By Ivana Mitrovic

Dr Rolf Reichardt joined the AccessHolding Management Board as Chief Finance & Risk Officer in August 2018. Previously, he worked as CFO and later as CEO of AccessBank Azerbaijan. His former professional experience covers various risk management functions in some of the largest German banks. Rolf holds a doctoral degree in Finance and a M.Sc. in Economics. He speaks German, English, French and Russian.

(…) the absence of bad news is often the unnoticed success of a well-functioning governance system.

AccessHolding has completed its merger two years ago and you have joined as our first Chief Finance and Risk Officer. How would you describe the past two years and what were (and still are) the main achievements you are the proudest of?

The merger led to many changes and additional tasks in the Finance and Risk functions. Alongside operational tasks, we had to foster a well-functioning corporate governance and internal control system. We had to build up our capacities at Head Office and deliver tangible support to our network banks in terms of accounting, compliance, financial controlling and reporting, risk, taxation, and some treasury functions. We greatly improved our capacity in the Risk function by on-boarding quantitative data analysts including a forensic expert. We can now draw upon a variety of expert knowledge in different areas which helps us to develop state of the art Finance and Risk Management in our Group, both at Holding and at bank level. Among our accomplishments are: the implementation of IFRS 9 and IFRS 16 in a very short time; building up an own accounting function covering all aspects of Group accounting like inter-company invoicing and transfer pricing; a systematic approach to Risk with a Risk Heat Map identifying major gaps in the Risk universe; and developing the Compliance function with proper AML software. For all of this, I express my deep appreciation to our colleagues in the Finance and Risk functions, who have been working hard to achieve so much in such short time.

Another important step forward has been the establishment of the Group Audit and Risk Committee (ARC) two years ago, represented by three members of our Supervisory Board. The ARC has taken an active role in enhancing the corporate governance framework in the Audit, Compliance, Finance and Risk universe of our Group by setting the tone for meaningful work in the second and third lines of defence, and the internal control system in general.

In general, the absence of bad news is often the unnoticed success of a well-functioning governance system. Obviously, this is difficult to track. To give you an example: I am very satisfied that we had improved our SME underwriting standards, including a limitation of large single credit risk exposures and a proper reporting, as one of our first actions in improving Group Risk Management, which was especially relevant for our smaller banks. This now serves us well, as we have avoided potential capital erosion by loan loss provisioning needs for larger client exposures in distress because of the pandemic.

Needless to mention that we still have much work to do to further improve the Finance and Risk functions in our Group. Our next focus areas are improvement in budget forecasting and corporate governance.

AccessHolding’s instant reaction to the COVID-19 outbreak led to a very well-coordinated collaboration with the network banks. How would you reflect on our joint response and what were, for you as Chief Finance and Risk manager, the main challenges during that time?

Since the wave of the pandemic came to Europe first, we had a head start of a few weeks to prepare and support the banks in time. While we could not predict government responses like lockdowns and other mitigating measures exactly, we were warned by the exponential growth of infection rates.

Therefore, we set up a Task Force addressing issues like staff security, business continuity, risk, and internal & external communication. Our knowledgeable and skilled staff in the second and third lines of defence in our Head Office got directly involved to support the business colleagues in the field. Preservation of liquidity at Holding and at bank level, as well as addressing repayment issues of clients early on by developing scripts for expected mass restructurings, provided strong operational support to our banks. It certainly helped that we have many managers in the banks and at head office who had already experienced shocks like Ebola, the Global Financial Crisis in 2008, sharp declines in raw material prices, and extreme FX devaluations.

At the same time, the Finance Departments of our banks and their auditors had to work hard to get the audited Financial Statements prepared under partially difficult circumstances. This process ran very smoothly thanks to the great engagement of our Finance staff in the banks and at Head Office.

In Finance and Risk management we are fully dependent on our access to data. So, what could have become a major stumbling block during the lockdown times, turned out to work rather smoothly. Thanks to our IT colleagues, we had everything in place for safe remote work and data extractions working properly.

The main challenge remaining from a Finance perspective has been how to forecast end of year financial results, next year’s outlook, and potential capital needs for some banks. Especially the impact on loan portfolio quality is difficult to assess. For this purpose, our Risk department has developed a forecasting tool for loan loss provisions, considering observable transition rates during the pandemic and allowing for parameterisation of key assumptions about loan portfolio development. We have recently shared these tools with the banks to help them better assess the impact of the pandemic on future loan portfolio quality and hope this will prove to be a useful tool for them.

How can you describe the “new normal” for AccessHolding? What has changed significantly and what is yet to be expected in the next period?

At Head Office, remote home office work became the new normal for most of our staff. Communications between Head Office and banks, including Board meetings, have shifted to internet channels, as traveling had to be abandoned. In the banks we see a move to more digitalisation of payment transactions. While we can expect some trend reversal in the future to have again more physical meetings and contacts with clients, I expect that the overall move to more remote and digital work will be more pronounced, as a consequence of this pandemic.

Towards the end of this interview, can you please share your most significant, personal learnings from this period?

Let me share first how much I am impressed with our multicultural/multilingual staff composition alone at Head Office, which I find extraordinarily enriching with 30+ different nationalities among our 80-90 staff members and then, of course, with our international network reaching out into regions with many more different nationalities and cultures that I wouldn’t get to know otherwise. I find this a very enriching experience which I would not want to miss! 

In my view, this cultural diversity was key to our extremely well organised response to the pandemic. As many of our managers had experienced crisis events in many different parts of the world before, we could act prudently as a Group by combining these insights into an action plan. This vast experience pool gives our Group a huge strength and I am grateful I could experience this with AccessHolding!