The key things we learned from our work in Ukraine is flexibility and adaptability

Liga May 2023

Alexandre Tchesnakoff, Member of the Management Board at Credit Agricole Bank for Liga business media

Crédit Agricole Group has a long history. How would you characterize the accomplishments of the bank during its 30 years of presence on the Ukrainian market? In your opinion, what the banks of the group could learn from the Ukrainian bank?

I should mention that the group started its history in Ukraine a lot earlier than 30 years ago. In 1892, in Odesa the first outlet of the French bank Crédit Lyonnais opened its doors. It operated until the early 20th century. In 2003, Crédit Lyonnais became part of Crédit Agricole Group, so in a way our group has been operating in Ukraine since the late 19th century.

Indeed, the official history started its course 30 years ago. We have come a long way since then – from a smaller investment bank to a larger systemic one with a network of 140 outlets and a team of over 2,000 employees. In France, it is considered rapid development. The key things we learned from our work in Ukraine is flexibility and adaptability. If you want to evolve, you need to constantly change according to market conditions and modern challenges. The overall history of Ukraine during this period includes overcoming a number of crises, both global and local ones. The banking market experienced spurts of rapid growth and periods of freezing, correcting mistakes of the previous years. Unless you are ready to change promptly and transform your work in the new environment, you will have a really hard time. As for our Ukrainian colleagues, adaptability is running through their veins, whereas the French have to learn it.

Moreover, many products and services we piloted in Ukraine were subsequently implemented abroad, where Crédit Agricole Group is represented. Yes, the banking business in Ukraine is modern and digitized. There are separate mobile applications that are customized for different target audiences and their needs - individuals, businesses, private enterprises. Confirmation of money transfer online and instant notification of funds being credited to our counterparty's account is a common thing in Ukraine, while in France a few years ago it was still a novelty.

What French qualities has your bank imported to Ukraine and the Ukrainian banking system?

In France, we love procedures and regulation, extremely prudent approach in risk-management and our group is no exception. I believe that both Ukraine and Ukrainian banking business can benefit from these features: they enabled process systematization and focusing efforts in the right direction. Generally speaking, over 130 years of experience from the group which is in top-10 of the biggest banks in the world imparted understanding what a reliable and stable bank should be like.

Do you think Credit Agricole Bank was able to find the middle ground between the French tendency to over-regulate and agility in Ukraine? Do you consider your bank to be more over-regulated in comparison to other banks in Ukraine?

All banks in Ukraine and in France, first of all, must be stable and ensure the safety of clients' funds. To do this, for example, in Ukraine, the NBU implements prudential supervision - it regularly assesses the general financial condition, financial results and quality of bank management, this practice continues at a high level even during war time. We demonstrate stability and reliability thanks to strong capital positions, liquidity, and constant support of the Group.

Our customers like what we have to offer and how we do it. By choosing us, they have demonstrated their priorities. The Ukrainian market is step-by-step creating the values of long-term partnership, the importance of reputation. Clients increasingly understand the price of risk and appreciate the transparency of relations with their counterparties and banks. We are proud to be an active participant in the formation of such a culture.

In your opinion, does your prudent approach put off customers?

We service many customers and we build a long-term relationship based on trust with each of them. They appreciate our stability, our social responsibility and the fact that we offer them support even in the trying times, when the customers struggle and their business is in jeopardy. We do everything we can to help them withstand a crisis and sustain growth. Customers that have overcome the ordeal with us are loyal and remain with us for a long time. I believe that any shortcomings can and should be compensated with strengths.

For many years, Credit Agricole Bank participated in and co-organized numerous social and cultural events, e.g. the French Spring in Ukraine. How did your activities change since the full-scale war broke out?

Like before, Credit Agricole initiates many activities, but in the context of war, we allocate as much of our budget as we can to charity, mostly for the procurement of the vital medical equipment for hospitals with the support of Your Support charity fund. In one year, we implemented over 20 good initiatives, for the total amount exceeding UAH 21 million. Namely, we helped Zaporizhzhia Regional Children’s Hospital and the Institute of Pediatrics, Obstetrics and Gynecology. In addition, in the period of extended blackouts, jointly with the regional banks of the group we purchased power generators for orphanages and social institutions.

