Rietumu Banka

Rietumu Banka

Type	JSC
Industry	Financial services
Founded	1992
Headquarters	Riga , Latvia
Key people	Rolf Fuls, Ruslan Stecyuk, Ilya Suharenko, Jelena Buraja
Net income	EUR (2017) and 15.7 bn EUR (Q1 2018)
Total assets	2.145 bn EUR (31.03.2018)
Number of employees	Up to 500
Website	www.rietumu.com

Rietumu Bank is a Latvian commercial bank established in 1992. It is one of the major private banks in the Baltic States, and the largest bank having Latvian capital in Latvia, specialising in financial services for corporate clients and wealthy individuals. The bank is headquartered at Rietumu Capital Centre in Riga.

For many years, Rietumu Bank has been one of the leading Latvian banks and, according to the data for Q1 2018, it is the fifth largest Latvian bank in terms of assets. The bank's activities are mainly focused on serving corporate clients and wealthy individuals.^[1]

Traditionally, an important part of Rietumu Bank's activities was related to foreign markets; however, in 2018, the bank started transforming its business model, focusing on Latvia, other Baltic States, EU and OECD member states.^[2]

In 2018, requirements to evaluation of risks associated with clients changed dramatically. As part of its business transformation, Rietumu Bank has made a decision to terminate relations with high risk clients or so called “shell companies” in accordance with requirements relating to classification of “shell companies” adopted in Latvia in the spring 2018. Rietumu Bank has successfully completed this process, and currently implements the bank's new business model.^[3]

Rietumu Bank's new business model emphasises corporate services, lending, including implementation of tailor-made lending and investment projects. Technological development and involvement in fintech development form an important part of bank's activities in cooperation with and by way of financing fintech companies. Another active development area is lending related to real estate property projects, including residential housing and commercial segments. The bank is also actively involved in cross-border and commercial financing projects, supporting expansion of Latvian and Baltic companies abroad. The bank simultaneously maintains successful activities relating to wealth management.^[4]

Over the recent years, the bank has actively developed its corporate services provided in the area of e-commerce. Since 2012, an international e-commerce conference eCom21 has taken place under the bank's auspices. Each year the conference gathers hundreds of participants from the Baltic region, Central, Eastern and Western Europe, CIS, Asia and elsewhere.^[5]

History[]

1992 – 1999

Establishment and commencement of activities

Rietumu Bank was established in 1992 and registered in the Register of Enterprises of the Republic of Latvia.

In 1995, it became the fifth Latvian bank in terms of assets. In the same year, it started developing its regional information centre network in the cities of the CIS and the Baltic region. In 1996, Rietumu Bank started offering its customers various trust programs that later played an important role in the bank's development strategy. In 1997, Michael Bourke became the President of Rietumu Bank, after having worked within the framework of Phare consulting programme under the President of the Bank of Latvia.   In 1998, the bank opened a range of new branches and continued developing the Corporate Banking, which in 1999, allowed Rietumu Bank to become the leading corporate service provider in Latvia. In 1999, Rietumu Bank started accepting deposits in Euro.^[6]

2000 – 2008

Years of growth

In 2001, Rietumu Bank purchased 100% of Saules Banka shares and entered top five Latvian commercial banks. In late 2001 and in 2002, Rietumu Bank issued new, exclusive credit cards Eurocard/MasterCard Platinum and VISA Platinum. In 2003, corporate lending became one of the bank's priority development areas. In 2004, the bank issued VISA chipcards and completely transferred to a unified account numbering system in the EU member states - IBAN (International Bank Account Number). Rietumu Bank purchased Russian broker company Eco Save and established a new investment company RB Investments.^[7]

In 2005, 33% of shares were bought by Dermot Desmond, a citizen of Ireland. The bank started building a new central office Rietumu Capital Centre and also issued MasterCard and Maestro chipcards and offered customers a new modern platform for stock exchange transactions in world currencies FOREX. In 2006, the bank was granted a syndicated credit totalling to €60M arranged for by ERAB and a syndicated commercial credit totalling to €110M from more than 20 banks from all over the world. Aleksandrs Kalinovskis became the President of the bank. In 2007, it opened a representative office in Bucharest and extended its accreditation of a representative office in Minsk. The bank was granted one more syndicated commercial credit totalling €120M for three years (with 19 banks from all over the world among the syndicate members).^[8]

In 2008, the bank expanded its activities in the CIS countries, having become a co-owner of WestLeasing group of companies in Russia and Belarus and co-owner of Ukrainian Ощадна компанiя broker company. The bank's subsidiary RB Asset Management started offering asset management services: private investment funds, international investment fund portfolios and structured notes. The bank's new central office Rietumu Capital Centre was opened.^[9]

2009 – 2017

Development after the crisis and the 25th anniversary

In 2009, Rietumu Bank was the only Latvian bank that gained profit in the circumstances of financial crisis.  Rietumu Bank introduced a new customer identification system Rietumu ID, expanded personal management service to all customers, offering various market financing options, flexible investment opportunities, purchase of gold bars and coins, investment products.  The bank's logo and corporate style were changed.^[10]

In 2010, Rietumu Bank offered customers a support programme for obtaining a temporary residence permit in Latvia, which gave an opportunity to move within the Schengen Area. Aleksandr Pankov became Rietumu bank's President. A Hong Kong businessman Balram Chainrai became a holder of 5% share in Rietumu Bank.^[11]

