 billion from a consortium of sovereign funds, including a new shareholder – the Russian-Japanese Investment Fund ("RJIF"). In September 2019, Sovcombank was the first Russian bank to join the international group of financial institutions that signed The "Principles of responsible banking" of the financial initiative of the United Nations environment Programme (UNEP FI). In October 2019, Sovcombank issued $300 million of subordinated Eurobonds with a coupon of 8%.
In 2015, Sovcombank acquired 9.48% of shares in Rosevrobank. The Group continued to increase its equity interest and finally consolidated 100% of shares in August 2018. The Group's consolidated assets increased to more than 880 billion rubles, the capital exceeded ₽100 billion. Co-founders of Rosevrobank (Ilya Brodsky and Andrei Suzdaltsev) became the shareholders of Sovcombank. Due to the end of integration processes, Fitch upgraded the banks credit rating to "BB".
In January 2017, Sovcombank acquired the mortgage loan portfolio of Nordea Bank Russia which comprised a portfolio of high-quality seasoned mortgage loans. Disciplined commitment to the Bank's strategy allowed to achieve an average return on equity (ROE) of 50% for the period 2010-2017. In 2017, the credit rating of Sovcombank was updated by rating agencies ACRA, Moody's, and Standard & Poor's.
Sovcombank's strategy is to identify market niches with limited competition and to achieve and maintain strong competitive advantages in these niches. Due to the acquisition of Metcombank in October 2016, the Bank successfully entered the car loan segment. The acquisitions of financial technology companies "Finder", "RTS-Tender", and ICICI Bank Eurasia contributed to the creation of the largest digital platform for public procurement in Russia.
In September 2015, the DIA selected Sovcombank in an open tender for the financial rehabilitation of Express Volga Bank, a regional Russian bank based in Saratov and active predominantly in Volga region. As a result, Sovcombank entered a new region with nearly zero deployment costs and also acquired an expertise in cash and settlement services for small and medium-sized enterprises (SMEs).
In February 2014, Sovcombank acquired GE Money Bank Russia, a Russian subsidiary of GE Capital International Financing Corporation, which specialised in unsecured consumer lending. As a result, Sovcombank gained access to an advanced technological platform and the first class expertise in risk management and underwriting procedures, human resources and IT. Acquisition of GE Money Bank Russia enabled Sovcombank to build eventually the 3rd largest retail distribution network in Russia.
Sovcombank is actively developing the format of mini-offices throughout the country. The cost of maintaining a mini-office is 30 times less than that of a "heavy" traditional bank office, which is why the model is extremely profitable and convenient for use in small towns. By December 2013, the Bank expanded its network to 732 locations, and the number of employees reached 7,000.
Sovcombank was the first bank in the country that started to lend to older people. According to the Bank's analysts, pensioners are the best borrowers due to their prudent financial behaviour, low but guaranteed by the Russian government income, small loan size and short terms of loans.
Sovcombank acquired the Association of regional credit agencies (ARСA), a regional consumer loans provider with a network of 612 mini-offices and 2010 credit brokers in 140 towns in Siberia and Russian Far East. In 2007, the Bank also formed a securities portfolio mainly consisted of bonds of largest Russian corporations.
In March 2004, the Bank received a General license from the CBR, and in September 2005, it entered the Deposit insurance system. By the end of 2006, Sovcombank successfully expanded its branch network to 10 offices with 425 employees. Due to outstanding financial results the Bank's equity increased x21 times to ₽423 million, total assets grew up to ₽4.7 billion.
In February 2003, "Buoycombank" changed its name to "Sovcombank" (short for "Modern Commercial Bank") and moved to Kostroma, where the head office still continues to operate. By the end of 2003, the Bank already had three branches: in the city of Buoy, in the city of Kostroma, and in the city of Moscow.
The administration of the Buoysky district of the Kostroma Region and 45 state-owned companies (district collective farms and municipal enterprises) organized a commercial agro-industrial bank "Buoycombank" on the basis of Agroprombank in the town of Buoy. The bank served the shareholders as well as people of pre-retirement age and pensioners.