Letter from the Chairman
Dear Ladies & Gentlemen,
 We are truly living in historic times! Our team at OPM-Bank feels privileged to be a part of the exciting changes going on in Russia and is pleased to be able to offer clients a diverse range of services in this market.
OPM-Bank is a partner for Russian and international firms and individuals doing business in Russia. We strive to offer our clients the best of both worlds: a Russian bank which understands the intricacies of doing business here and is sensitive to the specific needs of enterprises operating in this environment and at the same time, a full-service bank which provides first class western-style service.
1995 was OPM-Bank's first full year of operations in Russia. It was a year of enormous growth for us with total assets increasing nearly ten times and profits increasing over 28 times. Efforts were focused on diversifying the bank's scope of activities, expanding into the fixed income market as a full-fledged dealer and customizing our client services.
In early 1996 we obtained our hard currency license and, as a result, began offering clients a whole new range of services. The volume of client fixed income assets serviced by our bank (an off-balance sheet item) surpassed total bank assets in the early spring. In addition, OPM-Bank successfully made its entrance into Russian equities and has already emerged as one of the leaders in this market.
Thanks to changes in the legislative environment and a number of new capabilities of our bank, we were able to significantly expand and improve the quality of, our commercial loan portfolio. These improvements were achieved through the use of client equities and fixed income instruments as collateral on loans made.
It is our goal for the future to remain at the forefront of Russia's developing markets while simultaneously improving the quality of those services we already provide to customers. Over the coming year we will actively market our brokerage and investment services to international clients. In addition we will focus our efforts on expanding our commercial lending operations and promoting the growth of local businesses. This becomes an easier task as interest rates are reduced and the economy stabilizes.
The summer of 1996 heralded in a new era for Russian politics with the first non-violent and democratic transition of power ever to be witnessed by this country. We believe that the future holds great things for Russia and its people. The road ahead may not always be a smooth one, but there are few in this world which offer greater possibilities.
We thank you for your trust and support and look forward to cooperating with you in the future. Best wishes to you all for the coming year.
Introduction
History and Development
OPM-Bank is a limited liability Russian partnership which was founded in March 1994 with a charter capital of RUR 150 million In August 1994 and March 1995 the fund was increased to RUR 1,050 million and RUR 10,000 million respectively.
A Russian banking license was obtained in March 1994, a license for trading government bonds in February 1996 and a hard currency license in April 1996. Membership of PAUFOR (now NAUFOR) (Russian Brokers Association) was acquired in January 1996.
Economic and Political Background
The bank has operated from its founding date to the present day, in a difficult and unpredictable economic, political and legal environment.
Through prudent financial management we have survived and prospered despite a number of particularly difficult periods in the development of the Russian banking system and the economy as a whole.
The Team
As a young and rapidly expanding bank we have a flat corporate structure which ensures fast and direct communication across all levels and all areas of the bank. This means that we are able to react quickly to the swiftly and frequently changing conditions which characterise the Russian market.
We are proud of the professional and dedicated team we have assembled. We recognize that the greatest asset of any company, particularly working as we do in the service sector, is the people which work for that company. We are committed to encouraging and promoting the best and to ensuring that all staff dedicate themselves to providing the highest possible levels of client service. To this end OPM-Bank conducts on-going in-house training programs with professionals from the Russian Financial Academy, other commercial banks and the Russian Central Bank. In addition English language courses are made available to all personnel, and the Bank is currently financing the graduate studies of several of its key employees.
Principles
Our corporate philosophy is based on the following four principles:
- Win-Win: all client and partner relationships must be mutually beneficial. A deal which does not benefit both parties is not one we will do.
- Innovation: Where other banks stop we get started. We believe that traditional conservatism which prevails in international banking should be used as a tool to promote the safety of the client's and the bank's investments and not as an obstacle to doing business. The Russian market is dynamic and chaotic. This environment demands innovative solutions and flexibility - solutions which OPM-Bank offers.
- Full-Service Bank: OPM-Bank provides clients a complete package of services and products tailor-made to suit each individual client's needs. The Bank evolves along with its clients and is continuously adding and improving services and products.
- Long-Term Commitment: Our commitment is long-term and we apply this attitude to both our clients and our strategy in the marketplace as a whole. True success generally comes after years of hard work and perseverance. Such financial institutions are rare amidst the short-term attitude which currently prevails in this market.
Aims
- To provide first class service, tailored to meet the needs of each individual client whether Russian or foreign.
- To make a productive contribution to Russia's economic transition by providing capital to businesses and manufacturers and taking an active and professional stance in all of Russia's major financial markets.
- To maintain the role of a good employer through motivation and by enhancing the skills, career development and well-being of our staff.
- To earn sufficient profits to ensure the long-term strength and growth of OPM-Bank and to achieve a good return on investment for our shareholders.
The Future
At the time of the fall of Communism in 1991 Russia had virtually none of the institutional or legal frameworks in place to support any form of capitalism. Today, only a few years later, state controls have been largely dispensed with, thousands of industries of all sizes and all across Russia are now in private hands and reliable, accountable and independent stock market, banking and legal systems have been established.
Prior to the presidential elections in June and July of 1996 there was a widespread fear that July could see a Communist government returning to the Kremlin: should this have happened it was generally accepted that the overall atmosphere in Russia would turn sharply against the foreign investor. This scenario remained a scenario and Yeltsin was returned to power. The way ahead is still not clear, however the fact that Russia voted for a continuation of the reform process indicates that now there is no going back.
We at OPM-Bank firmly believe that Russia, with its vast land area, strategic geopolitical location between Europe and Asia, its wealth of mineral resources, an already established industrial base and (most importantly) a highly educated work-force, must surely be poised on the threshold of a period of extremely dynamic growth and expansion. We aim to be a part of it.
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