Could you provide a brief journey of how you arrived where you are today?
I started my business career as a deputy accountant for Kazan Milk Factory. In 1998, I was appointed as the first deputy minister of Tatarstan. The ministerial experience was of great value when I was appointed as the chairman of the executive board of AK BARS Bank in 2003.
During the last nine years, my team has accomplished a series of large projects. Many of them have been innovative not only for our bank but for the Russian financial market in general. One of those projects is the recent Islamic finance Murabahah deal.
What does your role involve?
As the chairperson, I am responsible for operating as the CEO and managing the executive board. I represent AK BARS Bank in governmental relations, interact with key partners and clients, and manage current banking business. My competence includes the realization of the bank’s development strategies, control of financial and business performance indicators as well as timely execution of the decisions of the board of directors and shareholders.
What is your greatest achievement to date?
Our bank was the first in Russia to succeed in closing a Murabahah deal, an achievement not only for AK BARS Bank, but for the whole Russian banking system. Practically, the bank has opened the financial gates between Russia and the Middle East. A deal in accordance with Shariah norms gives a real possibility to diversify funding sources. We have started to form our own success story and to drive this new market area for Russia.
Which of your products/services deliver the best results?
The majority of the bank’s revenue (71.5%) is derived from corporate business, and the accounts of the bank’s corporate clients comprise over 60% of total customer holdings. The bank is developing and implementing the same number of services for both corporate and private customers.
What are the strengths of your business?
AK BARS Bank has always followed these main principles – rational conservatism, responsibility to clients and adequate estimation of existing risks.
AK BARS Bank remains one of the most effective credit issuing organizations in Russia, thanks to the timely offering of new products to clients and constant implementation of new technologies.
What are the obstacles faced in running your business today?
The debt crisis in the Eurozone is accelerating, creating substantial difficulties and risks for Russian companies in attracting financing from western markets. With the global financial uncertainty for capital markets, the growing state debt of the US, and the instability of the European banking system, it is obvious that Russian companies will have to offer paper with higher interest or those markets will simply be closed for Russian companies.
Where do you see the Islamic finance industry in the next five years?
In Russia Islamic instruments are at the very early stage of development. The demand for these instruments is growing from both sides – corporate and individual.
Currently, major investment houses and banks are primarily focused on attracting financial resources to Russia including free capital originating from Islamic countries. Individuals, as well as middle companies, are showing interest in small Shariah compliant finance instruments and investments.
There are certain limitations for the development of the Islamic financial institutions however. Most important of these is a lack of legal norms regulating this sphere of financial activity. Nevertheless, according to practical evidence, running a Shariah compliant business is still feasible within the current legislation.
Name one thing you would like to see change in the world of Islamic finance.
AK BARS Bank is a new player to this market and is still surveying its partners and competitors. Moreover, it is not the current centers of Islamic finance that need to change, but Russia itself.
In the framework of Russian legislation, it is practically impossible for banks to perform transactions where they would be acting as the seller of a real asset, such as property. In particular, many tax-related issues arise. Bans on banks engaging in sales transactions lead to having to involve additional operating companies, making the service for the client more expensive.