Nicholas Greene: We hope to get the biggest piece of the pie
In September, Russia’s Rosbank announced creation of a Structured Finance Group which would be focused on attracting foreign investments to Russian enterprises and on the development of securitization, a very popular financing system in the West. Rosbank Senior Vice-president Nicholas Greene is the head of the project.
The interview with Nicholas Greene, Part Two
Mr. Greene, has a program such as this ever been tried in Russia before?
- As far as I know, no structured finance departments were created at any of the other banks, and no efforts were done to develop certain technologies in the banking community. Some individual businessmen tried to implement the securitization technology, but those were just single deals. There was no system to take various capabilities of financial institutions. As a result, there was no team to offer the financial and investment community a wide range of services which are known as structured financing to the rest of the world.
What is your ultimate measure of success?
- The measure of our small contribution to the success of Rosbank will be an initial public offering on the stock market of Rosbank. I think this would be considerable achievement of the bank on the whole.
Do you think Russia is the right country for trying this sort of technologies and realization of such investment policy?
- My experience of a financier is limited to Europe, North and Latin America, and very little in Asia, that is why I can’t give you a global comparison. I think it is fair to say that the financial system that exists in North America and Europe doesn’t exist in any other place of the world.
This kind of experiment has been already tried in Poland and Czechoslovakia; what is really important, the experiment wasn’t quite smooth there. If we look at these two financial markets, Poland and Czechoslovakia, we can see that with the strongest desire to get incorporated into the European Union, both countries have gone through a number of changes to develop their financial markets. They tried to adopt the financial markets to the requirements introduced by the West European financial community. I think they paid a very high price for this. They achieved the present-day result by attracting foreign banks to the countries. In fact, these foreign banks are running the system according to their agenda and it’s not always responsive to the national interests.
It is a different type of process here in Russia. Until now, the government and banks themselves limited direct foreign investments in the financial system. For instance, foreign banks own 60% of the Polish banks; the percentage here in Russia is very small. Russia keeps up a very reasonable line: its has working relationship with some foreign banks, but keeps a certain distance.
Do you have a total dollar amount the Structured Finance Group hopes to attract?
- The potential of this market is multi-billions even for this year. Rosbank hopes to play an important role on this market. Let’s keep competition in mind, but I hope we get a big piece of that pie.
Mr. Greene, why did you get interested in this type of banking?
- I have been a banker for most part of my life, so I see how the things are developing. I have kind of intellectual curiosity to new tendencies. Sometimes programs look bad and sometimes they look good, and if they do, I want to study them closer. This may sound cynical, but this is like a mechanism: when you get it, you want to know how it works and how you can make it perform.
What is your background?
- I studied at Harvard, then did some post-graduate studies at the new York University, they have a great evening program.
Did you chose Russia because you see it as a unique place for experiments?
- This is true that I could have gone anywhere in the world. Indeed, this would be more convenient to work in those places where I do speak the language. But on the other hand, Russia is exactly the place which is currently extremely interesting for living and working. And it’s not just business, this is the culture, the people and the society.
Do you think the situation of burgeoning economy, like here in Russia, opens great opportunities?
- The Western European and North American economies are weak now, the growth rate is less than two percent. Here is Russia we observe a continuous strong economic growth driven by import substitution. Now, it’s cheaper to manufacture goods inside the country, that is why changes in the manufacturing process are occurring rapidly. And as it is cheaper to manufacture inside the country, people are shifting their consumption models to from imported goods to domestically produced. As a result, the Russian Gross National Product is increasing at that. In the next couple of years it will be higher than we see in Europe or the USA.
Do you see the high level of governmental bureaucracy here is a hindrance to economic growth?
- As for bureaucracy, it’s throughout the society, not just the government. It’s in the way banks are run, corporations are run, even in the way things are done on the plant floor. It’s a vestige of the Soviet system. If you think deeper about the philosophy of many of the rules and regulations and the way the system works here, you see that it’s got its own sense and its own logic. It’s clear why foreigners dislike the Russian bureaucracy: this methodology is foreign to them. Coming from North America and Europe you expect things to work a certain way, and when they don’t work that way you say “why not.” They work in fact, but they work differently. There is a large and inefficient bureaucracy, but it’s going to take time to make it more adequate and effective.
Is Russia the market of the future?
- Russia is a very competitive environment, which makes for considerable growth. The people I met, and not in Rosbank only, are smart, hard-working, forward-looking and strong. The opportunities here are tremendous, but it’s not going to fall in your lap. You need to work hard and use the opportunities, this is the way to achieve success.
For reference: Nicolas Greene has been working with largest international banks for 25 years, for instance, Chase Manhattan Bank and Dresdner Bank subsidiary in New York. In 1987-1999, worked as the chief executive and co-founder of the Structured Finance Group with West LB. Before appointment in Rosbank, Nicolas Greene worked as an aide to the president of Access Industries investment group.