Tinkoff Bank

 Tinkoff Bank (until January 1, 2015 Tinkoff Credit Systems ) is a Russian commercial bank focused entirely on remote services , without retail branches. The world's largest online bank in terms of the number of customers (as of August 2019). The bank's headquarters is located in Moscow [9] .

As of October 2020, Tinkoff Bank ranked 16th in terms of assets and 14th in terms of equity among Russian banks [10] . The Bank has long-term ratings of "BB-" from Fitch Ratings  , "B1" from Moody's , "A (RU)" from ACRA [15] and "ruA" (outlook "stable ”) from Expert RA  .

As of September 2020, Tinkoff Bank is the third among Russian banks in the retail products sector in terms of demand among the population [17] .

In October 2021, the bank was included by the Central Bank of the Russian Federation in the list of systemically important credit institutions due to the growth of the bank above the market and the size of the client base [18] .

Business model 

Tinkoff Bank  is a completely online bank : it does not have its own branches [19] . The main product for individuals is credit and debit cards, as well as deposits. The bank also offers the issuance of co-branded cards, targeted loans for purchases in regular and online stores.

In 2015, the Tinkoff Ipoteka mortgage platform was launched, where the bank, in exchange for a commission upon the transaction, acted as a broker between borrowers and a pool of partner banks ( Absolute , Housing Finance Bank , Vostochny , Deltacredit , Dom.rf , Metallinvestbank , SMP Bank , Uralsib and Unicredit Bank ) [20]. On May 24, 2019, the closure of the service was announced, which will accept applications until May 31 and serve existing customers until August 31. During the existence of the service, 1 million people used it, the annual amount of mortgage loans amounted to 25 billion. Representatives of the bank indirectly called state-owned banks the reason for closing the service, which, thanks to their capabilities (in 2018, they accounted for 80% of the entire mortgage market, and 56% - for share of Sberbank ) provided cheaper loans [21] [22] .

In October 2016, Tinkoff Bank launched the Tinkoff Investments service together with the BCS Broker [23] . In March 2018, Tinkoff Bank received brokerage and depository licenses [24] , and on May 15 the platform was restarted on its basis [25] . Operations with shares, bonds, IIS are available to clients online .

For individual entrepreneurs and legal entities, the bank offers settlement and cash services , corporate cards , payroll project , trade and Internet acquiring , POS lending , bank guarantees and loans, online cash desks, a free bookkeeping service and website and document designers [26] .

In 2018, the bank ranked second in terms of credit card portfolio in the Russian market. As of October 1, 2018, its share was 11.4% [27][ unauthoritative source? ] .

The bank widely uses automation systems to improve business processes: voice identification to protect against fraudsters and speed up the work of the call center [28] , as well as big data processing technologies , including data from social networks , to predict risks with debt repayment [29] [30] [31] [32] .

History 

The bank was founded by entrepreneur Oleg Tinkov in December 2006 under the name Tinkoff Credit Systems . According to Tinkov, he became interested in the remote service model of the American bank Wells Fargo and the Capital One monoliner , which specializes in bank cards . Together with consultants from the Boston Consulting Group , he came to the conclusion that the remote credit bank model could work in Russia [33] [34] . To obtain a banking license, he acquired Himmashbank, a small captivea bank that serviced enterprises from the chemical and pharmaceutical industries [35] [36] . The entrepreneur invested 70 million US dollars from his eighty millionth fortune in opening a "bank without branches" [37] .

2007 

At the start, the bank turned to direct mailing  (English)rus.credit card offers. Among the recipients of the letters were clients of the bank's partner companies - insurance companies , car dealers, mobile operators [38] [39] . In 2008 alone, the bank sent more than 8 million invitations, and in general the campaign continued until 2010. Positive response to letters was given by 1.5 to 3% of recipients [40] .

The first to enter the capital of Tinkoff Credit Systems was the international investment bank Goldman Sachs . As part of the transaction in the fall of 2007, the financial institution acquired a 10% stake in Tinkov Bank for $9.5 million (which corresponds to an assessment of the entire bank at $95 million) [41] [42] .

In addition, Oliver Hughes , who previously headed the Russian representative office of Visa [43] [44] , took over as president of the bank .

2008 

In 2008, the Internet bank "Tinkoff Credit Systems" was launched [45] . In May, the bank's investors included the Vostok Nafta fund, which acquired a fifteen percent stake for $30 million (respectively, the valuation of the entire bank reached $200 million) [42] .

