Vneshtorgbank: a new name for a new strategy

Russia's second largest bank – Vneshtorgbank – has launched a rebranding campaign that aims to help it become one of the top global financial institutions. The bank has changed the unpronounceable Vneshtorgbank to the short and sweet

The second largest government-owned bank in Russia, which was created to promote the country’s foreign trade, is seeking to make a presence outside the country. Beyond its three core banks in Russia, VTB has seven subsidiaries in Western Europe, four in the CIS and two banking divisions in Africa. The bank's managers believe – uniting these under one brand is imperative to VTB's ambitious expansion plans. Moreover, the old name – which stood for Bank for External Trade – no longer reflects the bank's growing retail operations and provides misleading connotations according to the Chaiman of VTB Andrey Kostin. But it's not just all in the name. Re-branding is VTB's attempt to raise its global profile ahead of next year's IPO. Analysts believe the bank is doing the right thing. Marc Rubinstein, an analyst from IFC Metropol says for Russia Today, “The name of the bank that the bank will use to go ahead with its IPO and making it easier to sound for international investors ear – that will certainly help to market Vneshtorgbank going to its IPO.” And the IPO itself should help VTB raise capital to expand its lending operations as it has its sights set on the emerging markets beyond the CIS markets. Kostin says for Russia Today, “We feel that emerging markets particularly represent a, potentially, very interesting business for us. Frankly speaking much more than the Western European markets which, of course, are much more competitive.” Yet, analysts believe that although VTB has enough resources to grow beyond Russia and the CIS, it must keep its appetite in check. Rapid expansion usually leads to shrinking profit margins and investors will scrutinize any profits after the IPO. But for now the bank expects to earn over one billion dollars in net profit this year. And in its effort to reinvent itself, there's no doubt VTB's aiming to become Russia's new champion of finance.