14.04.2008

We have space to grow

Collection business in Russia is still associated with tough guys with baseball batts. But judging from the fact that the biggest collection agency in the country is run by a 35-year old graduate from the Moscow State Linguistic University this stereotype has gone out of date.  

Elena Dokuchaeva, Director General of Sequoia Credit Consolidation has a very busy schedule, and it is not that easy for her to find time for a business lunch with a correspondent of Vedomosti. She has a lot of meetings with clients - collection business in Russia is on the rise. For instance, debt portfolio of Sequoia has already amounted to $820 million, which is approximately 40% of the total amount of overdue debts outsourced by the lenders. This is the debt of about half million debtors, who were transferred to the agency by over 190 clients. 80% of portfolio are debts of the banks, the remaining part are debts of telecommunication, leasing, trading companies, and internet providers (Sequoia is working with commercial debts). “The international practice shows that different companies who run up against debts on the part of their customers may be the clients of collection agencies”, says Mrs. Dokuchaeva.

Personal facts

«Though my younger son is small yet, I continue working as before: my working day starts at 9 a.m. and is over late in the evening. The schedule is rather tough. I always enjoyed yoga, and now I am especially fond of it – yoga helps me a lot».

«My husband runs his own logistics business, his activity is in no way connected with banking. My family likes traveling abroad – my husband and I together know three foreign languages: I know English and German, and he – English and French. We like peaceful holidays somewhere where there are rare Russian tourists: we rent a house somewhere in Bavaria, Tuscany or tranquil places in Provence and enjoy nature and rest».

We are having breakfast in Aristokrat Café on Myasnitskaya Street. Mrs. Dokuchaeva is in a hurry for the next meeting. Having quickly eaten a cottage cheese pie, she is telling how in the beginning of 2004, being the Vice President of Alfa-Bank in charge of consumer lending, she decided to tackle overdue debt collection business. «When our bank started to extend consumer loans, we naturally came up against cases that money was not returned in time or not returned at all. And we were looking for someone to outsource this cases to, but were unable to find any appropriate agency», she says.

The tallest tree

By that time Mr. Evgheny Bernshtam, the former head of Mrs. Dokuchaeva, who in 1995 accepted her in Alfa-Bank in Plastic cards Department, decided to start his own business. Having left the bank in the end of 2002, he was working in a position of a top-manager in Interpipe and Uralsib, and then decided to set up a collection agency. Mrs. Dokuchaeva does not remember whose idea it was to name the agency after the world tallest and long-lived tree. «At first I just helped to develop a business plan, and then I was more and more involved», she says smiling. Mr. Bernshtam is the controlling shareholder of Sequoia Credit Consolidation, and Mrs. Dokuchaeva together with another three top-managers of the agency is a minority shareholder – she had an option for the agency’s shares, which she sold in 2005 (the co-owners of Sequoia do not specify the amount of their shares).

Collection business is based on two models: this is either agency activity for an agency commission, which is the percent of the recovered amount (according to Elena Dokuchaeva, the usual practice on the Russian market is 23 – 25%), or debt purchase. Amount of purchased debts of Sequoia is 30% of portfolio, the agency debts make up 70%. Mrs. Dokuchaeva is not willing to say whether the agency cooperated with Alfa-Bank, where Mr. Bernshtam and she were working (she says that Sequoia never gives information about its clients). She says at first it was difficult for the agency to attract clients: «Collection business was completely new for Russia. It was a little bit easier with foreign banks - they were familiar with such practice. And some Russian banks do not still recognize the function of collectors».

Serious business

In 4 years the agency spent about $10 million to set up call-centers in Moscow and Omsk (call-center in Omsk will open on Tuesday), on staff training and hardware. The Director General is especially proud of the agency’s IT system. «As a debtor dials the number, he/she is immediately connected with the collector – that one, who already worked with this debtor», she says with great interest. «Collector immediately gets all the information about the debtor on the screen of his computer; it takes a collector a couple of seconds to know the details about a concrete debtor. We also have a system of accepting a great number of calls: a debtor who calls us is holding the line for not longer than 30 seconds. This is extremely important, since a call means that a debtor is ready to cooperate and return the debt».

What is more, clients of Sequoia could any time enter the agency’s system and get to know which activities have been already carried out with any of their debtors. According to Elena Dokuchaeva, Sequoia is the only on the market to practice this – others have no technological opportunities, and besides Russian collection agencies do not disclose their information. «We reveal information about the agency as we have what to say. To tell the truth is easy and pleasant», she adds happily.

The agency employs 700 collectors in total. There are a lot of candidates: currently Sequoia recruits about 100 employees a month and plans to triple the headcount by the end of the year. Only men visit debtors. A lot worked with the Ministry of Internal Affairs, there are former bailiffs – the collector’s job is similar to what they did before. On the average there are 300 debtors a month per one field collector. The average salary is 25,000 roubles; skilled and successful collectors who recover up to $100,000 per month could earn $2000-3000.

«Professional collection activity is a serious business, - Mrs. Dokuchaeva is sure. – We shall not send letters signing them “Your Conscience”, use public networks like “Odnoklassniki.ru”. I heard one collection agency do that. Our collectors show debtors their service certificates at once not trying to cheat people, as some of our colleagues do». In general, to surprise of Elena Dokuchaeva, it is quite easy for collectors to find contact with the Russian debtors, and cases when people refuse to talk with the employees of Sequoia are rare.

Mrs. Dokuchaeva herself has never communicated with debtors – there is no need for that for a top-manager responsible for the policy and management in general. «I used to listen to the recordings of telephone conversations of collectors with debtors to analyze our mistakes and improve the method of communication with people», she adds.

On the average Sequoia recovers 20-30% of transferred debts. «These are both nearly bad debts, in terms of which 15% collection is a great success, and portfolios on which we recover 70% and more».

Ground for Sequoia

Unliquidated loans in Russia amount to about 3.3% of the total loan amount granted by banks to individuals. According to international standards this is relatively small. «Italy, for instance, has an overdue debt amount of 5%, USA had about 6% till the mortgage crunch. In Poland this indicator reached 22% in 2002», says Director General of Sequoia. 

The world liquidity crisis could be either a threat, or luck for the Russian collectors, according to her. On the one hand, slower growth of lending market could contribute to fewer overdue loans. At the same time another scenario is possible as well, «Delinquency will be more apparent in banks’ portfolios, which will cause extra interest to collectors’ services». This tendency already manifests itself due to Russian domestic reasons: from July 2007 bankers are obliged to reveal effective interest rate on consumer loans, and growth rates of their portfolios have slowed down. «Any way the Russian market has space to grow further», notes Mrs. Dokuchaeva. «German overdue debt market is EUR300 billion, which is two times bigger than Russian».

Director General of Sequoia Credit Consolidation has two sons; the younger one is only 5 months old. Would she like her children to become collectors? «I do not want to impose any guidelines on them. They may probably like to become artists, lawyers, bankers, or football players», she answers after a thought. Mrs. Dokuchaeva treats her profession as a logical development of her career in banking business and considers her mission in some respect honorable. «We help people to find a way out of a difficult financial situation».