— You were dealing with the issue of financial risk whilst still studying in the US. What was it that sparked your interest in the Basel Standards?
The Basel Committee on Banking Supervision at the Bank for International Settlements was founded in 1974 in Switzerland by the presidents of the central banks of the Group of Ten(G10: a group of states, members of the International Monetary Fund who signed up in 1962 in Paris to the General Arrangements to Borrow). Today committee members are representatives of the central banks and financial regulatory bodies of around 30 countries, including Russia.
The main aims of the Committee are the implementation of unified standards in the banking regulation sector.
In 1988, the Basel Committee drew up the first Accord on Capital Adequacy as a reaction to the large losses and bankruptcy of banks, hedge funds, and institutional investors witnessed in the 70s–80s. The main aim of this agreement is the limitation of credit risks by way of the development of a series of supervisory principles.
The main objective of the second Basel Accord, passed in 2006, is to increase the quality of risk management in banking and to strengthen the stability of the financial system as a whole.
The third Basel Accord came about in 2010 in reaction to the global financial crisis of 2008.
— I only became properly immersed in this subject when I was working in the UK after studying in the States. A colleague of mine gave me a document on banking supervision put together by the Basel Committee. I was asked my opinion on it. And the new concept inspired me. I joined in with the work on its development and theoretical basis. And I became directly involved with developing the Basel Standards: international standards to determine financial risks and ways of managing them. There are three of these accord/recommendations already: their names have been shortened to “Basel II, Pillar I”, “Basel II, Pillar II (ICAAP)”, and “Basel III, LCR and Capital Requirements”.
Like my associates, I was convinced that banks which accept the Basel Standards will ultimately attain not only great stability, but will also be able to increase their revenue.Not to mention that for the borrower receiving credit will become simpler and cheaper.
We presented our suggestions in Paris at a conference for the financial directors of the largest banks in the West. Our ideas interested the professional community.
Since then, I have never needed to send my CV anywhere. I became known, and the leading banks began calling me to work for them in the capacity of consultant.
— And then suddenly you popped up in Moscow. What attracted you to Russia?
— It wasn’t sudden at all. A senior manager at Russia’s Alfa-Bank called me. He suggested I put my concepts into practice with them. I thought about it and refused. “What is Russia!?” At the time, I was certain that to build a serious career, you had to work at one of the global financial centres like London, New York or Paris. But a year on, I had been convinced that in Moscow I could be involved in genuinely serious business on a massive scale. So I accepted.
— Were you advised by anyone when making this decision?
Born in Harare (Zimbabwe) in May 1969 to the family of an eminent businessman. Left for the US in 1988 where, in 1993, he was awarded a bachelor’s degree in Business Administration from Hofstra University. Worked in financial management of his father’s automobile company. Set up a food company. Sold his company in 1998 and set off abroad to study. 2000: awarded master’s degree in Business Administration (MBA) from the Fuqua School of Business at Duke University (USA). By then had already worked as a banking consultant dealing in risk management. Then worked at a series of leading financial organizations (Deutsche Bank, American Express, BNP Paribas, Royal Bank of Scotland, Banco Santander, ABN Amro).
From 2009 participated in developing the rules of the Basel Committee on Banking Supervision: Basel II and Basel III accords. Member of advisory bodies at various banking associations and central banks, including the UK’s financial regulator The Financial Conduct Authority (FCA).
Has held the post of Managing Director and Head of Basel Standards in the Risk Management Directorate of Russia’s Alfa-Bank since 2011.
2011: set up the Committee of the Association of Russian Banks for Basel Standards and Risk Management, becoming its co-president. Awarded the Golden Certificate from the Association of Russian Banks for “Outstanding contribution to the Russian banking sector”.
— Of course. I had a word with my father. He’s a businessman. “What do you want to go there for, to Russia? You have a stable job in London, you’re on good money. Just stay put”, he said.
You have to realise…I was born in a country which was then called Rhodesia (now Zimbabwe). Then civil war broke out. My country was fighting against Communism. Fortunately, by the time I finished school, the war had ended. I didn’t even have to do military service. Imagine how the older generation were brought up? But now, everything has changed both in Russia and in the rest of the world. So, when I told my mum about what I was planning to do, she was supportive.
My mum had managed to get to Russia and see St. Petersburg by then. She then said, “The Russians aren’t easy to get on with. They aren’t like us, they are gloomier, they don’t smile much. But living in Russia for a while would be very interesting for you.”
Now, I am in complete agreement with her: living and working in Russia is a very interesting and worthwhile experience.
— But what were your first impressions of Russia like?
— Woeful. I flew in and there was no one to meet me at Sheremetyevo, even though they were already waiting for me at work. I had to find a taxi myself and make my own way to the hotel…
— But you have now found your feet in Moscow?
