“We knew that it would require professionals with new knowledge who will develop the post-crisis economy”

Chairman of the Board of Directors of the Bank “Centr-invest” Vasily Visokov suggests to create in SFU and RSUE training organizations, where design of economic processes would be taught. According to him, it would be the beginning of the reform of economic education, without which the younger generation will not be able to catch up with the West on level of knowledge. “Centr-invest” has initiated the program “SFU-2020”. Within the framework of this program 12 teachers and professors of the Southern Federal University will deliver public lectures on advanced scientific topics, the best lecturers will be rewarded based on the auditors’ vote. This year the bank allocated 7 million rubles for educational projects, almost twice as much as in the past. Financial crisis didn’t affect this activity!

N: — What is the idea of the program “SFU-2020”?

V.V .: — For Russia to reach the level of European countries, our children must be 20 times smarter than us. But they can not be smarter than the instructions of the Ministry of Education and Science, which measures the quality of education with thick pages of textbook and the number of hours on a given course. There is also an information underrun. In 2007, Leonid Gurwits was awarded the Nobel Prize for the description of the design of economic mechanisms. And this topic is not even included in the curriculum of our universities. Although Gurwits and his colleagues conducted the main researches way back in the 1970s. The situation is similar in other areas of science.

So where did the name of the project “SFU-2020” come from? We were working with the government to prepare the concept of socio-economic development of Russia until 2020, with regional authorities to prepare strategic materials, and also in 2011 expires the strategy “Centr-Invest”, and we have calculated the new one up to 2020. We got a path of stable balanced growth without involving additional capital. But for this growth the competent bank needs expert customers who do not only possess a wide range of knowledge, but are also able to develop quickly and flexibly their own business from this knowledge. And this requires a brand new, modern system of knowledge and teaching methods. To reveal this knowledge and techniques, we proposed to organize a series of public lectures.

Why did you choose the format of public lectures? The ideas are strong when they dominate in masses. There are few people who know how to structure the knowledge in their mind so that it is clear to others and are at risk to publicly declare their knowledge. Only 12 professors of the SFU who will give lectures mainly for science subjects has made applications. I will speak first, on 24 October — “Centr-invest” always sets up first experiments on itself. The theme of my public lecture — “Design of economic mechanisms.” Economic mechanisms — the rules that govern economic relations in administrative and market economy. Due to these rules we come to agreed solution. If these rules do not work, one market participant comes to its optimal decision, the other one — to his own, and the economy falls between these two optimums as Buridan’s ass between two armfuls of hay. Formation of such rules is a subject of research of economic design. In earlier versions of the translation into Russian this area was called the “design of economic mechanisms”, but it was limited to the interaction of businesses and ministries. Market economy requires not only constructing, but also the design.

By the way, if we talk about the design of the project “SFU-2020”, the applicants for public lectures should present not only the application, but also the presentation, text, published copyrighted material on the topic of the lecture, and recommendations from leading specialists. Auditors will evaluate lectures by filling in special questionnaires anonymously. If this mark is higher than 4 points, the lecturer will receive 100 thousand rubles from the Bank “Centr-invest”, and the Academic Board of the SFU will make alterations to curricula and scientific research plans.

I’m planning to lobby for the establishment of the Institute of Economic design in SFU and similar areas in RSUE. What is used to be called “Economic Cybernetics”, should now become “Economic Design.” Graduates of this speciality will know maths, economics, law, statistics, and will be able to prepare any regulations adapted to the situation in the different sectors of the economy in a very short time. And because this topic is interdisciplinary, then we will need to rebuild the entire system of economic education gradually. Any graduate should be able to design economic mechanisms of its area of activity.

N: — What is for you the proof of the effectiveness of bank investments into education? How do you fix a quantum leap?

V.V.: “Centr-invest” takes on educational projects because we need competent customers. We need entrepreneurs who know their business thoroughly and are able to work in growing markets, have their own advantages in the production, marketing, personnel, and most importantly — have a development strategy.

The only objectively measurable aspect of benefit from our efforts — is the growing number of customer accounts in “Centr-Invest” and the growth of turnover of these accounts in the bank. Of course, there may not be a direct link, but it is possible to carry out the correlation analysis. We persuaded shareholders to devote funds for educational projects to the maximum. We found the most rational decision how to spend money: to increase the number of students up to 250 people who receive scholarships from “Centr-invest”, to increase the size of these scholarships to 20,000 rubles, to finance a number of special projects. For example, in November we, together with SAP AG, set up a project “University Alliance SAP” for additional training of SFU students and other universities in southern Russia of a global system of SAP software for the automation of various areas of activity. We will pay for the foundation of a certification training center.

Teachers have already undergone the training, we got the training-methodical documentation, specialized training classes were set up, technological access platform to the world-system SAP was prepared.

The results of our projects are not only the financial support of the students. We arrange for our scholars lectures and meetings with eminent people coming to the bank “Centr-invest”, using their knowledge and social position for realization of other projects. For example, participants in the contest “The best young teacher of SFD” are selected on the recommendations of the students — our scholars.

N: — You set up these projects just at a time when banks have other problems. Is this your answer to the financial crisis?

