When Carlos de Cordoue, 59, was appointed CEO of Credit Agricole Ukraine on April 1, his first challenge was to entirely reorganize and adjust to a new way of working in the reality of the COVID-19 pandemic.
As a result, 85% of the 500 employees at the bank’s headquarters in central Kyiv began working remotely starting in April, helping Credit Agricole Ukraine maintain its leadership in the banking sector.
The bank, which has 150 branches and employs over 2,400 people in the country, has been named one of the most reliable banks in Ukraine. It announced a record-breaking volume of Hr 5 billion ($178 million) in trade finance on Sept. 2.
“The main thing was to avoid layoffs at all costs… and to build trust with the employees,” de Cordoue told the Kyiv Post on Sept. 3 at his Kyiv office on Pushkinska Street.
France can offer attractive long-term development for Ukraine. But Ukraine still lacks a key element to entice investors, he said. “When you have stability, investors come.”
Key sector
The bank’s strategy for the years to come includes the development of agriculture, the most stable sector in the country, de Cordoue said.
Agriculture, the bank’s key sector since it appeared in Ukraine in 1993, did not directly suffer from the COVID-19 crisis, according to the CEO.
“Farmers kept taking loans to buy seeds and fertilizers as usual,” he said.
Exports went down 6.6% compared to 2019, but de Cordoue said it was mostly due to the drought in the main producing region of Ukraine – the south – at the beginning of the summer.
Since January, the overall turnover of agricultural goods totalled $64 billion and the majority of it has been exported. In terms of grain alone, Ukraine produces three times more than the roughly 30 million tons it consumes annually.
This explains why Credit Agricole is interested in Ukraine’s agricultural potential and wants to increase its leadership on the market, de Cordoue said, especially since the Verkhovna Rada finally adopted the long-awaited law on land reform in April, lifting the land sale moratorium and allowing Ukrainians buy and sell farmland starting July 2021. The reform bill was highly redacted and has many limitations. But it is a start in the right direction, according to some experts.
“France sees huge potential in Ukraine’s agriculture, and in central and eastern European countries in general,” he said.
De Cordoue also said the bank aims at developing “family agriculture” by helping small farmers with properties under 10,000 hectares to modernize their infrastructure. The bank provides low-interest loans to farmers who qualify.
“The main point,” he said, “is to support small farmers and big enterprises who work with intensive agriculture.”
Carlos de Cordoue, CEO of Credit Agricole Ukraine since April 1st, speaks to the Kyiv Post in the bank’s headquarters located in the center of Kyiv, on Sept. 3, 2020. (Oleg Petrasiuk)
The French way
When asked about competing with other market players, such as Chinese state-owned companies, which are setting their sights on Ukraine’s agriculture, de Cordoue acknowledged it was a challenge.
“It’s difficult to fight against them,” he said.
Chinese state-backed or state-owned companies have been investing millions of dollars in infrastructure to enhance trade with Ukraine and Europe.
For example, China Harbour Engineering Company has already completed the first stage of the renovation project at the Pivdennyi seaport in Odesa Oblast and won a tender for the Black Sea port of Chornomorsk.
But these projects come at a cost, and China’s so-called “debt diplomacy” often raises concerns. China faces frequent accusations of providing infrastructure loans to developing countries knowing they cannot be repaid, allowing China to seize the borrowers’ valuable assets.
Therefore, de Cordoue believes that France can help Ukraine with a long-term strategy that includes renovating airports or agricultural infrastructure and help develop the country.
He said the main reason why French companies are better partners is the freedom they provide to contractors of an investment, even if it is a little more expensive.
“France has a long-term vision in Ukraine,” he said. “We let you be the owners of the infrastructure and of a free destiny.”
But the bank’s interests do not stop at agriculture, nor at developing infrastructure.
IT middle class
The bank also aims to attract foreign investment and help develop small Ukrainian companies, especially in the tech sector, de Cordoue said.
“Ukraine has a lot of very competitive startups and entrepreneurs, which develop incredible ideas,” he said.
He was inspired by the digital services banks offered in Ukraine and is proud of Credit Agricole’s new application in the country, which, he said, is way ahead of digital services offered in France.
Ukraine’s tech talents are widely recognized: European and U.S. investors put their money into Ukrainian startups, while global information technology behemoths like Google and Viber open research and development centers here.
IT brought Ukraine $5 billion in exports in 2019, securing 3.5% of the country’s gross domestic product in 2019. Meanwhile, the Ukrainian industry continues to grow, as do the salaries of people working in the industry.
The average salary of a developer in Ukraine ranges from $2,000 and $5,000 a month, which helps create a small, yet promising middle-class, according to de Cordoue.
He says the best index of this change is the sale of new cars, a sector that Credit Agricole closely monitors, as the bank is Ukraine’s leader in car loans.
The bank’s core car financing clientele tends to be middle-class Ukrainians who typically take out loans of up to Hr 800,000 ($28,000).
While the middle class is small, de Cordoue says it is growing, and Credit Agricole believes this middle class has big potential in the years to come.
“It is still small, but it’s taking shape,” he said.
However, he added that, for this middle-class to grow and stay, Ukraine has to develop good conditions for its citizens, which will be accomplished through stability and the fight against corruption.
Stability and corruption
De Cordoue cites the example of Serbia, where he used to work.
Despite having been through the Yugoslav Wars, Serbia experienced “extraordinary stability” for the past six years, which brought a massive influx of investors to the country, he said.
Serbia was among the fastest-growing economies in the world in Feb. 2019, according to Bloomberg. Its gross domestic product rose by 6.1% in 2019, roughly the same as in China. Amid the COVID-19 crisis, its economy is forecasted to contract by 3%, far less than the European Union’s 7.5 %.
However, Serbia and Ukraine both face endemic corruption.
Stability aside, one of the key factors for economic growth is healthy banking, in which Ukraine put ample effort, de Cordoue said. He cited the example of Privatbank, which was nationalized in 2016 after $5.5 billion were allegedly stolen by its controversial founders, oligarchs Ihor Kolomoisky and Hennadiy Boholyuobov.
“Corruption is a big obstacle to growth here,” de Cordoue admitted.
But he said the Ukrainian regulatory system is getting closer to European Union rules of compliance and transparency.
Banks undergo frequent checks, he said, a good sign for the country’s banking system.
He added that Credit Agricole’s transparency and compliance is part of its success.
“We showed it’s possible to exist on the market without falling into the trap of corruption,” he said.
