Tag Archives: banking

Stock Market: Central Asia Metals

JUNE 12 2017 (The Bulletin) — Shares in Central Asia Metals (CAM), the Kazakhstan focused miner, stayed steady this week on the London Stock Exchange despite some early calls by stock analysts to buy into it.

At the end of the week it was trading at 220p, roughly the level it has been anchored to since the start of May.

Still, some analysts said that now was a good time to buy into CAM. Peel Hunt has a target price of 290p against CAM, up from 270p. Canaccord Genuity also gives the stock a buy rating.

Across the Caspian Sea, Bank of Georgia, has also been given a lift by analysts. Investec raised its target price for Bank of Georgia to 4,000p from 3,950p. Several other brokerages moved their guidance to a ‘buy’ rating too.

Last month it issued the first ever corporate debt in Georgian lari, attracting widespread publicity. The IFC, part of the World Bank, said that it would step into support the lari issues, agreeing to buy up to a third of the $250m bond sale. Reports said that 20 other institutional investors had applied to buy a total of $207m of the bond, meaning the the IFC ended up with a smaller stake than it had offered.

Kaha Kiknavelidze, Bank of Georgia CEO, said: “IFC’s bid gave us great support in building investor confidence and creating early momentum in book build.”

ENDS

(News report from Issue No. 332, published on June 12 2017)

Kazakh Banks make deal

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JUNE 2 2017 (The Bulletin) — Halyk Bank will buy Kazkommertsbank’s two largest shareholder’s combined stake of 54% for a nominal fee of $1, Reuters reported. The nominal fee highlights the state-sponsored natured of the merger, agreed in March, between the country’s two largest banks. Under the deal, a government unit set up to buy banks’ bad debt will buy 2.4 trillion tenge ($7.5b) of bad debt from the new bank. Kazkommertsbank’s two biggest shareholder are Kenes Rakishev, a financier close to the elite, and Samruk Kazyna, the sovereign wealth fund.

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(News report from Issue No. 331, published on June 5 2017)

More Azerbaijani banks rely on state support to survive

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MAY 30 2017 (The Bulletin) — Five more Azerbaijani banks are currently failing to meet their capitalisation requirements, Rufat Aslani, head of the Financial Markets Supervisory Authority told media, suggesting more weakness in the sector.

In May, Azerbaijan’s biggest bank, the International Bank of Azerbaijan, which is 80% owned by the government and has a market share of around 60%, said that it needed to restructure its debt to stave off bankruptcy.

Now, after a series of small banks merged or went bankrupt in 2016, it has emerged that five mid-sized banks are still under the special supervision of Azerbaijan’s Financial Market Supervisory Authority.

“Today, under our supervision, there are five banks, capitalisation programs of which should be completed by mid-2017,” media quoted Mr Aslani as saying at a banking conference in Baku.

Mr Aslani did not name the banks but the Business New Europe magazine named three of them as Unibank, AtaBank and DemirBank — all mid-sized banks. None of the banks responded to requests for comment. The EBRD owns a 25% stake in DemirBank and Dutch development finance company FMO owns a 10% stake.

The Central Bank has imposed increased capitalisation rules to strengthen the sector. A recession in Russia and a collapse in oil prices since 2014 have halved the value of the Azerbaijani manat and heavily dented the banking sector.

Analysts had warned that Azerbaijani banks have been too relaxed about lending.

The currency devaluation and poor economic conditions have triggered a surge in bad debt which Moody’s, the rating agency, said stood at 30% of the banking sector’s loan portfolio.

ENDS

(News report from Issue No. 331, published on June 5 2017)

Profit at Georgia’s TBC Bank rises 65%

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TBILISI, MAY 22 2017 (The Conway Bulletin) — Georgia’s TBC Bank posted Q1 profit up by around 65% because it completed the integration of a smaller bank it bought last year sooner than expected.

Specifically, pre-tax profit rose to 96.6m lari ($40.08m) and revenues rose 40% to 203m lari. TBC Bank is listed on the LSE. Its share price rose to 1,700p from around 1,600p after the results announcement. At the end of last year, TBC bought Bank Republic, making it the biggest bank in Georgia in terms of loans.

TBC Bank said: “One of our main strategic objectives for 2017 is to deepen the relationship with our clients and offer our existing and newly acquired Bank Republic customers the best-in-class products and services.”

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(News report from Issue No. 330, published on May 28 2017)

Kazakh CB chief orders IBA debt investigation

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MAY 24 2017 (The Conway Bulletin) — Kazakh Central Bank chief Daniyer Akishev said that he had ordered an investigation into why Kazakhstan’s state-run pension fund had bought $250m of debt from the International Bank of Azerbaijan (IBA) in October 2014, just as the price of oil started to collapse. Oil is Azerbaijan’s main export and its collapse triggered an economic downturn. This month IBA said that it was having to restructure its debt.

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(News report from Issue No. 330, published on May 28 2017)

Two smaller Kazakh banks set to merge

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ALMATY, MAY 23 2017 (The Conway Bulletin) — Two small Kazakh banks, RBK Bank and Qazaq Banki, said that they were preparing to merger, marking more consolidation in Kazakhstan’s finance sector.

Kazakh banks have been encouraged to merge in a drive designed to strengthen the sector which analysts have said has become weak and fragmented.

In a statement, RBK said: “The decision to merge was dictated by a desire from shareholders to use the new business opportunities in a changing economic environment.”