V.V.: — It is not opportunistic but strategic response. In April, when we started up the project “SFU-2020”, no one spoke about crises. But we knew that it requires professionals with new knowledge who will build a new post-crisis economy. It will be a world with new energy efficient technologies, new infrastructure, eco-friendly environment, a new financial world order and the new rules of business dealing.

N: — Have you predicted crises?

V.V .: — We predicted. And not just us. In recent years specialists were saying that the crisis is inevitable, because the growth of mortgage market, the derivatives market was not supported by the growth of real wealth. A “bubble” was formed and he had to burst. In this situation, with our experience of 1998, we just had to evolve a program of actions in case of crisis. We did all that could be done this year: we increased capital, got all syndicated and long-term loans that can be obtained. We received 145 million dollars Instead of 80, plus another 45 mln from the EBRD. In August we got a 5-year money (more than $ 40 million) on the development of agriculture and energy efficient projects. There is a rule of overcoming the crisis: if the crisis originated in the virtual economy, the way out of it will be in the opposite direction — in the real sector. For two years, “Centr-invest” almost does not work on the securities market — we have a very small volumes connected with servicing of our bank-managed mutual fund (BMMF). We even warned our clients to move from a more profitable but more risky BMMF-1 to BMMF-2, in which portfolio there are only documents with fixed income. We did not only create fund of special-purpose fund “Education and Science SFD” in the amount of 36 million rubles, but also earned income to fund our projects in the amount of 10% per annum.

N: — How do you think the crisis will affect the regional economy — for individuals, companies, banks?

VV .: — We are lucky because the citizens of the Rostov region are poorer than average Russians on 30%. Yes, no illusions. And just because we are poor, people were not able to gamble on a large scale in the securities market, and a few were attracted by high interest rates on bank deposits, which were gambled in this market. That is why the financial crisis in itself avoided us. Business is mainly oriented on the domestic market, with the exception of grain export. And in Russia, the situation is relatively quiet. Well, probably, moscow players may have problems. In Rostov banking sector, I do not see any complications, especially because 3-4 banks control more than two thirds of the market.

The south of Russia has a unique opportunity now. Region must win on the crisis. With a total money supply contraction and the reduction of its turnover the winner is the one who just discovers dynamics between production volumes and prices, because the volumes and the prices are going down, but not all at the same time. Interests of the market now shift towards simple things — for example, food, and this is just the prerogative of the southern region. Demand for our products will grow due to the reduction of money supply and real income of people and companies.

Now the important task — not to sleep all the money that has been planned for infrastructure projects for the south of Russia, whether it is the construction of international airport, or works on the M4 highway. South of Russia is obliged to participate in all federal target programs, including even the support program of the nations of the north, at least, because the representatives of these nations should rest in the south. To possess new segments of the national market we should strive to be competitive in global markets. This is not just an appeal but a real-life experience. More than 100 banks from around the world take part in the syndicates of bank “Center-invest”. And the money that our borrowers receive can go from Nigeria, China, India ... We must not miss the chance in a new global world.

N: — Is a certain Rostov company able to make money out of crisis?

VV .: — Of course. If all drop down but only you give a number of push-ups- here’s your prize. Crisis substilizes feelings. I remember in 1998: half of entrepreneurs went to drink beer on the left bank of the river Don, and the second part took the vacant places in the market. To make money out of crisis — it means to find your own advantages in a not very intelligible market. Yes, it requires some mental effort.

It is important that our officials have kept the business informed, so that it can participate in the implementation of government orders, to be informed about the regions where you can earn. When a businessman is aware of budget projects, he can organize his strategy accordingly. More effective mechanisms of interaction of business and government should be implemented. Here, economic design is required too.

As for the “Centr-Invest”, we will credit the sphere of energy efficiency (about one billion rubles works there now), agriculture (our loan portfolio is now about 7 billions). Not only seasonal crediting, but also funding of technology of productive land use will be popular. We also feel comfortable with small and medium-sized businesses (the loan portfolio of more than 15 billion rubles). The bank serves more than 30,000 small and medium-sized enterprises, and these are the best entrepreneurs in the south of Russia. We did not withhold their credit for a single day. And we plan to grow during the crisis with the best of them, as it was in 1998 and 2004.

N: — You pay close attention to the decisions of the government. Do you need some support from the government?

V.V .: — We are not asking for anything. The attention is simply connected to the fact that the greatest risks of the banking system depend on government decisions, which often contradict each other. Even the term “over-regulated economy” appeared. Fortunately, recent government measures have demonstrated rejection of stereotypes of monetarist concepts and turn to the real sector of economy. Moreover, the plan proposed by Russia to come out of the global crisis: the effectiveness of supervision, risk management, disclosure of information, liability of auditors and rating agencies, the removal of international barriers, — bank “Centr-invest” realizes in its work all these measures for many years. Our experience of usage of the best global practice was a good spectacular example of sustainable, stable development and on the background of zigzags of Russian reforms, and in the context of global crises.

Interviewed by Julia Urakcheeva
Gorod N, № 40 (October 14-20 2008)

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