— The Moscow of 2011 and the Moscow of today are like two different cities. It is so much cleaner now; the streets and buildings have been renovated. I don’t know, maybe it’s being done for the football World Cup? But it is definitely being done.
There are, of course, still problems here. Service is lax. The foreigner is often looked upon as a visiting rich man from whom more money is to be extracted. The attitude towards the customer in shops or restaurants is often indifferent. It’s a small thing, but the service culture sorely needs changing.
— You came here not knowing a word of Russian. Did you then learn the language?
— I had a teacher for six months. It was tough. I was holding meetings with bank representatives every day, including weekends, conducting long negotiations. I had to get a team together, find somewhere to live, buy a car… When it came to the lessons, I was so worn out that my teacher would quietly go and make me some coffee… I had to stop having lessons deciding that I would gradually pick the language up by using it. Obviously, if I want to carry on working in Russia, and I do, I need to learn the language.
— You mentioned that at the start things were very difficult. What problems were there?
— I had to start virtually from scratch. The perceptions in Russia of the system of Basel Standards were extremely hazy. The specialists here, of course, were reading the translation of the Swiss documents. But as for their practical implementation: they weren’t always properly understood.
At the time, the banks in Russia sometimes behaved according to the English proverb “Рenny wise, pound foolish”. In other words, they were being too conservative and hard-headed when it came to loans for small business, but they were giving out hundreds of millions to some rather risky megaprojects. Nobody was able to determine accurately the real cost of loans, of financial risks. Experts were working not according to precise, well-founded criteria, but, as the Russians say, by eye.
It occurred to me that for the system to start producing results, it needed to be joined by not just Alfa-Bank, but by as many big players as possible. So I turned to the Central Bank. I took an interpreter with me and, as they say, “turned up on their doorstep”. And – guess what?! – we met with understanding. In Russia today there are very robust processes at work for integrating the country into the global economy. As a result, we set up a working group to discuss and implement the Basel Standards in Russia. We invited the first few banks to collaborate with us.
I have to admit that sometimes we had to drag people along and convince them to come and see us. Convince them that the Basel Standards were created not to harm Russia, one of the last countries to address this issue. After all, the USA, Hong Kong, Europe had been working on the application of the Basel Standards for ten years by then. They had been successfully implemented in Brazil, China, India… What we are proposing is ultimately for the benefit of banks themselves and the country’s financial system as a whole.
Yes, implementing these recommendations does require a certain outlay. But those who say, “Why? Everything here today is quite alright” don’t understand that you can’t just think about today.
As a result, within the Association of Russian Banks, we set up an industry structure: the Committee for Risk Management. I am its founder and president. And now, 57 large Russian banks are already actively involved in the Committee’s work.
— When you came to Russia, you didn’t know anybody. What is your circle of friends and acquaintances like now?
— I have lived in different countries and get on easily with new people. And I have stayed friends with people everywhere.
I am from Zimbabwe. Foreigners, as a rule, socialize with their fellow countrymen outside work. But there aren’t very many Zimbabweans in Moscow. So, I have mates amongst the foreigners living here, but, still, most of my friends in Moscow are Russian.
One of my closest friends is Igor Korneev, the well-known former midfielder for CSKA Moscow and the USSR, who also played for Barcelona, and who is now a well-established coach for the Russian national team. We meet up often, and I know his family well.
— And how do you spend your spare time? Assuming you have any…
— I do now. I am a bachelor, I live on my own. I go to the cinema, I’ve been round pretty much all of the museums in Moscow. There are certainly things to see here! I often go to cafes and restaurants. I love good food. I cook a lot myself, by the way, and I think my cooking isn’t bad. No, honestly, that’s what my colleagues say as well: I often bring my culinary delicacies to work and treat the team.
— You live alone. Do you feel safe doing so?
— Absolutely. As far as personal safety goes, I like it here in Russia. I can happily wander around the centre of Moscow on my own of an evening, talking on my mobile. Try doing that in Johannesburg! They’d have your phone off you. And you’d be lucky if they didn’t crack you over the head. Yes, and in certain parts of London…
— I see that you are not about to leave Moscow?
— My contract with Alfa- Bank is until 2017. After that... I hope that I have built up enough of a reputation in the banking community here not to be without work…
— Imagine a foreign entrepreneur who is thinking about starting a business in Russia comes to you. What advice would you give him?
— Why imagine? I’m thinking about starting my own business here myself. Not a bank, of course. But a financial consultancy: the Russian economy is extremely attractive to foreign investors at the moment in terms of its size, its requirements, its potential, opportunities, and prospects. Very, very many investors would find something to put their efforts into here. Saying that, I think that starting a business for the foreigner in Russia is not completely straightforward. They need help. Not knowing the local set-up makes going through the whole process of registering your business and getting to grips with the tax system difficult.
My advice, then, to the foreigner considering investing in Russia, would be this: to start a business in Russia successfully, it is best to have a Russian partner.