JUNE 23 2015 (The Conway Bulletin) – The Kazakh Central Bank cancelled BTA’s banking licence, officially ending its banking activities. BTA, which had once been one of Kazakhstan’s biggest banks, merged with Kazkommertzbank earlier this year. It assumed a massive proportion of bad debt in the 2008/9 Global Financial Crisis.
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(News report from Issue No. 237, published on June 25 2015)
JUNE 14 2015 (The Conway Bulletin) – Azerbaijan and Iran intend to set up a joint bank in Tehran, Iran’s ambassador to Azerbaijan, Mohsen Pak Ayeen, told the Trend news agency.
Mr Ayeen was speaking to reporters at the sidelines of a conference in Tehran. He didn’t give any more details on how the bank would be developed.
If the bank did take off, it would underline just how far relations between Azerbaijan and Iran have improved over the past few years. Under former president Mahmoud Ahmedinejad, Azerbaijan and Iran were locked in a cycle of sabre rattling, arresting spies and threatening war.
Since then, though, with Hassan Rouhani in power in Tehran since 2013 and the international community gradually accepting the re-emergence of Iran, the two neighbours have made a show of swapping prisoners, hosting bilateral defence and diplomatic meetings and talking up trade relations.
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(News report from Issue No. 236, published on June 18 2015)
JUNE 5 2015 (The Conway Bulletin) – The IMF jumped into an increasingly vicious row over supervisory oversight of commercial banks in Georgia by criticising the government’s plans to strip the Central Bank of the responsibility.
In a rare intervention into domestic politics, the IMF released a statement
which said it was worried about the implications that a change of supervisory powers would bring.
“The IMF is concerned that recent proposals to amend the central bank law would put NBG (National Bank of Georgia) independence at risk,” the statement said.
The government’s plan, which some suspect has been motivated by a desire to punish the Central Bank still headed by senior officials appointed by the previous administration of Mikheil Saakashvili, has been controversial from the start. A group of businesses warned that the policy change would not only pose a threat to the banking system, but also to the business and investment climate. This sentiment was supported by President Giorgi Margvelashvili, who said he would veto the bill if it was adopted by parliament.
The government has said that it wants to transfer responsibility for the oversight of commercial banks to an independent body to improve and strengthen this oversight. It has fallen out with Central Bank chief Giorgi Kadagidze over his handling of the economic storm which has battered the region.
IMF made its statement the day after former PM and Georgia’s most powerful man, Bidzina Ivanishvili, backed the proposed changes.
Mr Ivanishvili set up the governing Georgian Dream coalition and is considered the country’s chief power broker. He has clashed with both Mr Margvelashvili and Mr Kadagidze.
It its statement, the IMF also reiterated its public support for Mr Kadagidze, pitting itself firmly against Mr Ivanishvili and Mr Margvelashvili.
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(News report from Issue No. 235, published on June 11 2015)
JUNE 9 2015 (The Conway Bulletin) – Foreign direct investment (FDI), so important to Georgia’s economy, halved in the first three months of this year compared to the last quarter of 2014, GeoStat, the Georgian statistics agency, said.
GeoStat measured total FDI in Georgia at $175m, down from $349m in Q4 2014. Georgia’s attractiveness as a foreign investment destination was rebounding after the global economic crisis of 2008/9 and a war against Russia in 2008, so the data will disappoint.
Apart from the second quarter of 2014, this was the weakest FDI data for Georgia since 2009. The biggest drop was in construction and manufacturing, reflecting the recession which has hit the region, triggered by a struggling Russian economy.
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(News report from Issue No. 235, published on June 11 2015)
MAY 30 2015 (The Conway Bulletin) – Georgia’s President Giorgi Margvelashvili said that he opposed stripping the Central Bank of its supervisory duties over the country’s commercial banks. As reported in last week’s Bulletin, reformers suggested that these powers should be given to an independent body.
