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Establishing a factoring business in Russia? Factoring market in Russia and CIS: market trends and future scenarios .

Establishing a factoring business in Russia? Factoring market in Russia and CIS: market trends and future scenarios . ILYA POKAMESTOV Business Development Director, Financial Company POLITEKS (Russia). ABOUT POLITEKS.

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Establishing a factoring business in Russia? Factoring market in Russia and CIS: market trends and future scenarios .

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  1. Establishing a factoring business in Russia?Factoring market in Russiaand CIS: market trends and future scenarios. ILYA POKAMESTOV Business Development Director, Financial Company POLITEKS(Russia)

  2. ABOUT POLITEKS • POLITEKS LLC was created in 2003 as an affiliate company of B&N BANK. POLITEKS offers financial lease (leasing) and a whole range of factoring services. In 2008 a limit of operation of financial lease reached 1,1 billion RUB.During operating time such companies became our clients: SBARRO, REN-TV, OOO “City Bowling”,OAO “Volgatelecom”, OAO “Ulyanovskenergo” and others. • May 2011 POLITEKS commenced operations of factoring services. • November 2011 POLITEKS member of IFG.

  3. B&N BANK‘S NETWORKS • B&N Bank – is a successfully developing universalbank with a wide sales network over 120 offices indifferent regions of the Russian Federation. • B&N Bank is among TOP-50 Russian banks. As ofincluded in TOP-30 biggest Russian banksaccording to CBR Consolidated Statistical Data. Moreover, the Bank’s sales network is supplemented bybranches of two banks consolidated in the bankingGroup (14 points of Bashinvestbank and 27 points ofVyatka-Bank).

  4. RUSSIA-Market size China Growth Rate [CAGR, 2005-2007] Russia UK India Brazil Bubble size shows GDP penetration Market Size, [mln. euros]

  5. Market Volumes • Market historical volumes and forecast [mln. euros] 0.8% 1.1% 1.6% 2.1% 2.7% 3.0% 45 864 +58% Penetration [% to GDP] 2005 2006 2007 2008 2009 2010 Forecast 882 bln. RUB-TURNOVER 2011, 165 bln. RUB-OUTSTANDING Dec. 2012, Forecast 2012-1500 bln. RUB Source: Expert RA, AFC analysis

  6. Benchmarking against mature markets Financing per client, mln. euros Germany Finland UK Russia Source: FCI, AFC analysis

  7. Segmentation 5700 Clients 17200 Debtors 73 Operators LE 10% 49% ME 47% 36% SE 43% 14% 2011 2011

  8. Regional aspects High Coverage 2002 2003 2003 2007 Factoring clients base Medium Coverage 326 423 958 75,000 Source: Expert RA, AFC

  9. Market players Factoring market: breakdown by type of player [2011] 3% 35% 62% Factoring departments under bank's umbrella Factoring companies that operate with banking mother structure Non banking factoring companies Source: Expert RA, AFC analysis

  10. Market players Label Label Label Label Source: Expert RA, AFC analysis

  11. Market Trends • Consentration • IT problems • HR problems • Legal aspects • Risk issues • No infrastructure • Lobbying

  12. Market Trends • Russia's potential to play a major role in the world economy is to be underpinned through the establishment of a financial hub • So far international factoring in Russia takes only 1% of the factoring turnover, far behind the world's 11%

  13. Regulations-bound scenario • Tough Way suggests the appearance of the state regulator in the factoring market. I.E., the licence regime would appear that would be the main lever of the market • Effectively this would bring the market under state control, undermining its flexibility and adaptability

  14. Regulations-free scenario • Liberal Way means, that factoring market will be developed with a self-regulation scheme. • In this case – The Russian Association of Factoring Companies will become the main regulation body on the market. • Flexibility but "fair-play" rules followed

  15. To start factoring business in Russia: Challenges • Legislation • Lack of professionals • IT platforms • Unstable macro and micro perfomance • Political risks

  16. To start factoring business in Russia: Benefits • Gross margins • Huge potential market • Leading role in community • CIS markets • Low entrance barriers

  17. Ways to enter Russian Factoring market: • Affilate Company • Factoring departments in international Banks • Buy out Russian Factoring Company • Joint venture with Russian Factors • Joint venture with international investors

  18. FACTORing in CIS • Ukraine • Belorussia • Kazakhstan • Moldova • Armenia

  19. Questions? Many Thanks!

  20. Contacts: • ILYA POKAMESTOV www.politeks.ru • +7(495) 748-50-50 Director of Business Development Financial Company POLITEKS i.pokamestov@politeks.ru www.factoringpro.ru +7(499) 940-8798 General manager manager@factoringpro.ru

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