Credit Agricole Bank has leading positions in the agrarian segment. Has this area always been a priority for the bank? What was this path to the top like?

Since the very beginning of its operations in Ukraine, Crédit Agricole Group appreciated the potential of Ukrainian agriculture. We started working in Ukraine as a small investment bank. Our customers were international companies serviced in the banks of our group around the globe. Even then, we could see that the bigger part of our customers are involved in agriculture. After acquiring Index Bank, we were introduced to the small and medium businesses market, where a significant share of customers also worked in agrarian segment. What did we get? Our international corporate customers (manufacturers of fertilizers, plant protection products, suppliers of agricultural machinery, etc.) cooperated with small and medium-sized agricultural enterprises in Ukraine, which, in turn, sold products to traders. Our customers were essentially all links of this production chain.

That is where our French experience came into play: in France, Crédit Agricole Group started operations as a bank for farmers.

The Group's experience working with the agrarian sector, as well as agricultural experts with agronomic and veterinary education in bank team, allowed us to be one of the first to focus on the agribusiness support and development. Agrarian expertise is one of the bank's strengths. Communicating with our specialists, clients feel that the bank understands the specifics of agricultural production and their activities. Agrarian experts also constantly train colleagues from other bank divisions who work with clients from the agricultural sector. Thus, in 2018, the first bank AgroSchool in Ukraine was established - this project is one of the flagships for our bank even now.

Did your priorities in the agro change during the war?

No. This area remains among the key ones for us. At the moment, about 50% of the bank’s loan portfolio constitutes financing of the agribusiness. When the war broke out, we focused our efforts on the existing customers to provide them with the maximum support. To grow financing and minimize the risks, we employed various tools, e.g., since the start of the war the bank has granted UAH 1.8 billion in loans for the agrarian companies under the state programme “Affordable loans 5-7-9%”. Besides, during the war we joined the Government Program of State Guarantees and issued UAH 1.2 billion of loans as part of it.

Last year proved to be the most horrific one for Ukraine since it gained independence. In this period, most banks significantly re-assessed their development strategies. What changed in Credit Agricole Bank’s strategy?

Indeed, last year turned out to be very difficult and brought unexpected adjustments to the plans of people, companies, the state, and the world. We did not become an exception. In 2021, Credit Agricole introduced its strategy for the next 5 years. Naturally, when the war broke out, we focused on solving issues at hand. Eventually it became obvious that it is not enough to simply react towards what is going on. We then updated our strategy making the decision to keep supporting the existing customers and emphasize lending as far as possible in the current realities.

Simultaneously, we are doing enormous amount of work internally. Now the banking market is operating in the context of significant restrictions, the amount of products and services used by the customers has decreased dramatically compared to the prewar level. Our task is perfect our products and services to make them even more user-friendly and convenient for customers.

In addition, we keep investing in digital and development of new IT products. During the war, we launched state-of-the-art digital solutions for business – CORPEX і СА+ Prо, considerably improved our mobile application for individuals CA+. Actually, CA+ is the best banking application according to Ukrainian Fintech Award 2022. Also, it is rated among the top ones according to consumer feedback on App Store and Google Play.

When the war is over, all of the above will prepare us for the post-war recovery and it will be a lot easier for us to take the plunge.

What are the bank’s goals for the current year?

The previous year once again proved that Credit Agricole is a resilient bank that operates in a stable manner even in the conditions of war. We have created all the necessary provisions to cover all possible risks. As always, our liquidity and capitalization levels are strong – they are about double the NBU minimum requirements. The Bank is thriving thanks to its team, support from the group and our customers. Our main objective is to extend as much support as possible to all our customers, including in terms of financing. Beside agro we also focus on the IT sector as well as automotive lending – market segment where we have operated for 15 years now and are traditionally among the market leaders.