DialogBank Chief a Man of Many Hats

Peter Derby greets you with not one business card but three.


The five-person operation that he started as DialogBank back in 1989 has mushroomed into a financial mini-empire of 1,200 employees spread across separate banking, brokerage and asset-management arms. He concedes that he is "wearing too many hats," and that the 6- and 7-day work weeks year after year are adding up.


Nevertheless, the 36-year-old banker-son of Russian emigres soon will add a fourth business to his stable with the launch of DRB, or Development and Restructuring bank, a merchant institution aimed at taking Russian credit risk.


Linked to Dialog, it will provide financing for activities such as business investment, leasing and mortgages, but move the risk to a different balance sheet from depositors.


"We wanted to put a fire wall between the commercial bank" and DRB, Derby said in an interview, noting that Dialog's strategy is so conservative that some associates call the bank "a safe-deposit box."


The new entity is just the latest venture from Derby, who last weekend was named the 1996 "Businessperson of the Year" by the American Chamber of Commerce in Russia. The award cited his contributions to business here, his visibility as a spokesman for Russia and his commitment to the highest ethical standards.


"This award to me was very touching because it represented the most of what I am about in Russia," said Derby, calling it "one of the nicest I've ever gotten."


That's no small praise: He also was selected by the World Economic Forum in Davos, Switzerland, as a "Global Leader of Tomorrow," and by Euromoney magazine as one of the top 10 financial leaders of the 21st century.


The growth of DialogBank shows why Derby wins such recognition. It has doubled its net income every year since 1991, to about $20 million in 1996. Assets grew by 70 to 80 percent last year to $220 million and capital stands at about $50 million, which by international accounting standards makes it 17th largest among Russian banks, Derby said.


Also in the corporate family, Troika Dialog has grown to offer a full range of services as one of Moscow's top investment banks, and Troika Dialog Asset Management has surfed the wave of Russia's booming financial markets through local and offshore mutual funds.


The bank's growth comes despite a consciously conservative strategy. Its assets-to-capital ratio of 4.5 is unusually small for an institution its size, and the bank is deliberately choosy about what companies it will accept as clients, skirting any it believes might have criminal ties or unethical practices.


Despite the caution, DialogBank has built a client base of some 10,000 individual depositors and well over 1,000 corporate clients. Coupled with increased automation, the numbers add up to a "critical mass" that Derby said will allow the bank to expand operations -- including new branches -- at the same time as cutting costs to customers.


Yet Dialog and its president still keep a low profile in the rough-and-tumble world of Russian banking. Derby said his business competes "sensitively" -- trying to provide products and services that other banks cannot offer.


By this fall, Derby said, Dialog will offer close to the same range of products as a commercial bank in Europe or the United States, including electronic and telephone banking and a 24-hour international telephone hotline.


Indeed, Dialog's identity always has been a blend of Russian and Western, mirroring its founder and other early partners who grew up speaking Russian in an emigre community in Queens, New York. Whether the bank -- a 100 percent Russian legal entity with Western capital and managers -- is perceived as domestic or foreign doesn't matter to Derby, but his roots do color his approach to doing business here.


"I felt very strongly mentally and emotionally that the people who I'm serving are my grandmother and many of her kind of people, and I would not betray the kind of individuals that raised me and gave me all I have," Derby said.


There's also family. When his first son turned 18 months, Derby reduced his working hours to six days a week. With the birth of his second son last year, he vowed to make it home for dinner twice a week and avoid the office on weekends.