Credit Where Due in Northern Capital

ST. PETERSBURG -- Opportunities for small businesses and private individuals to receive credit in St. Petersburg are limited -- but over the last year, several banks have announced plans focusing on work with the small-business sector, with foreign banks leading the way.

Most banks in St. Petersburg still do not offer startup loans for businesses.

"If a big bank gives a loan, it prefers to give $100,000 to one borrower, rather than $10,000 to 10 smaller clients," said one source in a St. Petersburg bank, on condition of anonymity. "It involves too much financial analysis of those 10 firms. Medium-sized banks often announce small-business loan programs, but they don't always end up running them, and the smaller banks rarely have the resources to run programs of that kind."

At present, there are fewer than 10 Western banks in St. Petersburg with 100-percent foreign capital -- Raiffeisenbank Austria, Dresdner Bank AG, ABN AMRO Bank, Credit Lyonnais Bank, Citibank, KMB Bank and International Moscow Bank, or MMB.

In St. Petersburg, foreign banks working with private clients are limited to Raiffeisenbank, MMB and KMB Bank. Even more offer no services directed at private clients, specializing instead in providing financial services to large corporate clients. Banks of this kind include BNP-Dresdner Bank, Credit Lyonnais Bank, Citibank and ABN AMRO Bank.

MMB joined the ranks of St. Petersburg's foreign banks catering to small business after merging with the Moscow-based branch of Austria Creditanstaldt Bankverein, announced in October 2001. Irma Koldobenkova, general manager of the MMB's St. Petersburg branch, said prior to the merger, the bank specialized in working with major corporate clients in the telecommunications, wood-processing and foodstuffs sectors; while Austria Creditanstaldt Bankverein specialized in working with small and medium-sized businesses and private clients.

Viktor Ozhegov, St. Petersburg branch manager of KMB Bank, said the European Bank for Reconstruction and Development, which has a 35-percent share in KMB Bank, has invested $800 million in a program providing loans to small businesses in Russia. At present, about 80 percent of KMB Bank's funds are used in providing loans to small business.

Raiffeisenbank has also shown an interest in minor market players, as well as in major corporations.

"We have concrete plans and are budgeting to develop the small and medium-size business market," said Michel Perhirin, chairman of the board at Raiffeisenbank Austria in Russia.

"We are definitely not concentrating on cooperating with large groups alone -- we are more than interested in becoming partners with any organization that shows good prospects for development."