NV June 2023
CEO of Crédit Agricole on the development of country and business potential and the invincibility of Ukrainians
This year, Crédit Agricole Bank marks its 30th anniversary in the Ukrainian market. Being the first foreign bank to enter Ukraine, it has made it to the top 10 banks in the Ukrainian market in terms of assets and a systemically important bank, one of the leaders in car lending and reliable partner of Ukrainian agribusiness. The bank has 141 outlets across Ukraine and counts 2,200 employees.
From the first days of the full-scale war, Crédit Agricole Group supported Ukraine, strongly condemned the invasion, and stopped all new financing for russian companies and all commercial activity in russia.
NV spoke to Carlos de Cordoue, CEO of Crédit Agricole, about 30 years of doing business in Ukraine, the exit from Russia and the future of the bank and Ukraine.
Please tell us what results Crédit Agricole has achieved in the Ukrainian market in 30 years.
Indeed, it has been 30 years. Crédit Agricole was the first foreign bank to enter Ukraine, back in 1993, and now we are marking our 30th anniversary in Ukraine. We came to Ukraine at the beginning of its independence to support and assist international companies that wanted to develop their business here. This is the key thing.
When the bank started to feel quite confident in Ukraine, Crédit Agricole Group decided to expand its business and acquired Index Bank in 2006. It was an operating bank with a branch network across Ukraine.
In this way, we were able to cover retail and corporate banking, legal entities, and decided to focus on the agribusiness segment.
We actually started working with agribusiness in 2009, though the Agro Expertise division was established in the bank only 11 years ago, and we can be proud of what we have achieved since then, because what we are doing is actually developing agribusiness in Ukraine. The bank has a 12% market share in Ukraine, and agribusiness financing accounts for 50% of the bank’s total loan portfolio.
What is the share of the Ukrainian market in the Group’s overall profits?
Credit Agricole Ukraine is a part of the large Credit Agricole Group, which is ranked in the top 10 banking group in the world. We are operating in 46 countries, we are number 1 in France, we have leading positions in Asset Management, in Insurance business, in Consumer Finance on the European market. Our presence in Ukraine has a positive but limited impact on the overall profit of the Group. Moreover, Credit Agricole Ukraine has always shown positive results even in difficult economic circumstances and we consider that the Ukrainian market is offering significant potential for the future.
Philippe Brassac, CEO of Credit Agricole Group, during his visit to Kyiv, November 2022
Do you expect an increase in the Ukrainian share in the Crédit Agricole’s overall portfolio in the future?
Yes, but for now, the bank is rather focused on ensuring stable organic growth. At the same time, Ukraine’s accession to the European Union should be a turning point not only for the bank and the Group, but also for other investors. We expect more investment, more rapid development, because joining the EU will in fact mean more certainty and stability. This will be a clear and positive signal for investors. For now, we are focusing on stable and sustainable development.
How did Crédit Agricole Group help Ukraine at the beginning of the full-scale russian invasion of Ukraine?
I would like to say that I was really impressed by how quickly the Group reacted to the war in Ukraine and made an unprecedented decision on the 24th of February. Within the first week of the full-scale invasion, all new financing for russian companies and all commercial activity in the country was stopped.
And the second instant decision of our parent company was to set up a EUR 10 million Solidarity Fund for Ukraine, which was intended not only to support Crédit Agricole employees, but also to finance projects important for Ukrainian society in wartime.
Did the Group lose anything by leaving Russia?
We didn’t have large retail banking with network of branches in Russia. Our unit was focused on servicing International Companies and large Russian Corporate. The exit of our commercial activities had of course a negative impact. Our Russian entity turned from profit to losses. The large scale of diversification and growth of the Group entirely compensated this negative impact.
How did the war affect the financial performance of the Ukrainian bank, how much did it change over the year?
On 24 February 2022, when the full-scale agression had just started, we could not even expect what we have today. We were preparing for the worst-case scenario. One of our main concern was the potential weakening of our liquidity position. We were expecting massive cash withdrawals from clients due to the war. But in fact, what happened is the opposite. People continue to place their funds with the bank, the deposit portfolio of Crédit Agricole Bank has grown by 35% since then, and our liquidity ratio is several times higher than the minimum NBU requirement.
The liquidity position is very strong and this is not only the case of Crédit Agricole – it is the situation in the banking system in general. This growing excess of liquidity has generated significant increase of operating profit. As a result, we have been able to build up substantial level of reserves in order to cover recognized or potential losses on our loans portfolio. As of today, we consider that we have created sufficient buffer to hedge cautiously our credit risks in current situation. This is the first point.
The second point is the business situation. During the first 3-4 months, when the Black Sea was blocked and the agribusiness had virtually no sales, we continued to support it. We financed the purchase of seeds and fertilisers to support the sowing campaign. This situation was not very comfortable for the bank since we did not know what would happen. Yet, thanks to the exceptional, even extraordinary resilience of the Ukrainian people, the business adapted and reorganised processes, cut costs, set up new logistics solutions and adjusted to work during the war in general. Now the situation is quite stable: the bank is profitable and the banking system as a whole is profitable, too.
