Tag Archives: banking

Gerogia TBC Bank completes buyout of rival

TBILISI, OCT. 18 2016 (The Conway Bulletin) — Georgia’s TBC Bank completed the takeover of Bank Republic, making it the biggest bank in the country in terms of loans.

At the same time, the Georgian Central Bank suspended the licence of Progress Bank, linked to former energy minister Kakha Kaladze and billionaire Bidzina Ivanishvili, suggesting that a deal for TBC Bank to buy it was about to go through.

TBC had bought most of Bank Republic last month from Societe Generale for 315m lari ($136m) but still had to buy the final 6.4% from the European Bank for Reconstruction and Development.

Vakhtang Butskhrikidze, TBC Bank CEO, enthused about the future. “We believe the acquisition of Bank Republic is a critical step in delivering on TBC Bank’s strategy and represents a major step forward

in TBC Bank’s ambition to build the leading banking group in Georgia and the broader Caucasus region,” he was quoted by media as saying.

Importantly, the deals shift TBC Bank from having a 5.3% share of the deposits market to a 34.5% share.

Georgia’s banking sector is generally considered the most advanced in the South Caucasus. Bank of Georgia, TBC’s rival, is listed on the London Stock Exchange.

ENDS

(News report from Issue No. 301, published on Oct. 21 2016)

Kazakhs turn to credit cards

ALMATY, OCT. 18 2016 (The Conway Bulletin) — Kazakhs are spending more money on credit cards than ever before, new data showed, as they try to work out ways of pulling through a prolonged economic downturn.

Data from the rankings.kz website showed that the amount of credit cards in circulation in Kazakhstan had increased by 250% this year, a jump that suggests a large rise, too, in consumer debt.

Kuralai Abenova, a student in Almaty, was using her credit card to buy kit to renovate her apartment.

“It is very convenient rather than saving money. I can take a large sum of money and then pay little bits of it off regularly,” she said.

A crash in oil prices and a recession in Russia have hit Kazakhstan hard. The tenge currency has lost around 50% of its value since 2014 and inflation is rising.

Analysts have previously warned, though, that Kazakhs’ over-reliance on credit was a weakness that could undermine the economy. During the Global Economic Crisis of 2008/9, Kazakh banks were left with piles of bad debt. The risk is that similar amounts of bad debt are being accrued now.

And this loose attitude towards consumer debt is being replicated in high street shops which are encouraging shoppers to spend through cheap loans.

Saida Zhunusova, a financial consultant at the electronics store Technodom, said she had seen a large increase in the number of people using credit cards or asking directly for credit to pay for products.

“Many people cannot pay for the goods with cash and it is more convenient for them to pay only a part of the cost. Compared to 2014-2015 our sales have doubled because of loans,” she said.

ENDS

(News report from Issue No. 301, published on Oct. 21 2016)

S&P upgrades ratings of Kazakhs lenders

OCT. 20 2016 (The Conway Bulletin) – Ratings agency S&P increased the long term credit rating of Kazkommertsbank, one of Kazakhstan’s largest lenders, by one notch to B- from CCC+. S&P said the reason for the upgrade were the positive results in the first half of 2016 and the increased capitalisation of the bank. S&P also said the outlook remained negative, reflect- ing low confidence in Kazakhstan’s banking sector.

ENDS

(News report from Issue No. 301, published on Oct. 21 2016)

Gazprombank sells its Armenian subsidiary

OCT. 11 2016 (The Conway Bulletin) — Ardshinbank, one of Armenia’s top- three banks, bought Areximbank from Gazprombank, the financial arm of Russia’s giant gas company, for an undisclosed amount.

Areximbank was Armenia’s fifth- largest bank, according to local media and the buy-out will push Ardshinbank towards becoming the largest bank in Armenia. Its assets will grow by 20% to around 540b dram ($1.1b) after the deal. Karen Safaryan, a Russian billionaire businessman with Armenian roots, founded Ardshinbank in 2003 and remains its beneficial owner.

Analysts said that US sanctions against Gazprom and its subsidiaries and Armenian Central Bank requirements for commercial banks could be behind the buy-out.

In 2014, the Central Bank ordered banks to increase their minimum capital requirements by six times to 30b dram ($63m) by January 2017. The rule has prompted a round of mergers.

ENDS

(News report from Issue No. 300, published on Oct. 14 2016)

Azerbaijan’s Bank Standard files for bankruptcy

OCT. 6 2016 (The Conway Bulletin) – Bank Standard, one of the largest banks in Azerbaijan, filed for bankruptcy, delivering a sharp shock to the country’s banking sector which is trying to recover from a currency crisis.

The sight of Bank Standard, considered a stalwart of the high street since the mid-1990s, going bankrupt in Azerbaijan will worry ordinary Azerbaijanis who have already seen the manat collapse and other smaller banks disappear in a harsh economic downturn.

Azad Javadov, director of the Azerbaijan Deposits Insurance Fund, a government fund that insures people’s savings in banks, told media the government had tried to save Bank Standard.

“The state tried to normalise Bank Standard, but failed. It was decided to declare the bank bankrupt to prevent more loss,” he said.

Bank Standard has, effectively, been on life-support for some time receiving funds from the government which wanted to save the bank and protect its financial sector.

But like several other smaller banks which have filed for bankruptcy this year, Bank Standard couldn’t weather the financial storm generated since 2014 by a collapse in oil prices, a recession in Russia and the fall in value of emerging market currencies.