2009 

Bank employees at work

In 2009, Tinkoff Credit Systems began accepting deposits and issuing debit cards, and also launched a referral program for clients with a good credit history, paying them a reward for attracting new borrowers [46] [47] . The bank stopped issuing Visa plastic cards and focused on cooperation with the MasterCard system , which offered better working conditions (the issuance of Visa cards was resumed at the end of 2012) [48] [49] .

In addition to Tinkov, who controlled the main stake, in 2009, among the co-owners were Goldman Sachs with 15%, as well as the Swedish fund Vostok Nafta Investments with 15.2% [47] . Despite the economic crisis , the bank showed a significant increase in profits at the end of the year [50] .

2010 

In 2010, Oleg Anisimov, the former editor-in-chief of the Finance magazine, took over the position of vice president for marketing of the bank, in which Oleg Tinkov had been writing a column since 2007 [51] . Together with Anisimov, Tinkov published the book “I am like everyone else” and the series of programs “Business Secrets with Oleg Tinkov”. In November 2013, Oleg Anisimov left the bank, explaining this by the need to rest after 19 years of continuous work [52] .

In addition, the bank introduced the possibility of ordering cards through an Internet site with delivery by courier [45] . In the same year, the Tinkoff Credit Systems card took fifth place in the rating of credit cards compiled by the Russian Forbes [53] .

2011 

In 2011, Tinkoff Credit Systems introduced a mobile bank for smartphones with iOS and Android operating systems (the version for Windows 8 appeared a year later) [54] [55] .

In April, the bank announced the acquisition of the rights to the song by Viktor Tsoi and the Kino group " We will continue to act ", released on the album " Blood Type " in 1988. The song was featured in a commercial for the bank, and its refrain was approved as the company's slogan [56] .

The bank's total valuation was $300 million [42] .

In May, the Baring Vostok Capital Partners fund entered the capital of the bank , investing $ 50 million for 8% of the company. The bank's valuation reached $625 million [42] .

In October, Emerging Europe Growth Fund II, managed by Horizon Capital  (ukr.)rus., acquired 4% of Tinkoff Credit Systems for $40 million with a total bank valuation of one billion [7] .

2013 

In March, a new product was announced - ALL Airlines . Market participants assumed that it could become a low-cost airline , but on April 11, a credit card was introduced with the possibility of accumulating miles independent of airline bonus programs [57] [58] .

The initial public offering of the bank's shares on the London Stock Exchange in October 2013 was among the largest Russian deals of the year according to Forbes [59] . Goldman Sachs, Morgan Stanley , Sberbank CIB acted as arrangers and bookrunners, JPMorgan Chase and Renaissance Capital acted as bookrunners, and Pareto Securities AB [60] became the placement agent . In addition to Oleg Tinkov, among the shareholders at the time of the IPO were: Vostok Nafta fund (13.32%), Goldman Sachs investment bank (12.41%), Baring Vostok fund (8%), as well as management (1.14%) [61 ] A 34.3% stake in the bank for $1.087 billion was offered for bidding, with a total valuation of the bank at $3.2 billion [62] . Typically, banks are valued marginally above equity, and Tinkoff Credit Systems traded at eight times the bank's equity. This ratio is typical for technology companies whose valuation is based on expected profits [63] [64] .

Oleg Tinkov retained 50.9% of the shares and control over the company [63] . The IPO doubled Tinkov's fortune, placing him in 1210th place on the Forbes world list with a net worth of $1.4 billion [65] . For the deal, the Russian Forbes awarded Tinkov the title of "Pioneer of the Year" in the rating of entrepreneurs at the end of the year [66] . The Vostok Nafta fund withdrew from the bank's capital, receiving $232 million for an 8.6% stake [67] . Most of the shares were sold by the investment bank Goldman Sachs [68] .

On November 15, 2013, State Duma deputy from A Just Russia Anatoly Aksakov , chairman of the financial market committee and deputy from United Russia Natalya Burykina and senator Nikolai Zhuravlev proposed amendments to the law " On consumer lending", which included a ban on remote issuance bank cards. In the evening of the same day, Aksakov reported a mistake made in the text of the bill (and giving it a prohibitive character) , but over the time that has passed since its publication, Tinkoff Credit Systems shares have lost 26.86% of their value [69] .

Aksakov explained what happened as a technical error . At the same time, the version was discussed that the bank became the target of an attack by an unknown party that profited from a sharp change in quotes [70] . The same version was shared by the former managing director of the KIT Finance bank and economic observer Leonid Bershidsky , who compared the incident with other cases when ill-conceived bills proposed by deputies led to a drop in the value of shares of specific public companies [71] .

