Establishing a factoring business in Russia? Factoring market in Russia and CIS: market trends and future scenarios. ILYA POKAMESTOV Business Development Director, Financial Company POLITEKS(Russia)
ABOUT POLITEKS • POLITEKS LLC was created in 2003 as an affiliate company of B&N BANK. POLITEKS offers financial lease (leasing) and a whole range of factoring services. In 2008 a limit of operation of financial lease reached 1, 1 billion RUB. During operating time such companies became our clients: SBARRO, REN-TV, OOO “City Bowling”, OAO “Volgatelecom”, OAO “Ulyanovskenergo” and others. • May 2011 POLITEKS commenced operations of factoring services. • November 2011 POLITEKS member of IFG.
B&N BANK‘S NETWORKS • • B&N Bank – is a successfully developing universal bank with a wide sales network over 120 offices in different regions of the Russian Federation. B&N Bank is among TOP-50 Russian banks. As of included in TOP-30 biggest Russian banks according to CBR Consolidated Statistical Data. Moreover, the Bank’s sales network is supplemented by branches of two banks consolidated in the banking Group (14 points of Bashinvestbank and 27 points of Vyatka-Bank).
![RUSSIA-Market size China Growth Rate [CAGR, 2005 -2007] Russia India Brazil Bubble size shows](https://present5.com/presentation/5808ea096f819dcd40eb8f7da3c09cdc/image-4.jpg "RUSSIA-Market size China Growth Rate [CAGR, 2005 -2007] Russia India Brazil Bubble size shows")
RUSSIA-Market size China Growth Rate [CAGR, 2005 -2007] Russia India Brazil Bubble size shows GDP penetration Market Size, [mln. euros] UK
![Market Volumes Market historical volumes and forecast [mln. euros] 0. 8% 1. 1% 1.](https://present5.com/presentation/5808ea096f819dcd40eb8f7da3c09cdc/image-5.jpg "Market Volumes Market historical volumes and forecast [mln. euros] 0. 8% 1. 1% 1.")
Market Volumes Market historical volumes and forecast [mln. euros] 0. 8% 1. 1% 1. 6% 2. 1% 2. 7% 3. 0% 45 864 +58% Penetration [% to GDP] 2005 2006 2007 2008 2009 2010 Forecast Source: Expert RA, AFC analysis 882 bln. RUB-TURNOVER 2011, 165 bln. RUB-OUTSTANDING Dec. 2012, Forecast 2012 -1500 bln. RUB
Benchmarking against mature markets Financing per client, mln. euros Germany Finland UK Russia Source: FCI, AFC analysis
Segmentation LE 5700 Clients 10% 49% ME 47% 17200 Debtors 36% SE 43% 14% 2011 73 Operators
Factoring clients base Regional aspects High Coverage 2002 2003 326 423 958 Source: Expert RA, AFC 2007 75, 000 Medium Coverage
![Market players Factoring market: breakdown by type of player [2011] 3% 35% 62% Factoring](https://present5.com/presentation/5808ea096f819dcd40eb8f7da3c09cdc/image-9.jpg "Market players Factoring market: breakdown by type of player [2011] 3% 35% 62% Factoring")
Market players Factoring market: breakdown by type of player [2011] 3% 35% 62% Factoring departments under bank's umbrella Factoring companies that operate with banking mother structure Non banking factoring companies Source: Expert RA, AFC analysis
Market players Label Source: Expert RA, AFC analysis
Market Trends • • Consentration IT problems HR problems Legal aspects Risk issues No infrastructure Lobbying
Market Trends • Russia's potential to play a major role in the world economy is to be underpinned through the establishment of a financial hub • So far international factoring in Russia takes only 1% of the factoring turnover, far behind the world's 11%
Regulations-bound scenario • Tough Way suggests the appearance of the state regulator in the factoring market. I. E. , the licence regime would appear that would be the main lever of the market • Effectively this would bring the market under state control, undermining its flexibility and adaptability
Regulations-free scenario • Liberal Way means, that factoring market will be developed with a self-regulation scheme. • In this case – The Russian Association of Factoring Companies will become the main regulation body on the market. • Flexibility but "fair-play" rules followed
To start factoring business in Russia: Challenges • • • Legislation Lack of professionals IT platforms Unstable macro and micro perfomance Political risks
To start factoring business in Russia: Benefits • • • Gross margins Huge potential market Leading role in community CIS markets Low entrance barriers
Ways to enter Russian Factoring market: • Affilate Company • Factoring departments in international Banks • Buy out Russian Factoring Company • Joint venture with Russian Factors • Joint venture with international investors
FACTORing in CIS • • • Ukraine Belorussia Kazakhstan Moldova Armenia
Questions? Many Thanks!
Contacts: • ILYA POKAMESTOV www. politeks. ru • +7(495) 748 -50 -50 Director of Business Development Financial Company POLITEKS i. pokamestov@politeks. ru www. factoringpro. ru +7(499) 940 -8798 General manager@factoringpro. ru
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