Russia?s Largest Bank Looking to Hire Collection Agencies: Report

The largest bank in Russia will be hiring collection agencies soon, according to a report on Russia-focused Web site RussiaToday.ru.

Savings Bank of the Russian Federation – commonly called Sberbank – has not used third party debt collectors in the past, according to the article. They are the last of Russia’s major banks to rely exclusively on internal collections.

Sberbank is the largest bank in Russia with $15 billion in revenues in 2006 and more than 240,000 employees. The bank is majority owned (60.25 percent) by the Central Bank of the Russian Federation.

The bank has been involved in a massive cost reduction program over the past couple of years. Working with consulting firms Bain & Company and McKinsey & Company, the bank has closed down branches and plans to shed some of its workforce. It is also looking to automate many of their processes.

The cost reduction plan could be a major rationale behind the decision to use outside collectors, according to a leader at one of Russia’s largest collection agencies. “When a bank works with troubled borrowers using its own resources, it always risks spending time and money in vain,” Aleksey Kozyrev, Deputy Head of Sequoia Credit Consolidation, told RussiaToday.

U.S. investment bank Goldman Sachs bought a stake in Sequoia in late 2006 ("Goldman Sachs Buys Stake in Russian Collection Agency," Oct. 10, 2006).

Russia’s expanding debt collection industry would receive a major boost if its country’s largest bank started using collectors, according to analysts cited in the article.