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Russia: Renewed hope for the SMEs

Small and medium-sized enterprises (SMEs) in Russia have faced a tough time over the past two years after large corporates and private individuals tightened their belts and once-enthusiastic banks cut back their lending activity as the country went into recession. Consequently, the SME banking segment registered the highest bad loan ratios, which only served to shrink the availability of funding even further.

But with the Russian economy reviving, banks with a strategic focus on the SME sector are looking forward to reaping the rewards of the improved business climate. Locko-Bank, for example, has seen a strong uptick in its financial fortunes in the past year, registering across-the-board growth on the asset, lending, customer base and equity fronts.

As a result it has regained capital markets access, launching a Rb2.5 billion ($82 million) 2015 domestic bond in late July – it’s first for two years. Olga Gorokhovskaya, director, debt capital markets, at investment bank Troika Dialog, which joint lead managed the transaction, says that the successful placement of the deal, which had tightened in from a launch yield of 9.25% to 8.59% by mid-August, proves that SME-focused banks are coming back in favour.

She adds that the bank has an impeccable credit history, having fully serviced all its domestic and international debt to date.

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