Fast-expanding Uralsib Leasing Group is an enigma. Its parent
company is reducing investment in the lessor, yet it also regards
it as one of its more profitable businesses
Part of the Uralsib Financial Corporation (UFC) group and
majority-held by Bank Uralsib (87.6 per cent), Uralsib Leasing
ranks among the top five leasing companies in Russia.
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The group is controlled by Russian oligarch Nikolai
Tsvetkov, an erstwhile officer of the Russian Army who later made a
fortune as investment and financial adviser to Lukoil, Russia’s
largest oil company, after the collapse of the Soviet
Union.
Main business segments of the UFC group are retail and
investment banking, brokerage via Uralsib Capital, insurance and
leasing. Currently, Uralsib represents six per cent of UFC’s
assets, but analysts expect its share within the group to increase
with the rapid growth of leasing. Leasing is also seen as one of
the most profitable segments within the group.
A Fitch Ratings report estimates Uralsib’s total assets, as at
30 June 2007, at about RUB17.3bn ((€464m) and total equity at
RUB3.3bn (€88.6m). In the financial year to December 2006, it
reported operating and net profit of RUB275m rubles (€7.3m) and
RUB219m (€5.8m) respectively.
With 48 offices spread across Russia, Uralsib has a
presence in the large, medium-and small-ticket leasing markets.
Assets it leases include rolling stock, motor vehicles, machinery
and real estate.
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By GlobalDataBeing part of UFC brings several advantages, among them being
able to access to UFC’s vast customer base and a reliable source of
funding.
In recent years, however, Uralsib has begun to reduce reliance
on its parent bank and, by year end 2006, had ceased to finance new
deals with funds from Uralsib Bank. Fitch reports it now outsources
some functions, such as collection services, to the bank, but
intends to develop these internally or outsource them to other
companies if the latter option proves to be more
efficient.
Uralsib is understood to have a well-defined strategy to
strengthen its market positions through branch expansion and the
development of new products, and even vendor programmes. It plans
to start branches in the more active economic regions of Russia and
Azerbaijan, where it sees great potential. By the end of this year,
Uralsib expects to have expanded its network to about 80 branches.
Fitch says the development of relationships with foreign vendors
and export agencies is aimed at increasing the company’s market
share in machinery, particularly agricultural machinery.
Uralsib is also working on diversifying its highly concentrated
customer portfolio by increasing its SME customer base, which it
hopes to achieve by tapping into UFC’s broad geographical
spread.
A further interesting development may emerge this year. Fitch
reports that Uralsib is seeking a joint-venture with possibly a
large foreign bank or corporation to finance big-ticket leases such
as rolling stock, construction equipment and real estate to reduce
concentration risk.
Uralsib’s move towards greater independence from Bank Uralsib
saw the leasing company place its debut ruble-credit linked note
issue of $100m as well as a further $200m syndicated loan last
year. By the end of last September, Uralsib was obtaining more than
half of its funding needs from seven foreign banks, 11 per cent
from other Russian banks and 36 per cent from UFC.
It was considering issuing more ruble-denominated debt in the
domestic market, although it could still turn to Uralsib Bank as a
last resort if necessary. Still, Uralsib Bank has limitations on
how much it can lend to Uralsib.
