Dmitry Gusev: “Banks that ignore responsible banking principles are going to be left behind”

An Interview with the CEO of Sovcombank

At the end of September 2019, a number of international financial institutions launched the UNEP FI Principles for Responsible Banking. Sovcombank became the first Russian signatory to the document. Dmitry Gusev, CEO of Sovcombank, speaks about the significance of this milestone and its implications for Sovcombank going forward.

Sovcombank is the first Russian bank to commit to the Principles for Responsible Banking (PRB). Some experts see responsible finance practices mostly as a marketing and image-building tool, rather than a way to effect real change. Would you agree or disagree with them?

Sustainable development is a subject of great interest nowadays, for both financial institutions and our customers. Many market players are introducing various corporate social responsibility programmes, including this UN initiative.

I don’t think that corporations and financial institutions can afford the luxury of sitting this one out. In the nearest future, we are going to find ourselves under immense pressure from society, partners, consumers, and, most importantly, our own employees. They want us to be committed to human values, instead of just chasing profit. One way or another, it is our customers and employees who drive change in our business. Those who don’t understand that are going to lose out in the long run.

Participating in the UN initiative will certainly improve our corporate image, but it’s not what it’s all about; we had sound reasons for doing it. We are not a charity. We seek to maximise profits. We believe that we can only be successful in the long term if we share common values with our customers and society at large.

Today, sustainable development and responsible banking are primarily associated with the climate agenda but, in fact, they go far beyond that. For us, these are not only about reducing our environmental footprint, but also about building honest and responsible relationships with our customers on a daily basis, especially in retail.

We know many examples when banks behave recklessly when dealing with retail customers. For instance, foreign currency mortgages were once very popular in Russia, but we all know about the dire consequences of those. That is why we prioritise providing financial education for our customers and place great value on responsibility in our loan products.

When and how are you going to restructure your business model to fit the sustainable development principles? What is going to come first?

There is no need for us to make any drastic changes to the business strategy, since we have always followed similar principles.

The first step for banks would involve assessing the status quo and identifying long-term goals and objectives. We have already undergone a third-party audit and approved some long-term goals, the key point of which is that they should be feasible. In the near future, we will announce our plans, and then report on their implementation as we go along.

As a signatory to the Principles, how are you going to integrate them with your work with retail customers and corporate clients?

As part of its corporate lending business, Sovcombank is already financing several long-term energy-saving, renewable-energy and waste-management projects. Currently, a large number of related government initiatives and programmes are underway in Russia, and we see ourselves as an active financial player in this market. Shortly, we plan to close the Russian market’s first transaction involving the securitisation of solar energy payments.

Moving forward, we will be very deliberate with our financing, paring down support for some projects and stopping it altogether for others. It’s going to be a balancing act between our goals and obligations as part of the Principles on the one hand, and the bank’s interests and prospects on the other. In particular, we will offer all possible help to our customers in relation to financing projects that aim to reduce their environmental impact.

As far as retail products are concerned, we create market products that are affordable for our customers and that foster so-called “smart spending”.

We want our customers to minimise interest expenses related to their daily needs, and save up that money to purchase or renovate housing, or buy a car. Here, our Halva instalment card is the product of choice.

We also make a point of educating our customers on all things credit, which is also our top priority as a responsible lender.

What was the Russian regulator’s reaction to your initiative? Are there going to be any concessions or additional requirements?

Amid the increasingly strict legislation and the ever-tightening reporting and disclosure standards, corporations the world over are moving towards business practices that take account of environmental, social and humanitarian issues.

Russian companies are currently at the start of their ESG journey, and Sovcombank is among the trailblazers that have implemented the environmental, social and sustainability principles.

There are currently no laws and regulations relating to this in Russia. Certain market players participate in ESG projects on a voluntary basis. As time passes, though, regulation is going to tighten and become more standardised.

What is your general view on ESG implementation in the global financial market? Is the “green” strategy viable today?

Globally, businesses are becoming the main driving force behind the climate agenda. It has already been noted that private investors are shifting to investment decisions that have ESG at their heart.

Today, if a company – any company – enters a capital market with a sensible CSR policy and a robust ESG platform, it is likely to succeed and attract investors.

Thank you Mr. Gusev. We learned a lot.

Executive Profile

Dmitry Gusev joined Sovcombank in 2007 where he was first as an advisor to Chairman of Management Board in 2007. In 2011, he was appointed CEO and Chairman of the

Management Board. Presently, he still holds the same position and is also one of the minority shareholders of the bank.

Dmitry graduated from the Finance Academy under the Government of the Russian Federation majoring in Finance and Credit in 1998 and received his Ph.D. degree in Economics in 2001. He also went to the Tax Academy under the Ministry of Finance of the Russian Federation in 2006 with a degree in Jurisprudence.

He also worked with various multinational companies like the Coopers & Lybrand before it merged with Pricewaterhouse, now PwC. He held various positions when he moved to Deloitte in Russia and joined the department of taxes and law in 2001. Prior joining Sovcombank in 2007, Dmitry held the position of partner and head of international tax advisory team in Russia and CIS at Deloitte Moscow office for two years

joined Sovcombank in 2007 where he was first as an advisor to Chairman of Management Board in 2007. In 2011, he was appointed CEO and Chairman of the

Management Board. Presently, he still holds the same position and is also one of the minority shareholders of the bank.

Dmitry graduated from the Finance Academy under the Government of the Russian Federation majoring in Finance and Credit in 1998 and received his Ph.D. degree in Economics in 2001. He also went to the Tax Academy under the Ministry of Finance of the Russian Federation in 2006 with a degree in Jurisprudence.

He also worked with various multinational companies like the Coopers & Lybrand before it merged with Pricewaterhouse, now PwC. He held various positions when he moved to Deloitte in Russia and joined the department of taxes and law in 2001. Prior joining Sovcombank in 2007, Dmitry held the position of partner and head of international tax advisory team in Russia and CIS at Deloitte Moscow office for two years