Part of the blame, some analysts have said, lies with the Azerbaijani government which imposed heavy capital requirements on banks in 2016.

A few days after Bank Standard declared bankruptcy, the Central Bank ordered its deposits be transferred to Muganbank, a mid-sized bank. Zaminbank, another small bank, was also declared bankrupt on Oct. 4.

ENDS

(News report from Issue No. 299, published on Oct. 7 2016)

Business comment: Kazakh banking

SEPT. 21 2016 (The Conway Bulletin) – Despite countless declarations on efforts to save its banking sector, Kazakh banks are not as healthy as they say.

Last year, President Nursultan Nazarbayev instructed the Central Bank to conduct stress test to avoid a spiraling of non-performing loans similar to the crisis that followed the 2007/8 global debacle.

He had just sacked Kairat Kelimbetov, Mr Devaluation, the Central Bank chief under whom the tenge currency lost around half its value in two years.

The result of the declarations has been a sharp drop in the share of

bad loans in banks’ total portfolio. Officially, this week Kazakhstan’s Central Bank chief Daniyar Akishev said that non-performing loans had shrunk from around 30% two years ago to just 8.4%.

This raised eyebrows among analysts.

How could a broken system, hit by currency depreciation and toxic assets, recover so quickly, without undergoing a serious makeover?

The answer is simple, according to some: The problems were swept under the rug.

“Kazakhstan’s banking sector is a legalised zombie park,” an anonymous economist told Forbes Kazakhstan.

“In reality, bad loans make up around 60% of the total loan portfolio. But through refinancing, on paper, banks have written most of them off of their accounts.”

Notably, the most frequent and well attended protests in Kazakhstan for the past few years are organised by groups of mortgage holders. They mainly hold US dollar debt.

If their overdue loans are neither being refinanced, nor being accounted for, where are banks hiding them?

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Azerbaijan’s IBA signs promotional deal with Juventus football club

SEPT. 20 2016 (The Conway Bulletin) – The International Bank of Azerbaijan (IBA), majority owned by the government, signed a promotional deal with Italian football club Juventus, continuing Azerbaijan’s strategy of using sport to promote itself.

Juventus released a photo of its executives meeting IBA officials in Baku, posing with one of its famous black and white shirts.

Under the terms of the deal, the value of which has not been announced, IBA will be able to use Juventus logos and branding to promote its products. Juventus will also be committed to opening and running a football academy in Baku.

Juventus’ head of global partnerships and corporate revenues Giorgio Ricci said that the deal with IBA was the fifth regional sponsorship deal that the club had concluded in the last 16 months.

“We are proud to be working in a country of great potential such as Azerbaijan, and to collaborate with an organisation as prestigious as the International Bank of Azerbaijan,” he said.

For IBA, the timing is less auspicious. Azerbaijan’s economy has been under pressure because of a sharp fall in oil prices and analysts have said it will fall into a recession for the first time since 2009.

Banks have in particular come under pressure because of their previous loose lending arrangements which have now generated mountains of bad debt. This bad debt portfolio was exacerbated by a 50% fall in the value of the manat last year.

In July, a court in Azerbaijan also convicted IBA’s former CEO, Jahangir Hajiyev, of money laundering.

Sport, though, has become an important outlet for Azerbaijan to market itself. Azerbaijan had sponsored Spanish team Atletico Madrid and Baku is one of the 13 host cities for Euro 2020 football tournament.

The Azerbaijani government owns a 55% stake in IBA. IBA accounts for around 60% of all lending in Azerbaijan.

ENDS

(News report from Issue No. 297, published on Sept. 23 2016)

Azerbaijan halts currency trades

SEPT. 2 2016 (The Conway Bulletin) — Banks in Azerbaijan’s capital have stopped selling foreign currency as demand soared after the Azerbaijani manat started to depreciate, triggering memories of the currency’s double devaluation last year.

The news will be disappointing to Central Banks across the Central Asia and South Caucasus region who had hoped to have moved away from the currency crises of 2014 and 2015.

According to sources in Baku, the manat traded at 1.68/$1, 5% lower than last month. They said that many Azerbaijanis now fear that another crisis is around the corner and have tried to hoard foreign currency. Bloomberg reported that 15 banks in Baku and the city’s international airport had stopped selling US dollars, a sign that demand had surpassed availability.

Azerbaijan’s economy is particularly vulnerable to the vagaries of oil prices, which have collapsed since 2014, and it is set to shrink this year for the first time since the mid-1990s.

ENDS

(News report from Issue No. 294, published on Sept. 2 2016)

Kazakhstan’s Halyk Bank sees profits rise

AUG. 19 2016 (The Conway Bulletin) — Halyk Bank, Kazakhstan’s second largest lender, posted a year-on-year net profit increase of over 20% at the end of Q2 because it had been able to charge higher interest fees on loans. Importantly, too, Halyk Bank also said that non-performing loans had dropped to 12% of their portfolio from 12.9% at the end of March.

ENDS

(News report from Issue No. 293, published on Aug. 29 2016)

Azerbaijan’s ministry of finance closes banks

JULY 21 2016 (The Conway Bulletin) — Azerbaijan’s ministry of finance and the Central Bank stripped four local lenders of their banking licence, a sign that the banking crisis in the country is far from resolved. Rufat Aslanli, chief of the Financial Market Supervisory Body, said that Dekabank, Kredobank, Parabank and Zaminbank, all small-sized banks, will be shut or reorganised and that their creditors will be refunded.

ENDS

(News report from Issue No. 290, published on July 22 2016)