The Russian Forbes included the loss of a billion dollars in the bank's value into the list of the largest stock market falls of the year [72] . Nevertheless, according to the results of 2013, the bank was ranked 834th in the world ranking Top 1000 World Banks by The Banker . The publication also ranked it first in Russia, second in the world in terms of capital growth (307%), and third in Russia in terms of profitability (7.8%) [73] .

In the results of the Markswebb Rank&Report study of the convenience and functionality of Russian Internet banks in 2013, Tinkoff Credit Systems was ranked 6th [74] .

In March, the website of the Tinkoff Credit Systems bank, as well as the websites of Alfa-Bank , Promsvyazbank , the publications Arguments and Facts and Komsomolskaya Pravda and Interfax , the website of Kaspersky Lab , Habrahabr , RuTracker .org and other resources became the targets of a DDoS attack for extortion. Oleg Tinkov publicly refused to pay the hackers and promised to bring them to justice. The bank's security service independently found the initiator of the attack and passed the information to law enforcement agencies. In November, the hacker was arrested [75] .

In 2014, the bank considered the possibility of acquiring start-ups from the financial sector: solutions for paying traffic fines and the uBank payment service. However, the projects insisted on a much higher valuation (the bank offered $3 million and $15 million respectively) [76] [77] . Subsequently, the bank developed the necessary software solutions in-house [76] .

Against the backdrop of the crisis in the banking system due to the economic crisis that began in Russia in 2014 [78] [79] , the bank's shares, on negative expectations, “sank” from $17.5 to $3.25 per share by November [80] . In June, the bank announced the intention of the main shareholders to buy back about 4% of the shares as they appear on the market (at a cost of about 6.32-6.26 dollars) , in November, Oleg Tinkov suggested the possibility of delisting the bank's securities and turning it into a private company [ 81] [82] .

Sanctions related to the events in Ukraine in 2014 did not directly affect the bank, but it suffered from a general deterioration in the economic situation in the country and an increase in overdue debts [83] . The approval rate for new cards was lowered to 15% while maintaining low initial credit limits [84] . The bank began to develop its own collection service, as it turned out to be economically more profitable to keep overdue loans on the balance sheet and work with debtors on their own than to sell debts to collectors [85] .

The Bank increased the cost of provisions by 62%, to 15.8 billion rubles, which reduced net profit for 2014 by 41%, to 3.4 billion rubles. Nevertheless, at the end of the year, the total volume of the loan portfolio increased by 12.8%, to 93.9 billion rubles [86] . In addition, the bank managed to increase the volume of deposits against the background of a general decrease in deposits among Russian banks [87] . Commission income from new lines of business amounted to 300 million rubles [88] . In December 2014, the bank paid its shareholders interim dividends previously planned for 2016 [89] .

2015 

In May 2015, a mortgage platform was launched to attract customers for partner banks: Tinkoff Bank attracts customers and helps them prepare documents and conduct a mortgage transaction. The first partners were Delta Credit, Transcapitalbank , Housing Finance Bank, Interkommerts , and Absolut Bank later joined them [20] . The bank receives a commission from the partner bank upon the fact of the transaction, while the service is free for the client [90] .

The bank bought credit card portfolios from Svyaznoy Bank three times (in June, July and October) for a total of 6.43 billion rubles [91] [92] . Shortly before the third transaction, Oleg Tinkov admitted the possibility of buying loan portfolios of other banks in the amount of up to 20 billion rubles [93] . In August, the bank released a messenger with the function of instant money transfers MoneyTalk [94] . In the same month, the bank became a new partner of the Svyaznoy Club bonus program [95] .

In October, the bank announced plans to launch brokerage services in a mobile application and on the bank's website. The partner is a division of the financial group BCS "BCS Broker" [96] .

In the first quarter, the bank's financial results were affected by rising funding costs, as the bank accumulated liquidity to pay Eurobonds and raised deposit rates in December 2014 following a sharp increase in the key rate of the Central Bank . The result was the first net loss since 2010 in the amount of 193 million rubles, while the bank showed an operating profit of 85 million rubles before taking into account exchange differences [97] [98] . According to the results of the first half of the year, Tinkoff Bank increased its loan portfolio by 2.6% and turned out to be one of two Russian retail banks that made a profit (655 million rubles under RAS and 203 million under IFRS) [99] [100] . On September 18, the bank paid the last tranche of three-year Eurobonds for a total of $250 million [101]. In the third quarter, the bank earned 0.7 billion rubles (according to IFRS) [102] . According to IFRS statements for 2015, the bank's annual profit amounted to 1.9 billion rubles. The total volume of the loan portfolio increased by 7.6% and amounted to 101 billion rubles. Commission income from new lines of business increased 4.5 times and reached 1.37 billion rubles [88] .

