Ivan Learns to Run a Bank American-Style

When Vladimir P. Okhlopkov launched his independent commercial bank in Moscow this year, he faced an uphill battle in his quest to introduce capitalism to the Soviet Union.

But even with the recent fall of Soviet Communism, his job hasn't gotten much easier.

Though the aborted coup led to a wave of economic reforms, Mr. Okhlopkov finds he must now gain the confidence of hidebound potential customers -- many of whom don't trust banks of any sort and prefer to keep their rubles stuffed in mattresses.

What hurt most, though, he said, was that he and his staff lacked management skills.

"A year ago, I wanted to establish a bank management program at an economics institute in Moscow," said Mr. Okhlopkhov, chairman at Moscow-based Business Russia Bank, which began operations in March. "But a professor there asked me: |Who is prepared to teach?'"

Because of the skills gap, Soviet bankers are coming to the United States for management training. For example, Mr. Okhlopkov and three colleagues this summer attended a management school run by the Arlington, Va.-based Consumer Bankers Association.

U.S. Model Is Favored

Though crippled U.S. lenders are pulling back abroad, American management expertise still seems a hot item. Many Soviets cite the diverse American banking system as their model of choice. One reason is the concern that Moscow could more easily manipulate a system dominated by universal Japanese or German-style banks.

"American banking expertise is in strong demand throughout the eastern bloc," said Edward E. Furash, president of Furash & Co., a consulting firm in Washington.

"American banks and consulting companies are viewed as extraordinarily able and perceptive, particularly in the areas of consumer, small-business, and middle-market banking."

In 1988, Moscow moved to reorganize the banking sector and permit the establishment of commercial banks. By Aug. 1 of this year about 1,500 privately owned banks had set up shop according to Soviet statistics.

Many are shareholder-owned institutions launched primarily to serve the industries, individuals, and concerns that created them.

The new banks account for only 2% to 6% of total bank assets and around 7% of all outstanding loans, it is estimated. Nonetheless, some businesses are willing to pay a premium for the wider array of products and services provided. As a result, these banks are gnawing at the market share of larger, state-run institutions, and some are chalking up millions of rubles in profits.

Old and New

But the skills crunch is a big problem. Commercial banks sometimes poach the best young staff members from state banks. Generally, however, old-guard holdovers are distrusted.

"We hire people from the state banks," but most of them cannot work in market-oriented settings, said Pharid Amirhanov, deputy director at Kamaz Autobank in Nabereznyje Celny, a town in the autonomous Tatar republic, 540 miles east of Moscow. "They don't have the touch with the clients."

Mr. Amirhanov came to the United States last month to train with Strategic Management Group Inc., a Philadelphia-based technology and management consulting firm. His bank's major shareholder and client is Kamaz, the country's largest truck manufacturer, which last year became the first big state-owned firm to turn itself into a joint-stock company.

To boot, most commercial-bank executives in the Soviet Union are relatively young. CBA trainee Alexey V. Grigoriev, executive director at Moscow-based Stolichny Bank, is just 25. Many bank chairmen have yet to reach 40.

"Many of us are young," said Mr. Okhlopkov. "But one advantage of that is we can quickly change our way of thinking.

Nonbanking Backgrounds

As a result, many managers come to their positions with little prior banking experience. Before breaking into commercial banking, Business Russia's Mr. Okhlopkov spent four years at Vneshekonombank, the Soviet state bank for foreign trade. But it's far more common for banking chiefs to have a background in science, engineering, or law - usually in the industry the bank serves.

After a tour of duty in the Soviet army, Stolichny's Mr. Grigoriev was recruited by the bank from Moscow No. 3, a large construction cooperative. The concern is one of the largest shareholders in the new bank.

Notwithstanding Mr. Okhlopkov's failure to create a management training program, some banks are creating their own schools.

Stolichny Bank, for example, recently launched a high school that offers banking classes. The bank may establish work-study arrangements with the school, Mr. Grigoriev said.

Spotty Expertise

But most important, Soviet bankers agree, is the training they receive in the United States and other Western countries, including Switzerland, Germany, and Austria.

Some managers head to the West to fill specific needs.

"We have good staff dealing with some types of loans," said SMG trainee Sergei Zemljanski, head of the stock department at Avtovazbank in Togliatty, some 490 miles southeast of Moscow. "But we aren't well equipped to deal with foreign-currency operations, securities, and such new services as leasing and factoring."

Still, banking boot camps expose Soviet trainees to the basics of market economics.

"It's a getting-acquainted process," said CBA president Joe Belew, who toured Soviet banks with 13 colleagues in 1990. "Many Soviet commercial bankers have little understanding of Western-style accounting, how to determine whether a prospective borrower is creditworthy, or how to hire and motivate workers."

On-Screen Banking

At Philadelphia-based SMG, trainees tackle simulated problems fed to them by computer. Teams are given the reins of an imaginary bank and turned loose to make decisions on interest rates, pricing, and personnel.

For its training sessions with the Soviets, SMG translated its software into Russian.

In Charlottesville, Va., the CBA's Graduate School of Bank Management offers a two-week summer residency at the University of Virginia's McIntire School of Commerce. The school, this summer attended by four Soviet bankers including Business Russia's Mr. Okhlopkov, offers bank-simulation training only to seniors in its three-year program. The Soviets, as freshmen, were limited to lecture sessions.

Word of Mouth

But the CBA school - staffed and attended by executives from Citibank, CoreStates Financial Corp., Fleet/Norstar Financial Group, and other banks with sizable retail operations - offered its Soviet visitors a significant extra: the chance to rub elbows with their U.S. counterparts.

"We spent much time talking [in the dormitories] at night," said Garegin A. Tossunian, president of Moscow Commercial Bank of Science and Technology. "There is much we need to know."

U.S. bank consulting firms hope to fill that need. "American vendors are beating at the Soviet borders," said SMG's Jerome L. Roderick, senior vice president, banking and financial services. "We see significant opportunities in the Soviet Union and Eastern Europe."

U.S. Banks Hesitate

At least for now, American banks aren't likely to join the charge. For example, BankAmerica Corp. -- which with Chase Manhattan Corp. is one of two American commercial banks with an office in Moscow - said it was approached by a representative of Avtovazbank about setting up a management training program. But neither side followed up on the idea.

For the most part, U.S. banks will probably limit themselves to advisory roles on specific projects.

* Lazard Freres, an investment bank in New York, reportedly is advancing a plan for reform of the Soviet banking system.

* Investment banks Goldman Sachs, Shearson Lehman, Solomon Brothers, and Smith Barney are involved in a project called Ecolink, which aims to teach the Soviets bond-based project finance techniques.

* Bankers Trust in New York has been retained as financial advisor to the Tobolsk project, a large petrochemical venture in western Siberia.

Capital Defects

Some observers believe the education efforts are urgently needed. Western analysts and Soviet officials maintain that the new commercial banks are undercapitalized and dangerously overextended. Fears that failures among the newcomers could trip up an economy already teetering on the brink may reinforce calls for stiffer regulation.

Until management skills come up to speed, commercial banks' hopes for substantial infusions of Western cash and expertise appear slim. "But as training builds up, people will feel more comfortable dealing with us," said Valentin Fedoseev, chairman at Kamaz Autobank. "We know the [business practices] here, and we will make good partners."

PHOTO : SIMULATION: In Philadelphia, Soviet bankers and businessmen ponder banking decisions in a Strategic Management Group program.

PHOTO : CAPITALISM 101: Looking for pointers, Soviet bankers tour the back offices of Provident National Bank in Philadelphia.

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