With approximately 1.2 million in hryvnya lent out over its first two weeks of operation, PrivatBank’s pilot Loan Supermarket in Chernivtsi is realizing its most optimistic scenario and contributing to small and medium enterprise development in the city, the bank told LED Monitor on Friday.
Photos: courtesy of PrivatBank
Launched on May 23, 2007, the Loan Supermarket performs all normal functions of a bank office, but specializes in lending, including mortgage and consumer loans, credit cards, and microcredits, according to the bank’s press release.
“No other bank has a supermarket of such a format in Ukraine. That is, there probably are some specialized offices focused on lending, but not on this scale,” says Ivanna Skyba, PrivatBank PR Manager.
The Loan Supermarket fits in well with the Chernivtsi Competitiveness Strategy, which provides, among other things, for business infrastructure development. According to PrivatBank Chernivtsi Branch Director Andriy Stetsevych, the supermarket makes access to loans easier for SME’s, while providing services based on the one-stop-shop principle.
The bank combined all the services that a small business client formerly received through different windows, into one business package. The package includes a Turnkey Business program comprising consulting, lending and other services to both newly-registered and already-operating private enterprises, a program called Your Account Already at Work, a wage project, and a corporate card with an overdraft set automatically.
“A person who comes for an ordinary loan for his or her business additionally receives the whole matrix of services an up-to-date European bank can offer,” Mr. Stetsevych said. “The bank takes all the troubles associated with registration, legalization, etc. The client doesn’t have to go anywhere else anymore.” The entire procedure lasts about one week.
The price of the business package services is UAH 100 (about $20), which Mr. Stetsevych called a “token payment.” The bank is interested that the client would “come out of the shadow,” i.e., have his or her business legalized, according to the branch director.
Answering the question, why is Chernivtsi Ukraine’s first city where PivatBank opened its Loan Supermarket, both Ms. Skyba and Mr. Stetsevych referred to the geographic advantage of the city as being in a border region. “Many people have some business abroad, and go there on business trips, for training or a travel. Accordingly, they come, for example, for credit cards, because it’s the most convenient payment tool on the trips abroad,” Ms. Skyba explained.
According to Mr. Stetsevych, a higher borrowing activity of population is characteristic of any border region and of Western Ukraine in general. He said the concentration of entrepreneurs there is higher than elsewhere in the country. “For example, in 2006 the absolute number of entrepreneurs in the Chernivtsi Oblast was by 50 percent lower than that in the Donetsk Oblast, but the population was seven and half times less. That is, we can say that we have approximately 3.5 times more entrepreneurs per capita than the Donetsk Oblast has,” he observed.
However, the proximity to the border is not the whole story. The two bank officers mentioned many factors taken into account in decision-making. These include favorable business climate in Chernivtsi, SME development, positive experience in collaborating with local authorities, and the very fact that the city has the Competitiveness Strategy.
“Small and medium businesses generate major gross product in the city. And the main consumer of Loan Supermarket services – whether these are microcredits or express loans or mortgage loans or credit cards – is the middle class, just the one which does business,” Mr. Stetsevych pointed out.
Implementation of the Loan Supermarket project began in December 2006. Within a couple of weeks, i.e., before July 2007, PrivatBank is planning to open the second such supermarket in Chernivtsi, according to the branch director. He also unveiled the bank’s plans to open loan supermarkets in Lviv and, possibly, in the Zakarpattya Oblast.
Another PrivatBank project underway in Chernivtsi is establishment of business incubators, also based on the one-stop-shop principle, which will assist in business planning and provide other consulting services to entrepreneurs. The first one will open in a month, and two more later this year, Mr. Stetsevych reported.
PrivatBank was established in 1992. It is now Ukraine’s largest bank with UAH 39,139 million in net assets, as reported on the bank’s web site. Its loan portfolio equals UAH 30,118 million, including UAH 13,146 million lent to individuals.
Chernivtsi Competitiveness Strategy (strategic plan) was developed in 2006 with assistance from the USAID LED project. Business infrastructure development is one of the plan’s three so-called critical issues, the other two being tourism development and creation of conditions for investment attraction.
