Q.: Mr Ryan, you are Chief Country Officer and CEO of Deutsche Bank Group in Russia. This year Deutsche Bank will celebrate an important anniversary of its operations in this country. Could you please tell us about the milestones of your bank's development in Russia?
A.: I will begin my answer with an explanation of DB's current business in Russia. We are the leading investment bank in the country currently ranked #1 in Equity Capital Markets, #1 in Debt Capital Markets and #1 in M&A. We employ 750 people in Moscow and have developed strong client relationships with Russia's leading companies.
Turning to our history.
Deutsche Bank's business in Russia began 125 years ago in 1881 when Deutsche Bank took part in a placement of shares for the Russian Foreign Trade Bank on the German market. A few years later in the mid-1880's Deutsche Bank organized the first bank loans for the Russian Railroad.
In 1965 Deutsche Bank provided the first loans to the Soviet successor of its original Russian client - the Bank of Foreign Trade of the USSR, to finance imports from Germany. In 1972 Deutsche Bank opened a representative office in Moscow to provide advice and financing for Trading Partners and the Government.
To expand its activities in Russia Deutsche Bank opened a subsidiary in Moscow in 1998. Despite the fact that Russia suffered a financial crisis a few months after Deutsche Bank Moscow opened for business, we decided to continue developing our Russian franchise, playing a key role resolving problems between Russia and its international lenders. DB led the London Club restructuring talks designed to settle the Soviet Union's debt with western banks.
Q.: As an experienced banker, can you say why it is profitable and interesting for Deutsche Bank to work in Russia?
A.: Russia's official GDP will exceed $ 1 trillion in 2006 and our current estimates project a GDP in excess of $2 trillion by 2010. And the Russian growth story is not just about oil. Russia is experiencing a real consumer boom with real wages rising, strong SME growth and falling unemployment.
Russia is already the third largest market in the MSCI EM Index, behind S. Korea and Taiwan but ahead of the other BRIC's countries: India, China and Brazil. To support this development the Russian government has made significant progress in regulating its financial markets.
The strengthening of Russian economy and the rapid development of the domestic capital markets has allowed Deutsche Bank to expand its Russian business.
The Russian government is also actively seeking to further integrate Russia into the global economy. Russian foreign trade turnover exceeded 50% of GDP last year and in 2006 FDI is expected to reach $28 billion or 3% of GDP. Exports and FDI will likely increase with Russia's accession to the WTO. The recent signing of a bilateral agreement between Russia and the USA removes one of the principal stumbling blocks to Russian WTO accession, which is now possible in 2007.
As a member of the Foreign Investment Advisory Council, Deutsche Bank has worked with other foreign investors to assist in modernizing the Russian financial markets. The changes we are now witnessing in legislative and administrative institutions are profound.
The growing Russian economy and improving investment climate are attracting foreign investment; meanwhile an increasing number of Russian companies are looking to international markets for future growth.
These deepening business ties, if encouraged, should provide the basis for a more stable and productive relationship between Russia and the west.
Deutsche Bank has actively participated in this process as Russia's leading M&A advisor and with its own acquisition of United Financial Group, one of Russia's leading independent investment companies. The combination of Deutsche Bank's existing franchise with UFG's business moved Deutsche Bank to a leadership position in the Russian investment banking business and demonstrated the opportunity available to foreign investors in the Russian market as well as Deutsche Bank's commitment to its Russian business.
Q.: Mr Ryan, Deutsche Bank now offers its clients a broad range of quality financial services on the Russian market. What are they?
A.: Deutsche Bank Moscow offers the full range of corporate and investment banking services and has a growing private client business. In 2005 Deutsche Bank was named best Eurobond arranger in Russia. Thus far in 2006 Deutsche Bank has participated in 8 IPO's with a total volume of $14.5bn. The Bank also offers on-shore private banking services and has a subsidiary of its asset management division based in Moscow offering products to Russian investors.
Deutsche Bank has a world class team in Moscow supported by product and industry expertise in London, Frankfurt and New York.
Q.: It is well known that your bank assigns a special role to important social programmes in Russia.
A.: Deutsche Bank views support for the arts and culture as a core part of its mission in countries where it conducts business. Since 1983, the Bank has been involved in 20 international projects in Russia. In 2004, Deutsche Bank took an active part in celebrating the Year of German Culture in Russia together with the German Embassy in Russia and leading Russian and German companies. To celebrate the 25th anniversary of its art collection, Deutsche Bank brought the best examples of German art to Moscow. The exhibition, which was called "From a German Perspective: Masterpieces from the Deutsche Bank Collection" was held at the Pushkin Fine Arts Museum and was attended by Russian President Vladimir Putin.
Q.: What plans does your bank have in Russia in the near future?
A.: The Russian market is strategically important for the entire Deutsche Bank Group. The Bank was one of the first international players to understand the potential of the Russian financial markets and the country's economy. We now have two main tasks. The first is to maintain our leading position, providing financial services in the Russian capital markets to our Global and Russian clients. Secondly, we need to expand the range of services that we offer to our clients in all sectors of the Russian economy by introducing new products from Deutsche Bank's global platform.
Charles Ryan was interviewed by Mikhail Gerasimenko, Recipient of the Association of Russian Banks Award