Ursa Bank steps up Basel prep

Credit magazine reports Ursa Bank's launch of a project to enhance its risk management using an ERM framework

NOVOSIBIRSK, RUSSIA - Ursa Bank, the product of a recent merger between two Russian banks, has announced a project to enhance its risk management, encompassing a full enterprise risk management framework, and integrated operational and credit risk management.

The bank is using ABN Amro’s risk advisory services unit for the 12-month project, which is co-financed by FMO, the Netherlands development finance company that supports the private sector in emerging markets.

Russian banks face significant risk management challenges and Ursa Bank is looking to improve its risk management systems and culture to underpin its growth plans in retail and corporate banking. Retail banking is booming in Russia as the country’s expanding middle class gets more familiar with financial products. Lack of credit history is often an issue, and the safe expansion of a retail portfolio requires the right tools, such as credit scoring and strong governance, especially around consistency of credit decisions.

Headquartered in Novosibirsk, Ursa Bank is the result of a recent merger between Sibacadembank and Uralvneshtorgbank. In addition to perceived business benefits, the work will also boost Ursa Bank’s preparations for the Russia’s adoption of Basel II.

“For banks in Russia, good risk management and a strong risk culture are essential for good corporate governance,” says Cris van Kempen, regional head of ABN Amro’s risk advisory service.

Banks in Russia have experienced difficulties with loan portfolios, with retail banking in Russia seeing the kind of revenue growth that means losses can be hidden. “Our work will help ensure Ursa Bank does not make these mistakes,” says van Kempen.