UrBC, Yekaterinburg, March 18, 2020. Ural bankers believe that banks can remain stable by maintaining a business model that relies on conservative risk management; at the same time, a crisis can prove an extra opportunity to benefit from the market’s high volatility for quite a few banks.

According to acting Chair of the Board at NEYVA Bank Konstantin Levushkin, the Russian Central Bank currently tends to look closely into a bank’s business model, that is, a bank’s way of making money (if any), and into the way the global market situation and the weakening Russian ruble could affect a particular bank’s business model.

‘Our business model has been rather conservative, risk-wise, from the very beginning. We do not invest in shares, do not act as venture investors, and do not resort to other risky finance options. Up until the start of this year, we didn’t use to issue loans to businesses, so our corporate loan book amounted to zero. So we were risk-free in this respect. NEYVA Bank’s business used to be based on the cash management services we could offer business customers. The balance we end up with gets invested in highly reliable, highly liquid securities such as federal loan bonds and the CBR bonds.

We also deal in foreign exchange trading and offer loans and cash management services to private customers. The only risks involved are lending-related ones, but these risks are much lower in the private loan segment compared with the corporate loan one: experience has shown that every private borrower pays their loan off sooner or later.

So, a market standstill results in low volatility, the rates go down, as do both our profit margins and earnings, and making money gets harder. A market wave brings with it higher volatility, rising exchange rates, larger spreads, and growing stock quotes on the federal loan bonds and the CBR bonds. This is where we start earning more,’ acting Chair of the Board at NEYVA Bank Konstantin Levushkin tells UrBC.