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. Last Updated: 07/27/2016

Menatep St. Petersburg Posts $3.3M Profits




Menatep St. Petersburg has posted surging 1999 profits of 90 million rubles ($3.3 million), more than triple the bank's 1998 performance.


Originally set up as a sister bank to once-mighty Menatep Bank, Menatep St. Petersburg denies any direct link to its failed namesake, from whom it acquired a regional branch network and several major accounts in the wake of the 1998 crisis.


Recognizing that the banking sector has a lot to do to convince depositors to trust it once more, Menatep St. Petersburg is hoping the Internet will spur retail growth, board chairman Vitaly Saveliev said Wednesday.


"We understand that one can no longer hope to cajole clients into a bank, so we are betting on the 'Generation Next' of Internet-users," he said.


It has taken four years for the group of companies of which the new bank is a part to make Menatep St. Petersburg the lead financial institution of the group, according to a bank press release.


Asked what group the bank's managers were referring to, Saveliev said Wednesday that it was a group of companies - oil major Yukos, holding group Rosprom and others - which belong to the shareholders, "which use to the maximum extent the benefits and possibilities of the bank."


Up to two-thirds of the bank's loans are made to the same group of shareholders, whose businesses stretch from gas and oil industries to food processing and gold extraction.


The companies to which Saveliev referred were part of a financial-industrial group built up in the early-to-mid-1990s by Mikhail Khodorkovsky.


Although Khodorkovsky is now the head of Yukos and has long moved to distance himself from the financial side of the business, Menatep Bank was at one stage the public face of his Rosprom group.


Before its demise in the 1998 financial meltdown, Menatep Bank posted $30 million net profits for the first half of 1998 on assets of $3 billion.


When Menatep sank, Menatep St. Petersburg grabbed much of the regional network after the collapse of its Moscow sister left only four out of 45 branches profitable, according to company officials.


By the end of last year, the number of loss-making units had been reduced to 22, but overall the regional network is at break-even level.


The bank was unable to buy regional outlets of other major banks, which have refused to sell their assets at a price below the original cost of purchase.


But Menatep was eager to give access to its regional network free of charge, so the new bank took it over without paying a dollar, simply signing new lease contracts with the landlords.


Menatep St. Petersburg is now the third largest retail bank in Russia after Sberbank and SBS-Agro. The bank has the accounts of major corporate players such as Baltika brewery and several Gazprom subsidiaries, Saveliev said.


The bank is also trying to woo power grid operator Unified Energy Systems, Saveliev said.


The bank's retail expansion hopes hinge very much on its online service, which the bank says is the only one in Russia.


Having secured reliable exchange of information between regional outlets, Menatep St. Petersburg can track all online payments 24 hours a day, facilitating cash-flow management to companies with a large share of regional sales, Saveliev said.


The bank hopes to tap the Internet retail sector, which currently numbers 2.5 million users with an average age of 25 years and monthly income in excess of $300, he said.


Menatep St. Petersburg has two large groups of shareholders. One of them is made up of companies close to Yukos/Rosprom and the other is close to Sigma-Gaz, a St. Petersburg firm close to Gazprom.


Saveliev declined to provide complete information about the bank's shareholder structure but admitted that companies close to Gazprom together owned a 30 percent stake in the bank.