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(News report from Issue No. 234, published on June 4 2015)
MAY 22 2015 (The Conway Bulletin) – Georgia’s parliament will consider adopting a law that will shift supervisory powers over commercial banks away from the Central Bank to an independent supervisory body, media reported.
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(News report from Issue No. 233, published on May 28 2015)
MAY 20 2015 (The Conway Bulletin) – Tajik bank Bonki Rushdi Tojikiston (BRT) will switch to Islamic banking rules after striking a deal with the Saudi Arabia- based Islamic Development Bank, media reported.
BRT will be the first Islamic Bank in Tajikistan. Its conversion shows the increasing appeal of Islamic banking, after banks in Kazakhstan, Kyrgyzstan and Azerbaijan agreed to switch.
BRT aims to complete the conversion by mid-2015.
“This will open the door to numerous other operators iden- tifying the opportunities inherent in the sharia compli- ant financial system,” Khaled Al-Aboodi, head of the Islamic Corporation for the Development of the Private Sector was quoted as saying. Islamic Corporation for the Development of the Private Sector is the unit within the Islamic Development Bank which helps banks convert to Islamic banking rules.
Reuters reported that Islamic banking has grown more popular across the world but has been slower in taking off in Muslim dominated countries that are officially secular. The popularity of finance raised through a sukuk, an instrument that adheres to Islamic banking rules, has also grown in popularity in the region. Earlier this year, the part state-owned International Bank of Azerbaijan said it wanted to issue a sukuk worth $200m to $300m.
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(News report from Issue No. 232, published on May 20 2015)
MAY 19 2015 (The Conway Bulletin) – Kazakh president Nursultan Nazarbayev ordered the Central Bank to move from Almaty to Astana by 2017.
The Central Bank is the last major government institution to move to Astana,
marking the final act of the ascendency of Mr Nazarbayev’s purpose-built capital over the far more louche Almaty.
He built up Astana, after declaring it his new capital in 1997, to reflect his status as the creator of a modern Kazakhstan. New buildings and towers dot the city’s skyline every year.
Now, it appears, Mr Nazarbayev has decided that it’s time for the economic and financial power to be transferred north. Both the Central Bank and Kazakhstan Stock Exchange had remained stubbornly based in Almaty, anchoring other commercial banks to the city. By wrenching the Bank to Astana, Mr Nazarbayev will pull other companies with it.
In 2013, Mr Nazarbayev replaced the popular and independent-minded Grigory Marchenko as Central Bank chief with the more pliant Kariat Kelimbetov.
At the time, the financial community speculated that the change would precede a move north to Astana by the Central Bank. This was denied. Now, it seems, this speculation has been borne out.
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(News report from Issue No. 232, published on May 20 2015)
MAY 15 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank said it will switch its monetary policy from targeting rigorous exchange rate stability to prioritising hitting inflation targets. Analysts have criticised the Central Bank for being too inflexible with its exchange rate controls.
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(News report from Issue No. 232, published on May 20 2015)
MAY 13 2015 (The Conway Bulletin) – The authorities in Azerbaijan questioned businessman Ibrahim Ibrahimov over an outstanding loan from the state-linked International Bank of Azerbaijan (IBA), media reported, the second high-profile Azerbaijani company owner to be hauled into a police station in a week.
Turan news agency reported that Mr Ibrahimov took a loans $57m, but sources in IBA told the news agency that the sum was actually $850m.
Last week police detained Nizami Piriyev, head of Azerbaijani Methanol Company. He was charged with financial fraud. Mr Piriyev is also charged with not repaying bank loans.
Natiq Cafarli, economist and executive director of ReAL opposition movement said in an interview with faktxeber.com that he does not expect the oligarchs to stay in jail for a long time. He said that the government just wants to recover its money.
“The ruling party does not need a lot of news around famous people,” he said. “They will be released soon.”
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(News report from Issue No. 232, published on May 20 2015)
