BusinessWeek Russia (Moscow) - April 28, 2008

Zurab Tsereteli's Art Gallery hosted the National Award Finansovy Olimp 2007 on April 16. The best companies working in the financial sector were named in accordance with the National Financial Rating in 45 different categories. Keeping with tradition, the ceremony kicked off with a briefing which summed up the results of the year 2007 and the potential for the Russian financial market's development in 2008. RBC was the official organizer of the event.

Among the briefing's participants were Deputy Finance Minister Sergei Shatalov, First Deputy Chairman of the Bank of Russia Gennady Melikyan, Deputy Head of the Federal Financial Markets Service Alexander Sinenko, member of the Russian State Duma financial markets committee Pavel Medvedev, President of the Association of Russian Banks Garegin Tosunyan, First Executive Vice President of the Russian Union of Industrialists and Entrepreneurs Alexander Murychev, Managing Director of Troika Dialog group of companies Pavel Teplukhin, General Director of Otkritie Financial Corporation Vadim Belyayev, President of Micex Alexander Potyomkin, President of RTS Roman Goryunov, and Ernst & Young Partner Marchello Gelashvili.

About 80 journalists received accreditation to cover the ceremony. "We are pleased to see that the briefing and the award ceremony of the best companies working in the financial sector have become venues that draw the general public's attention," said RBC General Director Yury Rovensky. "We have managed to find such a format for communication that allowed us to bring together businesses and society to talk about the most acute problems, as well as to unite professional players of the Russian financial market." The majority of questions had to do with the banking system, particularly whether or not Russian banks will be able to withstand the crisis and whether the global financial crisis will affect the Russian banking sector.

Experts preferred to either say only positive things about Russian banks or to say very general things without providing any specifics. "If western financial markets were not going through turbulent times, I would say that the state of the Russian banking system is excellent. As of today, the national banking system is stronger than ever," stated Gennady Melikyan." Compared to what it was 10 years ago, and even looking back three or four years, we have made a giant leap. The banks have seen a jump in capitals, the amount of loans, assets and deposits… We have also enjoyed some significant changes regarding the introduction of automated processes, improvement of corporate management, as well as changes in regulations of risk management and inner control within credit and financial institutions." In general, Garegin Tosunyan agreed with Gennady Melikyan, pointing out that over the last six years, the total debt of Russian banks to foreign creditors rose 14 times, as the majority of national banks were able to develop primarily thanks to foreign borrowings, which are extremely hard to secure now.

Participants of the briefing indicated that there were a number of negative factors affecting Russia's economy (rising risks of taking out loans and shrinking liquidity), but also added that there were positive factors. Among them, foreign investors' behavior (capital outflow stood at $20bn in the first two months of the year, having gone down to $2bn) and the emergence of new financial instruments on the Russian market (Potyomkin noted the increase in the number of ruble bond offerings). Experts generally agreed with Garegin Tosunyan, who urged financial authorities to take a more active approach in raising funds on the domestic market. "We would like to suggest that the financial authorities start using domestic financial resources more actively. Among these resources is money from the pension fund and budget funds, which should not be placed in foreign assets, but instead be used on the domestic market," he observed.

Participants of the venue also discussed the real economy sector. Notably, entrepreneurs argued over the matter with government officials. Alexander Murychev, for one, urged the government to cut VAT as soon as possible. "Our argument is that without the proper motivation in the tax policy, we cannot create an innovative economy or secure the necessary investments for the development," he stated, adding, "For us VAT is a major slowdown in the building of the infrastructure in secondary industries, that is beside the fact that this tax is being very poorly administered."

Sergei Shatalov promised that by August all proposals would be completed, and the government would be able to review several different scenarios. At the same time, he indicated that the International Monetary Fund's research showed that the business community overestimated the importance of VAT and its role in economic development: "VAT is next to the last among all other taxes (property tax is the last one - author's note) which influence the economy's growth," he stressed.

Experts also could not stay away from the matter of financial pyramids. Pavel Medvedev warned about the questionable activities (in terms of laws) of those companies which procure payments to third parties (i.e., primarily payments to mobile operators via payment terminals, as well as developers that take money from citizens and place them on deposits, saying that they will pay back interest in the form of a ready apartment). "Such companies erase the actual meaning of the term "bank transaction," he pointed out. "At the same time, they function as banks without obtaining a banking license." The common opinion of the briefing's participants: it is absolutely necessary to improve legislation and offer explanations to the general public, so that people will understand that only fraudulent companies would ever promise double-digit interest rates.

Following the close of the briefing, the official part of the ceremony began - the presentation of awards to the winners of the national award in the sphere of finances - Finansovy Olimp 2007. People whose contribution to the development of the Russian financial market was the most significant received their awards first. Among them was Managing Director of Troika Dialog Asset Management Pavel Teplukhin ("For contribution to the development of the Wealth Management industry in Russia"), Head of Private Banking at Deutsche Bank Russia Vladimir Pakhomov ("For contribution to the development of the private banking business on the Russian financial market"), Chief Executive Officer of Blagosostoyanie Non-State Pension Fund Elena Sukhorukova ("For active assistance in the development of non-state retirement insurance"), Al Breach (for "Best Stock Market Analyst"), Alfa Capital Metals & Mining manager Andrei Kilin (for "Best Mutual Fund Manager). After that, the best companies - leaders in the National Financial Rating for the year 2007 - were announced and received the Finansovy Olimp 2007 award.

Once all the winners were announced, the guests enjoyed themselves in a friendly atmosphere created by the Oleg Lundstrem Orchestra.