Russia's Sterling Success

It could have been the annual meeting of any successful London bank. The chairman reported that its total transactions increased 105% in 1962 to $31 billion, and that profits rose 33% to more than $1,000,000. But there was something different about this bank: it was the Moscow Narodny Bank, owned and operated by the Soviet government, in the heart of London's City.

Founded there in 1919, the Narodny Bank was only another agency to finance East-West trade until it began to go capitalist and expanded into a full-fledged merchant bank in the late 1950s under the prodding of a new chairman, personable and professional A. I. Doubonossov, 63, who wears a Homburg. Narodny's prudent bankers handle the extremely sensitive job of selling Soviet gold on the London market, trade actively in foreign currencies, and make short-term loans to British corporations and cities. With a capitalist eye for profit, they even hold $3.9 million in British Treasury certificates.

Narodny's prime function is still to grease East-West trade, which last year expanded 10% to $19 billion. When a British or other non-Communist company makes a sale to a Soviet-bloc customer, Narodny will pay the exporter at once, saving him the usual three-to six-month wait before collecting. For Narodny's services, the exporter pays a commission of 3% to 4% of the bill, so that the Soviets benefit doubly from the transaction.

Inside Narodny's five-story headquarters, the only tinge of Red is its massive maroon safe. Clerks work in a Dickensian atmosphere of mahogany panels, marble floors and gilded grillwork. Only the top six officers and one secretary are Russian; the other 133 employees are Britons--and everybody pauses for 4 o'clock tea. Says Doubonossov with a bankerish smile: "We observe the customs and conventions of the City of London." One closely observed custom is Narodny's refusal to divulge the names of its many British clients.

Gratified by its success in London, Narodny is branching abroad. Preparing to open a large and modern office in Beirut, it is already pirating clerks from other Lebanese banks.

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