MDM has concentrated on expanding its corporate customer base with a particular emphasis on mid-sized companies with annual sales in the USD 50-1,000 million range. MDM’s management believes that these “emerging blue chip” companies are among the fastest growing in Russia’s expanding economy, and approximately 500 companies will be targeted within this market segment. MDM plans to grow this business and increase its assets in this unit through a customer-driven approach that includes offering to MDM’s targeted corporate clients the products and services they need to grow their businesses, as well as strengthening MDM’s relationships with them through an increased focus on relationship management. In 2006, the number of corporate customers reached over 12,000, an increase of almost 20% from 2005. MDM is also in the process of increasing its marketing and sales efforts and reformatting its distribution channels. Cross-selling of investment banking products to “emerging blue chip” companies will continue to be one of the key strategic priorities for MDM’s corporate banking.
Corporate banking activities include lending, deposit taking, trade finance and other corporate banking activities.
Lending
Gross loans to customers of MDM Bank increased to RUR171,374
million as of December 31, 2006 from RUR83,162 million as of December 31,
2005.
MDM’s corporate lending strategy includes a diversified client base, a
wide distribution network, comprehensive knowledge of the industries in which
its clients operate, effective risk pricing and maintenance of the quality of
its loan book. Since 2002, as interest rate spreads decreased and the Russian
financial sector became more efficient, the competition for corporate loans to
major Russian corporations has increased. As a result, the profitability of
corporate loans to major Russian corporations has decreased, and MDM therefore
has focused its corporate lending on mid-sized Russian corporations in addition
to large corporations.
MDM engages in corporate leasing services, principally
the leasing of heavy equipment, vehicles and other machinery to its clients. Net
investment in finance leases of MDM Bank, as of December 31, 2006, totaled
RUR2,095 million. Most of MDM Bank’s corporate leasing business is
conducted through its non-bank subsidiary, LeasingPromHold OOO.
Deposit Taking
MDM offers a range of short-term deposit options and intends to further increase the range of deposit products it offers to its corporate clients. As of December 31, 2006, MDM Bank held approximately RUR81,633 million in non-retail customer accounts. MDM has expanded the range of cash management products available to its corporate customers, offering promissory notes, deposit certificates, deposit agreements (allowing for the placement of a number of tranches under the provisions of framework documentation), and foreign currency-denominated notes sold and paid in Rubles.
Trade Finance
MDM offers a wide range of trade finance products to its corporate customers. These services are provided via a worldwide network of more than 100 banking counterparties in Europe, North America, Latin America, the Middle East, India, Southeast Asia, China and Japan. MDM’s trade finance volumes now reach approximately USD1.5 bn, one of the largest portfolios among Russian banks. More information about Trade finance
