"Start with a clean slate." The head of VTB - on the new principles of the financial market

Andrey Kostin

The events of recent months have changed each of us and each of us in different dimensions. And of course, changes are inevitable in all key areas of our country's life.

Over the 30 years of the existence of modern Russia, certain tools and guidelines have appeared that have become familiar and convenient. And their loss should not throw us off balance. Today it is necessary to soberly comprehend what is happening, draw conclusions and continue to move forward.

This, obviously, will be the topic of all discussions at the St. Petersburg Economic Forum.

In my opinion, the main task is to assess the nature and depth of changes across the entire spectrum of the socio-economic agenda and formulate the priorities for the work of the state and business in the era of “game without rules”. We called our session: “New realities of the new world: a game without rules?”. And one of the main questions for me is what are the banking sector's footholds, what are its prospects.

To begin with, we should remember how and when the global "rules of the game" appeared.

Until the 1970s, two socio-economic systems existed in parallel in the world, each with its own set of internal rules, norms and values. At the same time, full-scale interaction in the field of finance was simply impossible - after all, there was no commercial banking in the USSR.

Détente established the first version of the "rules of the game" in the international arena. It was a kind of "gentlemen's agreement", which on the whole realistically reflected the balance of power between the USSR and the USA , based on nuclear parity, comparability of economic potentials and mutual recognition of legitimate security interests.

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What happened next is well known: the chaotic collapse of the USSR, the cardinal transformation of the Russian economy, and the seemingly logical and correct course towards the full integration of Russia into the world that is globalizing according to Western patterns.

In practice, this meant the voluntary acceptance in all spheres of life - from the economy to education - of foreign standards and norms that have become global. Russia has entered the game of "globalization", the rules of which were not formulated by it and without its participation. It would be wrong to say that this process did not bring significant economic benefits to our country. One of the beneficiaries was the modern financial sector, which was created in just a few years almost from scratch on the basis of American and European (there were simply no others!) Technology platforms, tools and business practices.

Understanding the vulnerability of the model based on technological and resource borrowing came later. The crisis of 2008 demonstrated the risks of dependence of economy funding on foreign markets. But 2014 was a really big time. The largest domestic banks were cut off from Western capital markets, and some colleagues were cut off from international payment systems. It became clear: we can easily be "cancelled".

Looking from today, it is obvious that the integration of our country into the global market and political structures on the terms of "secondary" could not be sustainable, because it did not provide not only for taking into account Russia's national interests in key areas, but even for an equal and mutually respectful dialogue.

Security is the most important, but not the only example. A forgotten but remarkable fact: for 16 years of membership in the G8 (1998-2014), Russia has not received the right to discuss financial and economic issues on an equal footing.

One way or another, today this page of relations between Russia and the "collective West" has already been turned over. What are the priorities of the financial sector at the new stage of development?

First. For bankers, the world really will “never be the same again.”
This is not a figure of speech. Now the former "partners" do not get tired of repeating that business as usual is no longer possible. Russia is deprived of access to major capital markets and payment systems, international ratings, and audit services. Therefore, the sooner we and our clients accept this fact, start looking for viable alternatives and new opportunities for growth, the better.

We should not forget about the unique feature of our sector — the ability to quickly "reconfigure" and find effective responses to managerial challenges. Many of us have experience of going through the crises of 1998, 2008, 2014, 2020. The crisis is the new normal for us.

Second. The most active participation in the structural transformation of the economy. The primary task is to help promptly restore and, if necessary, build new production, logistics and trade chains and, at the same time, adapt the tools and capabilities of the financial system to a dramatically changed environment.

The country will have to comprehensively restart the industry, replace foreign products wherever possible. All this requires significant long-term financial resources. At the same time, we have no one to rely on but ourselves.

Hence, another priority. I am not sure that, being today outside the perimeter of the Western financial system, Russia should continue to fully adhere to the Basel standards calibrated for Western markets.

The regulator has already expressed its readiness to “fine-tune” the application of Basel, taking into account current realities, which will certainly provide significant support to the sector and the economy as a whole.

Today we have a unique chance to start from scratch. Create your own versions of banking regulation and national credit rating. They may well find their place in the relevant provisions of existing international standards. But above all, such future standards should reflect the realities and priorities of the Russian economy.

Third. Sanctions  are permanent. Globalization in its former form is over. The world is likely to be again rigidly divided into “us” and “them”. This is Cold War 2.0.

Admission to the world market (where our rules do not apply) must be earned by good behavior, that is, "playing by the rules," according to a recent statement by British Foreign Secretary Liz Truss, which she made in the City of London. Russia received a "red card". China  is still "yellow".

For the banking sector, this means the need for further devaluation of balances in dollars and euros. Priorities on the external circuit are the diversification of foreign exchange payments, the transition to trade with friendly countries in rubles and national currencies using a secure payment and settlement infrastructure, the development and launch of investment instruments in soft currencies. Including within the framework of the BRICS, whose economies today form 25% of world GDP.

What happens next is up to us. In business, as in sports, there is a proven principle: to win, you must first play. This time, by your own rules.