Another problematic period was the time of blackouts. Again, thanks to their exceptional ability to mobilise their efforts and do the impossible, the Ukrainian people and businesses were able to avert a crisis during the blackouts and restore all processes. This is, as one might say, the striking magic of the Ukrainians, which is amazing.
What are the prospects for the Ukrainian market after the war, according to your estimations?
First, I would like to point out that the potential [of the Ukrainian market – editor’s note] is enormous. I mean natural resources, the agricultural sector, IT companies, energy sector and others. We are ready to work and support them.
Ukraine needs to receive significant funds for the reconstruction phase to effectively rebuild its infrastructure and economy. We can already see at the international level that EU and US partners are willing to create a plan for rebuilding Ukraine similar to the Marshall Plan after the World War II, and many governments are already working on it. At the same time, Ukraine needs to attract direct foreign investments. Capital investments from International companies will be a key driver for a sound development of the economy likewise in Poland 3 decades ago.
Even at this stage, we are trying to join the reconstruction process. We have a joint financing programme for EUR 50 million with the EBRD to support critical industries, including agribusiness. International Financial Institutions like EBRD or IFC can rely on banks like ours, with large networks over Ukraine territory, to help distributing these financing to end users, agribusiness in particular.
Once again, the key turning point will be Ukraine’s accession to the European Union. This will be a very strong message for investors, because joining the European community actually means more transparency, it means stability, and it will really give investors the confidence in the future and that this country is really worth investing in.
When do you think Ukraine will join the EU?
I cannot make any precise predictions.
We see a great political will to speed up the accession process. On Ukrainian side, I believe there is a strong willingness to implement the needed reforms. It make take some time but the process has started at a rapid pace.
Please tell us about your program We Care!
The program originated as a small initiative in 2016 and has significantly expanded since them. It encompasses four main areas: charity, volunteering, environmental initiatives and care for the bank’s employees. Since the war broke out, the bank focused on two areas: social responsibility and supporting our employees. Over the past year, we have implemented over 20 different initiatives, including the purchase of new equipment for hospitals and targeted support for war victims. In total, we allocated UAH 21 million in 2022. We have a regular charity partner - Your support fund, and we are very pleased with the results of our cooperation. They provide us with a list of various projects where our help is most needed, and we select and provide targeted support.
For example, the bank allocated almost UAH 8 million to help the Institute of Pediatrics, Obstetrics and Gynaecology (IPAG) in Kyiv and purchased a modern breathing apparatus for anaesthesia, a professional ultrasound diagnostic system, and a powerful power generator. We also purchased medical equipment worth UAH 5.6 million for the Zaporizhzhia Regional Clinical Children’s Hospital. As a result, 1250 hospital patients have already received vital treatment!
Credit Agricole donated medical equipment to IPOG, 2022
We keep looking for new opportunities to provide help where it is most needed. During the war, we found a new area of charity: we started to raise aid from the regional banks of the Group. Thus, we purchased 21 diesel generators worth almost UAH 11 million for 14 social institutions in Zhytomyr region, and 19 power generators worth almost UAH 3.5 million for orphanages. Recently, on the occasion of the 30th anniversary of Credit Agricole in Ukraine, a regional bank of the Group, Credit Agricole Provence Cote d'Azur, purchased and donated an anesthesia machine worth nearly UAH 2.5 million for the clinic “Simeynyy Likar” in Zaporizhzhia region. Since the beginning of the war, Credit Agricole S.A. and the regional banks of Credit Agricole Group have allocated UAH 40.6 million to help hospitals and war victims in Ukraine.
At the very beginning of the war, I was impressed by the dedication of the bank’s employees: they supported clients and ensured the smooth operation of outlets and banking services in such difficult times during the war, and after work they switched to volunteering. I am not sure if they had time to rest and sleep. It was amazing!
Credit Agricole team took part in a charity half marathon, Kyiv, April 2023
Does Crédit Agricole plan to launch any new projects in the near future?
We have many projects and ideas that we are working on. We are currently working on developing a tailored offer for private entrepreneurs. This segment is widely represented in Ukraine, and we want to help them unlock their potential by offering dedicated products and services. We hope that this will be one of the best offers on the market.
As always, we will continue to support agribusiness, and we are building specific expertise to support renewable energy projects in Ukraine.
Before the war, Crédit Agricole was one of the market leaders in car lending and, despite the fact that we suspended this programme at the beginning of the war, last July we resumed it. Not many banks in Ukraine work in this area. I have to admit, we are very proud of our results: we have excellent product quality and loan portfolio.
Credit Agricole teams took part in a flash mob dedicated to the bank's 30th anniversary in Ukraine
