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Viewing cable 09VLADIVOSTOK11, YAKUTSK LENDING INSTITUTION OFFERS SNAPSHOT OF CREDIT

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Reference ID Created Released Classification Origin
09VLADIVOSTOK11 2009-02-10 22:44 2011-08-24 01:00 UNCLASSIFIED Consulate Vladivostok
VZCZCXRO7825
RR RUEHAG RUEHAST RUEHCHI RUEHDA RUEHDF RUEHDT RUEHFL RUEHHM RUEHIK
RUEHKW RUEHLA RUEHLN RUEHLZ RUEHNH RUEHNP RUEHPOD RUEHROV RUEHSK
RUEHSR RUEHYG
DE RUEHVK #0011 0412244
ZNR UUUUU ZZH
R 102244Z FEB 09
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1076
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHVK/AMCONSUL VLADIVOSTOK 1175
UNCLAS VLADIVOSTOK 000011 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON RS
SUBJECT: YAKUTSK LENDING INSTITUTION OFFERS SNAPSHOT OF CREDIT 
SITUATION 
 
1.  Summary.  Though the effect of economic crisis has not hit 
Yakutia strongly yet, securing credit from financial 
institutions is becoming increasingly difficult for 
entrepreneurs and consumers there.  Poloff visited a prosperous, 
privately-run credit association in Yakutsk that offers an 
accessible alternative to commercial banks and 
government-sponsored entrepreneurship assistance agencies and 
provides an interesting snapshot into the credit situation in 
Yakutsk. 
 
Borrowers Looking for Alternatives 
---------------------------------- 
 
2.  During more financially stable times there were over 50 
banks in Yakutia providing business and personal loans. 
Currently there are fewer lending institutions, and those 
remaining have drastically cut back on lending.  Banks are 
increasing their interest rates, reducing the amount they are 
willing to lend, and increasing documentation requirements.  The 
regional government offers some alternatives for local 
businesses in the form of the Entrepreneurship Support 
Foundation of Yakutia and the Entrepreneurship Ministry of Sakha 
Republic. 
 
3.  A smaller private-sector lender has also emerged, called the 
Aurora Consumers' Association for Mutual Financial Assistance. 
The organization continues to grant mostly small-scale loans, 
and serves as an indicator of the economic situation in the 
region.  Poloff and FSN met with Kapitalina Alekseyeva, the 
founder and Director of Aurora. 
 
4.  A former director of the IREX program in Yakutsk, Alekseyeva 
has been running Aurora for eight years, the first three of 
which she did without a salary for herself.  She claims that her 
organization now provides more loans than her 
Government-sponsored counterparts and many of the local banks. 
Currently Aurora has over 1,000 clients and a capitalization of 
120 million Rubles. 
 
Small Scale Loans Help Entrepreneurs 
------------------------------------ 
 
5.  According to Alekseyeva, local entrepreneurs are 
increasingly turning to Aurora to obtain funds, as regular banks 
are increasingly turning them down.  The company offers 
relatively lower interest rates -- a 5 percent monthly interest 
rate compared to the 10 percent local banks charge business 
clients.  To attract capital, the company offers a 25 percent 
annual interest rate on deposits from retirees and 20 percent to 
others.  The local Sberbank offers only four percent.  Aurora 
currently only issues loans for up to one year.  Most loans are 
for around 100,000 Rubles, though repeat customers may obtain up 
to 600,000 Rubles.  Shuttle traders usually apply for loans in 
the 30,000 to 300,000 Ruble range. 
 
6.  The small loans have proven invaluable for a local 
transportation company which recently purchased its fourth bus 
with a loan through Aurora.  Recently, Aurora has been 
conducting its popular "Winter Clothing" program, enabling 
locals to purchase reindeer boots -- the only footwear feasible 
for -40C weather -- which cost one month's salary for many 
workers.  Due to the program, many Yakutians are able to 
purchase essential fur clothing and footwear. 
 
7.  Alekseyeva says that even now, defaults are very rare.  She 
credits some of her success to her U.S.-based advisor who has 
introduced a type of credit-rating system of her clients -- 
still unusual in Russia -- to help evaluate a borrower's 
viability.  When clients do find themselves suddenly facing 
economic troubles and unable to make repayments, Aurora accepts 
in-kind payments such as furniture or construction materials. 
 
ARMBRUSTER