News of the Bank

Chairman of Italian-owned Pravex-Bank says they are here to stay

KyivPost, 26 March, 2009

vol. 14, issue 13 

page 3 

As European banks pay the cost of aggressive lending, Italian banking system is not in the eye of the storm. Pravex-Bank, Ukraine's sixth largest bank for the size of its network, is weathering the global market freeze under Italian guidance. Acquired by Intesa Sanpaolo group last year, Pravex is set to expand its services from retail to a corporate sector. Chairman of the Supervisory Board, Silvio Pedrazzi, brings more than 30 years of experience in banking with him confident of success in this fast-growing emerging market. Taking over the job in October 2008, Mr Pedrazzi had to jet between Italy and Ukraine almost every week to close the transition. He's gotten off the plane now ready to take off Pravex to its new heights. 

Why did Intesa Sanpaolo group select Ukraine for expansion?

SV: Ukraine is the second largest country in Europe with a huge potential, so it was only natural for us to expand into this market. Bear in mind that an acquisition process started in 2007 when external economic conditions were completely different not just about Ukraine, but worldwide. Yet, once we decided to go somewhere, it is a strategic decision, not a speculation. Despite an obvious strain in the financial realm, we think that Ukrainian economy is fundamentally strong and reliable. Intesa is the largest banks in Italy and one of the largest in Europe. We have subsidiaries in 11 countries including Russia, Hungary, Romania, Croatia, Albania, Bosnia and Herzegovina, Slovakia, Slovenia, Serbia and Egypt. With a strong international presence focused on Central-Eastern Europe, Ukraine was the next big step. The truth is that we came here to stay.

How long have you been working for Intesa? What is your experience working for international markets?

So many, it's hard to recall. If I count my employment at the bank which is a part of Intesa Sanpaolo right now, then I started in 1996. Altogether, I've been in the banking sector for over 30 years. Prior to Ukraine, I was in charge of a Serbian subsidiary, which was my first international assignment. I was even awarded Best Banker in Serbia in 2006, which I have to thank the University of Belgrade and the Chamber of Commerce for.

Did you plan to reorganize the bank? If so, what was the effect of a financial turmoil?

I personally joined Pravex on October 1^st 2008, and at that time the impact of the international crisis in Ukraine was not so evident. All the indicators and all the figures for the country were positive. Our initial approach was to maintain strong presence on the market, and at the same time work on expanding corporate activity and financial services. Now our plan is mainly to further strengthen efficiency and safeguard of our business structure. Several banks in Ukraine are under temporary administration and this has a negative impact on the overall clients-base. Of course, we need more time to implement all the changes but we are in no hurry to leave and we'll certainly get there.

Apparently, Italian banks did not require recapitalization unlike its European neighbors and are considered safer options for investors. What is it that Ukraine can learn from your experience to soften the blow?

You know that Italy has no natural resources. That paved the way to the development of trade more than anything else. Small and medium-sized companies make up the spine of our economic activity in Italy. We don't have so many large companies. Ukraine is similar in this respect, which makes our experience and background useful here. It's not always easy to support and back financially this type of companies. It is more about personal relations than a monetary equation. You must not only evaluate numbers, figures, and the economy but also an entrepreneur in front of you. And we grew up in Italy following this scheme. This is why Italian banking system was not hit as deeply by the crisis as in other countries. We always focus our attention on the existing business. We didn't enter in sophisticated, international investment banking activities. It makes Italy's more conservative banking sector a safer option for investors right now.

What are the strongest sides of Pravex?

Stability, solidity, excellent network and a chance to cross-sell products to all of our clients through 598 branches well distributed all over the Ukrainian territory. To that I would add the quality of the employees — both in the headquarters and the network. 

What do you think about Ukrainian workforce in general?

This is the first thing that I realized about this country — Ukrainian people are very different. In Serbia, I found people more similar to Italians but it probably has to do with a geographical location. For sure, Ukrainians are very tough and hard-working people.

Many Ukrainians choose to keep their savings at home, instead of a bank these days. How do you rebuild their trust in the banking sector? 

This is a huge problem. When clients lose confidence in the banking system, it is a problem of the whole country. By definition, any bank activity needs confidence. Given that, I think that the banking sector in Ukraine must improve in terms of capitalization and risk management to achieve stability. So, there is room for improvement for all industrial sectors. It would be easy for me to say: Be confident in Pravex, because I know what's behind it. But I think this statement is not enough for the clients. We must strengthen it with facts. If I were a client, I would check the quality of my bank rather than search for the best interest rate on the market. My formula of a good bank includes flexible products and services and ability to withdraw funds at any given moment. In this respect, I can say that Pravex never had any problem returning their clients' deposits on time. This is very important.

Do you remember your first day in Ukraine? Have you had any exposure to Ukrainian culture and traditions yet?

My first experience was a long queue in the airport for passport control. But that experience was offset by a nice hotel afterwards and a meeting with my new colleagues. I have not had much chance to go sightseeing in Kyiv but I'll do it as soon as possible. Maybe initially it was a bit easier in Serbia in terms of language because many people speak English. I do like very much traditional cuisine in Ukraine, especially cold meat starters in jelly and borsch.

What about your hobbies? Will you be able to keep them up here?

Work is my first hobby but I also love sailing, diving and of course, spending time with friends. I like driving my motorbike, but I left it behind in Italy. I drive a car around here sometimes — Ukrainian drivers are just as crazy as Italian, so I feel like home in a way.

Hailing from Italy, famous for its delicious cuisine, can you think of an Italian recipe to serve the Ukrainian banking sector?

For a starter, I would suggest Parma ham, which is both sweet and strong. In banking terms, we must be sweet with our clients and be strong in a nutshell.

For the main course, I like my pasta with a sauce. Money and capital in this dish make up pasta, while a sauce is our experience. Then, Italians love their meat. But I think that meat is actually better prepared in Ukraine than at home. So a very nice steak will represent local experience.

And finally, a good desert. You see, the local banking system sometimes is not very cost-effective for the end-user, which means the clients pay a higher price for the services at the end. So for desert, I'd like banks to reduce their costs for an ultimate Italian experience.  

What is your key mission in Ukraine and how long will your assignment here last?

I will stay here as long as my superiors see my work effective in this division. Ultimately, my goal is to blend local performance with Italian experience. I respect managers here and I really want to share the best practices of the Italian banking system with them. I believe that the right thing is always somewhere in the middle. Under this principle, it will be a positive work exchange and an exciting investment journey.

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