Tag Archives: banking

Georgia cuts interest rate for the first time in 3 years

TBILISI, APRIL 27 2016 (The Conway Bulletin) — Georgia’s Central Bank cut its key interest rate for the first time in three years, performing a policy U-turn designed to boost its flagging economy.

It cut its key refinancing rate by 50 basis points to 7.5%, having steadily raised it from 4% throughout 2015. It said this was the first step towards a rate of around 5 or 6%.

“The Monetary Policy Committee considers it necessary to start phasing out the tight monetary policy, which means the gradual reduction of the refinancing rate down to the neutral level in the medium-term,” the Central Bank said in a statement.

“The rate of further monetary policy softening will depend on the revised inflation forecasts.”

In March, annualised inflation fell to 4.1% from 5.6% in February.

The Central Bank also dropped the lari-denominated minimum capital requirements for its commercial banks from 10% to 7% and increased the US dollar-denominated requirements.

It did this to try to push more lari into circulation and to take the US dollar off the market.

Alongside the less-than-rosy economic news, the Central Bank said that there had been signs of improved economic activity, especially in construction, but that high interest rates and other issues were a brake on potential growth.

“Another factor keeping the economic growth low is the negative impact of the economic situation in Georgia’s trade partners, reflected in the decrease of remittances and weakening of external demand,” it said.

Russia and Greece have traditionally been Georgia’s main source of remittances. Russia is currently in a recession linked to low global oil prices and Western imposed sanctions. Greece’s economy remains in recovery-mode after the impact of the 2008/9 Global Financial Crisis.

Like inflation, GDP growth has also been sluggish. The Statistics Committee said GDP grew by 2.3% in Q1, one percentage point slower than the expectations. The Central Bank expects 3% GDP growth in 2016.

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(News report from Issue No. 278, published on April 29 2016)

Kazakhstan’s Halyk Bank goes digital

APRIL 15 2016 (The Conway Bulletin) – Halyk Bank, Kazakhstan’s second- largest bank, said it has launched a new banking subsidiary, Altyn-i, which will operate a digital-only model. Altyn-i will operate under Altyn Bank, the successor of HSBC Kazakhstan, that Halyk Bank bought in March 2014 for $176m.

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(News report from Issue No. 277, published on April 22 2016)

Uzbekistan plans bank sale

APRIL 15 2016 (The Conway Bulletin) – The Uzbek government said it is ready to sell off its stakes in two commercial banks, part of a privatisation programme adopted in February. The government said it estimates its 47.6% stake in Aloka Bank to be worth $42.7m and its 63.1% stake in Turon Bank to be worth $29.7m. The government needs to raise cash and also wants to portray Uzbekistan as an investment-friendly economy.

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(News report from Issue No. 277, published on April 22 2016)

Kazakh businessman closes in on total control of Kazkommertsbank

ALMATY, APRIL 20 2016, (The Conway Bulletin) — The finish line is now in sight for Kenes Rakishev, a Kazakh businessman linked closely to the country’s elite, who has seemingly made taking over Kazkommertsbank one of his priorities.

In this process, control of Kazakhstan’s largest bank has been ripped from Nurzhan Subkhanberdin, a former opponent of Kazakh President Nursultan Nazarbayev.

A KazKom statement said that Mr Rakishev, 36, will buy out Subkhanberdin’s remaining shares in the bank by the summer. Mr Rakishev is also poised to become the next chairman in May.

“[Mr Rakishev] is expected to chair the board of directors and Marc Holtzman, chairman, shall take the CEO position in May 2016 after the extraordinary general meeting of shareholders,” KazKom said earlier this month.

As of this week, Mr Rakishev owns a 71.23% stake in Kazkommertsbank. When he buys out the rest of Mr Subkhanberdin’s shares, his stake will rise to 86%. Samruk-Kazyna, the Kazakh sovereign wealth fund owns a 10.7% stake in KazKom and the rest is owned by unnamed minority shareholders.

This takeover started in February 2014 when, essentially, the Kazakh government started to offload the debt-ridden BTA Bank onto KazKom and also to use it as a Trojan Horse to dislodge the London-based Mr Subkhanberdin.

Analysts have said the government, with Mr Rakishev as the nominated project leader, forced KazKom to buy BTA Bank from Samruk-Kazyna.

This weakened Mr Subkhanberdin’s control of the bank and started a process that has propelled Mr Rakishev to both being the owner and chairman of KazKom.

The eventual merger of KazKom and BTA Bank last year and the promotion of Mr Rakishev are the biggest changes to Kazakhstan’s banking sector since the Global Financial Crisis of 2008/9, but both the government and Mr Rakishev have been assiduous in avoiding commenting in public about it.

Even so, Mr Rakishev has developed an increasingly high public profile in Kazakhstan.

The son-in-law of the current Kazakh minister of defence, Mr Rakishev shot to prominence in 2008 as the go-between for Timur Kulibayev, President Nazarbayev’s son-in-law, and the British Royal Family when he bought an estate in England from Prince Andrew.