In 2011, Rietumu Bank opened a representative office in the capital of Armenia Yerevan, starting to offer its corporate customers a full range of electronic commercial services, Internet acquiring services to its corporate customers based on its European license. It expanded its lending geography in Russia and other CIS countries and rendered support to its customers in European fund raising and started offering a new service - Art-banking.^[12]

In 2012, Rietumu Bank opened the bank's partner representative office in Shanghai. The first international e-commerce conference eCom21 was conducted in Riga under the Bank's auspices, attracting more than 250 market professionals from Russia and other CIS countries, Europe and the US.^[13]

In 2013, Rietumu Bank presented a new Platinum class credit card Jūrmala. In 2014, Rietumu Bank implemented a virtual ID system, offering a simple and safe identification to its customers who work with the bank from mobile devices with the use of an inbuilt Digipass for Mobile©. The bank completed a limited issue of preference shares and paid up 13.3 mn preference shares.^[14]

In 2015, Rietumu Bank made a special smart phone application, giving the bank's customers convenient remote access to their accounts, created a new internet bank website iRietumu for devices with Android platform (internet bank website iRietumu is available to Apple Watch users as well), got the 1st level PCI-DSS certificate that evidences maximum safety of holder's data.

In 2016, the bank offered an opportunity to automatically and safely access structured data on investment portfolios with the use of JSON API — Rietumu Broker Link. This opportunity includes receipt of information on positions, financial instrument flow on accounts and statements.^[15] Rietumu Asset Management (RAM) stepped in with new investment products, including investment portfolios Industry 4.0 and major investors’ individual bond portfolio Target Maturity Bonds.^[16]

In 2017, Rietumu Bank celebrated the 25th anniversary of its activities. Simultaneously, the bank started its cooperation with the German leading deposit placement platform ZINSPILOT; thus, gaining access to the German savings market, the largest in Europe. Rietumu Bank became the first Latvian bank to start its own project in the fintech area. Moreover, the bank started cooperation with StartinLV association that unites tens of prospective Latvian startups.^[17]

2018

New business areas

In the Spring of 2018 the Latvian financial industry was considerably shaken as the US Treasury Department blamed Latvian ABLV Bank for money laundering. Corruption scandal at the level of financial market supervision institution added to this turmoil. As a result of this instability, the Latvian financial market supervision institutions and legislators adopted a range of decisions that considerably restricted banks’ cooperation with non-resident customers, especially high risk clients. At this point, Rietumu Bank made a decision to considerably change its business model, focusing its activities on servicing Latvian customers and customers from other Baltic and OECD states. As part of transformation of this business model, Rietumu Bank terminated cooperation with nearly 4000 high-risk customers. This work was highly assessed by both Latvian supervisory bodies and foreign partners.^[18][19]

At this point the bank's management was changed as well, and the responsibility for the implementation of the new business model was vested in Rolf Fuls, an experienced representative of Rietumu Bank management.^[20]

The main regions for the bank’s activities are now becoming the Baltics and other EU countries. Rietumu Bank continues focusing on the servicing of corporate clients and affluent individuals. One of the focuses of the new strategy is business lending, which already brings positive results within a short period.

Rietumu Bank was included into the TOP 101 of the most highly assessed Latvian companies – the annual research of the market value of undertakings conducted by the financial company Prudentia in cooperation with Nasdaq Riga stock exchange.^[21]

Rietumu Bank sponsored the Latvian national team at the Ice Hockey World Championship, where our team reached the quarter-finals.^[22]

Shareholders, council and board[]

In the end of 2017, Rietumu Bank's major shareholders were Boswell International Consulting Limited (33.11%, the sole shareholder Dermot Desmond); SIA Esterkin Family Investments (33.12%, the sole shareholder Leonid Esterkin), SIA Suharenko Family Investments (17.34%, the sole shareholder Arkady Suharenko). The bank's Council includes Leonid Esterkin (Chairman), Arkady Suharenko, Brendan Murphy, Dermot Desmond and Valentin Bluger.^[23]

Since 2018, Rolf Fuls, one of the bank's leading top managers over the past 20 years, has been the Chairman of the bank's Board. Before his appointment as Chairman of the Board, Rolf Fuls supervised the bank's financial planning and controls, technological development, correspondent relations, resource management and various customer support-related areas, including lending and asset management. Rietumu Bank Board members, in addition to Rolf Fuls, are Ruslan Stecyuk (Deputy Chairman of the Board), Ilya Suharenko (Deputy Chairman of the Board) and Jelena Buraja (Board Member).^[24]

Performance[]

In Q1 2018, Rietumu Bank's profit amounted to €15.7M with the total amount of assets being €2.14B. In this period, Rietumu Bank was the second Latvian bank in terms of profit. Return on capital was 13.58% and return on assets was 2.35%.^[25]

In 2017, Rietumu Bank's after-tax profit was €33M (€80M in 2016). The amount of dividends payable to holders of ordinary and preference shares totalled €12.7M. Profitability of preference shares equalled to 5% per annum.

As of December 31, 2017, the bank's assets amounted to €3B.

In 2018, considerable decrease in assets reflected the transformation of Rietumu Bank's business model after the termination of relations with a considerable number of high-risk customers.^[26]

Controversial events[]

On July 6, 2017, in the case France Offshore against Rietumu Bank, the First Instance Court in Paris imposed a €80M fine. Aleksandr Pankov was conditionally sentenced for four years and Sergey Shchuka, the former Chief of the bank's office in France, was conditionally sentenced for one year with prohibition to operate in France for five years. The bank contests the judgement and is challenging it. The appeal hearing is forthcoming.^[27]

References[]