2016 

In January, it became known that at the end of 2015 the bank closed a deal to purchase three floors with a total area of ​​8,000 m 2 in the Vodny multifunctional complex next to the Vodny Stadion metro station . It will house the headquarters [103] . Another significant transaction was the buyout from the stock exchange of 4% of the shares (1.69 million GDR) in the amount of about $ 5.16 million, which the bank distributed in March among 50 employees of the company [104] .

In January, the bank updated its Android app with NFC contactless payment options [105] and also released the Card to Card - Quick Money Transfer app for Windows 8.1 and Windows 10 [106] . In February, MoneyTalk technology was scaled up and an unofficial Telegram messenger client was launched with the function of money transfers between its users [107] .

In March , Google and Tinkoff Bank began issuing a joint bank card with bonus points for purchases on Google Play [108] .

In February, the bank launched a beta version of the website for entrepreneurs [109] , and in April it opened a “financial marketplace” based on Tinkoff.ru, which can also be used by clients of third-party banks [110] . On July 1, the bank became a co-founder of a Russian consortium for the study and implementation of blockchain technologies [111] . Since October, the Tinkoff Investments service has been launched on the bank's website, designed for private individuals to invest in shares and bonds [112] .

The net profit of the Tinkoff Bank Group under IFRS reached 4.4 billion rubles, including 2.5 billion rubles in the second quarter. The volume of the bank's loan portfolio for the six months increased by 9.8% and amounted to 111 billion rubles, the volume of client funds on accounts for the same period increased by 13.8%, to 101.7 billion rubles. The share of non-performing loans (NPL) in the loan portfolio decreased to 10.9% [113] . Reporting for the first quarter above market expectations led to an increase in prices for global depository receipts (GDR) on the London Stock Exchange (by 16.22%, to $5.48 per paper) [114] . According to the results of the first quarter, the bank allocated 2.51 billion rubles for dividend payments [115]. At the end of 2016, the group, which includes Tinkoff Bank and Tinkoff Insurance, predicts a 4-fold increase in profits, up to 7-8 billion rubles [114] . On June 23, the bank closed the book of applications for the purchase of exchange-traded bonds in the amount of 3 billion rubles with a final coupon rate of 11.7% per annum [116] .

2017 

On July 4, 2017, the bank opened its first own ATM, before that only partner ATMs were used. What happened was explained by the development of the bank's settlement system and the needs of customers [117] . On August 22, the first network of 28 own ATMs began operating in Moscow, during August-September it was planned to install "several hundred" ATMs in St. Petersburg, Yekaterinburg, Chelyabinsk, Perm, Kazan, Nizhny Novgorod, Krasnodar, Rostov-on-Don, Sochi , Samara, Ufa, Saratov, Omsk, Krasnoyarsk, Voronezh and Novosibirsk [118] .

In October 2017, Tinkoff Bank acquired a 55% stake in CloudPayments [119] . The deal amounted to 290 million rubles [120] .

In October 2017, the bank signed an advertising contract with TV presenter Ivan Urgant for two years , as well as an agreement on sponsorship of Channel One 's Voice and Evening Urgant [121] programs .

2018 

In March 2018, the bank received a license as a professional market participant , which allows it to provide brokerage and depository services [122] .

In July 2018, Tinkoff Bank launched the Card Protection insurance service, which guarantees the reimbursement of funds debited from a bank card account as a result of unauthorized actions of third parties [123] .

In 2018, the bank began issuing a Tinkoff Junior card for children, following similar cards from Sberbank, Raiffeisenbank and Post Bank . Experts explain that bank cards for children are an effective way to attract customers for the future: an adult will prefer the bank they used as a child [124] .

2019 

In March 2019, TCS Group (the holding company of Tinkoff Bank and Tinkoff Insurance) sells about 4.2% of TCS Group with a market value of $150 million on the market through the accelerated order collection (ABB) procedure. As a result of the placement, the selling shareholder's stake (through Altoville and other legal entities) in TCS Group decreased from 48.3% to 43.8%. Thus, the company sold about 4.5% of the holding 's shares [125] .