For Immediate Release
Citigroup Inc. (NYSE: C)
January 20, 2011

Russia: What Should Small and Medium Enterprise Owners Expect in 2011?


Survey by Citibank and RMC demonstrates that repercussions of the crisis have not yet been overcome by small and medium businesses

Moscow, Russia – Citibank and Russian Microfinance Center (RMC) announced the results of their joint survey, conducted at the end of 2010, of small and medium enterprise (SME) owners and independent experts.

In 2010, analysts observed an increase in revenues across the SME sector that came as a result of, among other factors, wider access to external financing. The survey shows that SME businesses demonstrated lower profitability. The results indicate that competition in the segment is gaining momentum.

According to the survey, in 2010, the SME owner's personal qualities, appropriate connections, the general condition of the business environment and access to financing played key roles in the success of the business. At the same time, direct support from the State was less important as in 2009, when governmental actions were crucial for the segment.

Accessibility to financing for existing SMEs went up significantly in 2010, particularly for current assets. However, the owners of start-up businesses had the most difficulty obtaining loans from financial institutions, and microfinancing, leasing and governmental programs came to the forefront.

Certain industries demonstrated growth in successful businesses – services and commerce, in particular. Increasing competition, cited by 60 percent of independent experts surveyed, resulted in a better quality of goods and services and growing demand.

According to the majority of experts, SMEs will continue to develop rapidly in 2011. However, in light of changes in the tax legislation starting January 1, 2011, the risk exists that "grey" (off-the-book) salaries are likely to increase, and investments will go down. This could hurt SMEs' results.

"SMEs took on about 11 percent of GDP in 2009, and their contribution to the Russian economy in 2010 showed a marginal decrease," said Viktor Rozhkov, Head of GSG Commercial Banking at ZAO Citibank. "As long as the recovery of this segment maintains momentum, SME owners' financial capabilities will broaden. Recovery will enable them to boost investments in their businesses."

Mikhail Mamuta, President of the Russian Microfinance Center, said: "SMEs are one of the drivers of post-crisis economic and social growth. Moreover, SMEs can make a contribution to the innovative development of our economy. Therefore, SME taxation issues should be considered very carefully. The study shows that the 'source of vitality' of small enterprises can dry up much more quickly than for large businesses."

Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at or

ZAO Citibank
Citi was among the first international banks to enter the Russian market when it established a local bank, ZAO Citibank, in Moscow in 1993. Citi has since grown its business to be among the country's largest banks offering a full range of products and services to corporate and consumer customers. At present, the Bank has over 3,000 employees; its distribution network includes retail branches, 350 ATMs and representative offices in 11 Russian cities: Moscow, St. Petersburg, Yekaterinburg, Samara, Rostov-on-Don, Volgograd, Nizhniy Novgorod, Kazan, Novosibirsk, Ufa and operations centre in Ryazan. Today Citi is present in 3 CIS countries - Russia, Ukraine, Kazakhstan.

Russian Microfinance Center (RMC)
Russian Microfinance Center (RMC) was founded in July 2002 as a response to the need of the sector in an organization to represent interests of the whole microfinance. RMC serves as the resource center for the microfinance sector and a nation-wide forum for interaction with the government, community and investors, facilitates formation of a favorable legal environment, renders professional services of training and consulting for microfinance organizations, as well as contributes to the establishment of national standards of leading a microfinance activity.