SEPT. 19 2014 (The Conway Bulletin) – A delegation from Qatar visited Tajikistan promising various investments, including setting up an Islamic bank, media reported. Islamic banking has previously been discussed in Central Asia, especially in Kazakhstan. Qatar is looking to spread its influence across the Islamic World, including Central Asia.
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(News report from Issue No. 201, published on Sept. 24 2014)
AUG. 4 2014 (The Conway Bulletin) – Kazakhstan’s Alliance Bank agreed a debt restructuring deal with creditors ahead of a merger with Temirbank and ForteBank, owned by Kazakh billionaire Bulat Utemuratov. It’s an important deal for the government, which owns 51% of Alliance Bank and has been looking to sell it.
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(News report from Issue No. 194, published on Aug. 6 2014)
JULY 25 2014 (The Conway Bulletin) – Azerbaijani finance looks in good shape.
At a local finance level, the European Bank for Reconstruction and Development (EBRD) has handed a $42m loan to Demirbank earmarked to help smaller businesses raise funds.
At an international level, Citi Group said it is now selling more Azerbaijani debt than at any time since 2008.
Both pieces of news are good general indicators for the Azerbaijani economy. Most analysts agree that the economy is in pretty good shape although domestic consumer lending needs to be tapered.
Bloomberg quoted Citi Group as saying that it had debuted nearly $15m of debt for Kapital Bank having issued $38.5m of debt for the International Bank of Azerbaijan earlier this year.
“Investors are seeking risk in emerging markets as central bank stimulus measures suppress returns on debt issued by companies in developed nations,” Bloomberg wrote.
Even so, the yield on the Azerbaijani bank debt is high at nearly 9%, reflecting the risk involved.
The Demirbank deal is more the culmination of a long term project by the EBRD to improve access to finance for smaller businesses in Azerbaijan. In April AccessBank, another Azerbaijani bank, secured a $60m loan from 16 lenders also for micro-finance.
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(News report from Issue No. 193, published on July 30 2014)
MAY 5 2014 (The Conway Bulletin) — The World Bank signed a framework agreement with Astana to invest a further $2.5b into small and medium sized businesses and to help reform the banking sector.
This is a strong statement of intent from the World Bank.
“We are ready to start the first project on easing the access to financing for SMEs. We are glad that our collaboration with the government has been renewed,” said a spokesperson at the World Bank’s office in Astana.
In the same week, the Asian Development Bank (ADB) also signed an agreement to join its proposed $1.6b investment with a $5.5b cash injection from Kazakhstan’s own national funds.
ADB top management described the investment as “groundbreaking” as they gathered at a summit with the government in Astana.
Their investments will be primarily focused on the development of small and medium enterprises and strengthening the non-oil sector of the economy.
Both deals are important for propelling Kazakhstan further towards its stated aim of becoming one of the world’s top 30 economies by 2050.
The world’s main financial institutions appear to believe that the Kazakh economy can achieve this, or at least can punch further above its weight.
One experienced financial professional in Almaty was more candid, however. “If the money is directed towards the development of infrastructure and the private sector, then it’s a good thing. Otherwise, it can be a waste,” he said.
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(News report from Issue No. 183, published on May 7 2014)
APRIL 29 2014 (The Conway Bulletin) — Kazakhstan is going to introduce a minimum capital banking requirement that will probably whittle down the number of banks in the country.
The head of the Kazakh Central Bank, Kairat Kelimbetov, said that to meet requirements laid out in Basel-III, a set of banking benchmarks drawn up after the global financial crisis of 2008/9, banks in Kazakhstan would have to increase their capital to 100b tenge ($550m) by 2019. T
his new requirement, analysts have since said, will cut the number of banks in Kazakhstan to roughly 15 to 20, from the current 38.
For Kazakhstan’s Central Bank this is undoubtedly a positive. It takes the view that the Kazakh banking sector needs to be reformed. There are currently too many banks and too many banks with large bad loan portfolios.
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(News report from Issue No. 182, published on April 30 2014)
APRIL 14 2014 (The Conway Bulletin) — Two Azerbaijani banks secured multi-million dollar loans from foreign lenders, underlining confidence in Azerbaijan’s economy. AccessBank secured a $60m loan for microfinance deals and International Bank of Azerbaijan secured a $125m loan to lend to other companies.
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(News report from Issue No. 180, published on April 16 2014)
APRIL 11 2014 (The Conway Bulletin) — Kazakh businesses and consumers need to learn to re-pay loans, Kazakhstan’s President Nursultan Nazarbayev said in a rare foray into personal finance. Mr Nazarbayev’s frustration is understandable. Kazakhstan has one of the highest proportions of bad loans in the world, hindering its economy.
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(News report from Issue No. 180, published on April 16 2014)
APRIL 9 2014 (The Conway Bulletin) — Georgia is considering launching a state-run development bank to support large-scale infrastructure projects, media reported. Former Georgian PM and head of the Georgian Dream coalition Bidzina Ivanishvili first voiced the idea of a Georgian Development Bank.
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(News report from Issue No. 180, published on April 16 2014)
APRIL 6 2014 (The Conway Bulletin) — Kazkommertsbank (KazKom), Kazakhstan’s biggest lender, said it made a profit of $288m last year, turning around a loss in 2012. KazKom’s ratio of non-performing loans, though, remained a stubbornly high 32.4%. Kazakhstan has made a priority of reducing its non-performing loans.
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(News report from Issue No. 179, published on April 9 2014)
MARCH 27 2014 (The Conway Bulletin) — Although electronic transactions are growing, Kazakhstan is still a predominantly cash-based society, analysis has shown.
Last year the number of credit and debit cards in circulation grew by 20% in Kazakhstan but the amount of electronic transactions by only 9%.
It feels as if consumers in Kazakhstan still have a mental aversion to using cashless payment models.
Payday for government workers in Kazakhstan is on the 10th day of each month. That’s when the tell-tale queues of people converting their electronic salaries into hard cash form outside branches of Halyk Bank.
It’s also a symbolic illustration of the problem that the Kazakh Central Bank needs to address.
Switching to a more cashless society is important as it is a mark of development. An increased number of electronic transactions in an economy also means that more taxes are paid and the financial system is, generally, more robust.
Alisher, a worker at Eurasia Bank in Almaty, puzzled over the problem.
“Our cards do not carry charges for electronic payments, yet customers refrain from using them,” he said. “Instead they pay withdrawal fees or simply forget that the piece of plastic they are carrying in their wallet is actually an instrument that could save them money and time.”
The problem, though, is not purely the mentality of the consumers. Many shops in Kazakhstan still do not have the right equipment. This is changing, though, and from July 1, new laws will mean that all shops will have to carry card reading machines.
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(News report from Issue No. 178, published on April 2 2014)