Since then, he has had a hand in some of Kazakhstan’s biggest business deals.

He also, officially, owns a 75% share in industrial holding Sat&Co. and a 20% stake in Central Asia Metals, a copper producer listed in London.

To this list he can now add KazKom.

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(News report from Issue No. 277, published on April 22 2016)

Stock market: BGEO Group

APRIL 22 2016 (The Conway Bulletin) – Shares in BGEO Group, the London-listed holding company that owns Bank of Georgia, gained 6% this week, rallying on the company’s positive annual results.

It posted a 38.4% growth in revenue and its retail banking customer base grew by 37.8% in 2015.

Neil Janin, BGEO’s chairman, also gave a strong outlook.

“The current economic and political situation in Georgia is solid and its outlook promising,” Mr Janin said in a statement, praising the recent tax code amendments.

Georgia holds parliamentary elections in October which may impact BGEO. The company was cagey about this and said that it hoped the country would “continue in the right direction”. In Georgian politics, though, anything can happen, as we’ve learned through the years.

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(News report from Issue No. 277, published on April 22 2016)

Kazakhstan’s wealthiest men owns Nurbank

APRIL 15 2016 (The Conway Bulletin) – Rashit Sarsenov, one of Kaza- khstan’s wealthiest men, said that he was the real owner of JP Finance Group, an Almaty-registered company that officially owns 82.8% of Nurbank. Measured by assets, Nurbank is the 15th biggest bank in Kazakhstan. Mr Sarsenov’s sister was previously listed as JP Finance Group’s owner. In November 2015, Mr Sarsenov’s son, Eldar, became the chairman of the bank.

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(News report from Issue No. 277, published on April 22 2016)

International Bank of Azerbaijan and Standard to merge

APRIL 21 2016 (The Conway Bulletin) – Bank Standard and the International Bank of Azerbaijan (IBA) started negotiations to merge their assets, in what could be a major shift in Azerbaijan’s banking sector. IBA is, by far, the largest bank in the country. It controls 60% of all domestic loans. Azerbaijan’s ministry of finance owns 55% in IBA. Bank Standard, owned by AB Standard Group, is said to be close to Azerbaijan’s political elite.

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(News report from Issue No. 277, published on April 22 2016)

Azerbaijan’s Bank needs more capital, says Fitch

APRIL 13 2016 (The Conway Bulletin) – Ratings agency Fitch said the International Bank of Azerbaijan needs to increase its proposed 500m ($328m) manat capital injection to repair its solvency problems. IBA, which is Azerbaijan’s largest bank, wrote off around 3b manat ($2b) of non-performing loans, but has another 3b manat or more of troubled assets, according to Fitch. A sharp depreciation of the manat last December hit the value of assets in Azerbaijan’s banking sector.

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(News report from Issue No. 276, published on April 15 2016)

Business comment: Dividends Et Impera

APRIL 15 2016 (The Conway Bulletin) – Dividends make investors happy, when they are issued, that is.

Kazakhstan’s largest publicly-traded companies have embarked on different dividend policies to weather an economic downturn that has, frankly, clobbered markets.

This week, mobile operator Kcell, which is part-owned by Sweden’s TeliaSonera and whose GDRs are listed in London, decided to give out 50% of its profits as dividend to its shareholders.

And, sticking to a long-held company policy, London-listed Central Asia Metals said it would pay out a total dividend of 12.5p.

At the opposite end of the dividend strategy spectrum, KMG EP and Halyk Bank, whose GDRs are also listed in London, ditched their annual payout to shareholders.

Both companies had traditionally given a piece of their profits to shareholders in the past.

KMG EP, a subsidiary of state-owned Kazmunaigas, said a collapse in oil prices over the past couple of years meant it couldn’t afford to pay out dividends and in a terse statement, Halyk Bank, owned by Timur Kulibayev and his wife Dinara Kulibayeva, daughter of President Nursultan Nazarbayev, said it too wouldn’t give shareholders a handout this year.

Halyk Bank didn’t explain its decision but Kazakhstan’s banking sector is bracing itself for an increase in non-performing loans linked to a 50% fall in the value of the tenge last year Broadly, these two different strategies provide an insight into Kazakh corporate mindset. Those companies with a stronger link to the Kazakh government and the political elite simply don’t need to pay dividends to keep their key investors happy.

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(News report from Issue No. 276, published on April 15 2016)

Bad loans re-emerge in Kazakhstan

APRIL 11 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank said non-performing loans had grown by 7.7% in tenge terms in the first two months of the year. Compared to last February, most banks saw their portfolio worsen, with the notable exception of the two largest lenders, Kazkommertsbank and Halyk Bank. As a proportion, overdue loans now represent 8.3% of total lending in Kazakhstan.

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(News report from Issue No. 276, published on April 15 2016)