Both RBK and Qazaq Banki are linked closely to members of the Kazakh elite, including Dinmukhamed Idrisov, Kazakhstan’s 20th wealthiest man according to Forbes. He owns stakes of under 10% in both banks.

Earlier this year, Halyk Bank and Kazkommertzbank, Kazakhstan’s two biggest banks, agreed to merge creating a mega bank with around 40% of the market. The new bank will be controlled by Halyk, which is owned by the daughter of Kazakh President Nursultan Nazarbayev and her husband, Timur Kulibayev.

Kazakh banks accrued a high proportion of bad loans over the past few years because of a downturn in economic conditions linked a fall in oil prices and a recession in Russia.

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(News report from Issue No. 330, published on May 28 2017)

IBA creditors criticise debt restructure deal in Azerbijan

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LONDON, MAY 23 2017 (The Conway Bulletin) — Azerbaijan’s reputation for economic competence was dealt another blow after creditors of the International Bank of Azerbaijan lined up to criticise a debt restructuring plan.

Senior officials unveiled the plan at a tense meeting with creditors in London, nearly two weeks after IBA failed to pay a scheduled repayment on a $100m loan. IBA now says that it has to restructure $3.3b of debt. This includes forcing creditors to take a 20% writedown.

In a statement after the meetings, Fitch the ratings agency said that the restructuring plan would effectively nationalise IBA’s debt without offering any essential structural reforms.

“The Negative Outlook reflects continued risks and uncertainty around the macroeconomic and financial sector adjustment under way,” it said.

IBA also said that it would sell off its subsidiaries in Russia and Georgia, IBA-Moscow and IBA-Georgia, as part of its restructuring plan.

IBA controls around 60% of Azerbaijan’s banking sector. The sector has been hit hard by the collapse in the price of oil which Azerbaijan relies on for income. This knocked around 50% off the value of the Azerbaijani manat in 2015/16 and forced the economy into a sharp recession.

Azerbaijani banks’ bad loans portfolios have grown forcing several to declare bankruptcy or merge.

The government has ploughed money into IBA to prevent it from defaulting, increasing its stake to 80% from 55%, and bought its bad debt.

Despite this state support, IBA still failed, embarrassing the government and its senior management.

Now, though, creditors have to decide whether to back the restructuring plan with a two-thirds majority needed to proceed. At its core the restructuring deal means that creditors will swap IBA debt for sovereign bonds, most at a 20% discount.

Many creditors were unimpressed.

Lutz Roehmeyer bonds at Landesbank Berlin Investment, including IBA debt, told Bloomberg News that he planned to vote against the deal.

Kazakhstan’s state pension fund is among the major creditors of IBA. Last week it emerged that it had bought $250m of IBA debt in 2014, shortly after the oil price had started to fall, drawing allegations of incompetence from MPs. The Kazakh Central Bank has opened an investigation into the purchase.

ENDS

(News report from Issue No. 330, published on May 28 2017)

Kazakh CB bans Delta Bank

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MAY 22 2017 (The Conway Bulletin) — Kazakhstan Central Bank banned Delta Bank, the 14th biggest bank in the country, from opening up any new customer accounts until mid- June because it had missed a series of payment deadlines. Kazakhstan’s banking sector has been under increased pressure because of an economic downturn linked to a drop in oil prices and a recession in Russia.

ENDS

(News report from Issue No. 330, published on May 28 2017)

Bank of Georgia issues first ever lari denominated debt

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TBILISI, MAY 23 2017 (The Conway Bulletin) — London-listed Bank of Georgia issued 500m lari of debt ($200m), the first corporate bond denominated in Georgia’s national currency.

Georgian PM Giorgi Kvirikashvili said that the issue was a major victory for Georgia and showed that investors had confidence in the national economy and the national currency.

“International investors trust our country and our national currency. It is a momentous event, and I would like to congratulate everyone,” he said.

The Bank of Georgia debt is due to mature in 2020 and has a coupon of 11%.

Fitch the ratings agency gave the Bank of Georgia debt issue a BB- rating and said that this “reflects the bank’s adequate asset quality, reasonable capitalisation, sound profitability metrics and stable funding profile.”

Bank of Georgia has been listed on the London stock exchange since 2012. Its stock is now trading at 3,744p, an all-time high, against a price of around 3,000p in January.

For investors in the West, the Bank of Georgia debt issue not only gives them exposure to the Georgian financial sector but also to the lari. It has performed well this year, currently trading at 2.41/$1 compared to 2.76/$1 at the start of the year.

Much of this strengthening has been linked to a general uplift for Emerging Market stock and currencies as oil prices have stabilised, but some of it is specific to Georgia. Western analysts rate Georgia’s economy as the most diversified in the region and best equipped to cope with shocks.

Bank of Georgia and local rival TBC are the only banks in Central Asia and the South Caucasus to be listed on the LSE.

ENDS

(News report from Issue No. 330, published on May 28 2017)

Stock market: Georgia’s TBC, Kaz Minerals

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MAY 28 2017 (The Conway Bulletin) — Profit at Georgia’s London-listed TBC Bank rose by two-thirds to nearly 100m lari ($40m) highlighting the increasingly upbeat assessment of the Georgian banking sector.

The bumper results also pushed up TBC’s share price to an all-time high of 1,695p. This is nearly an 18% increase from the start of the year and is an increase of roughly 65% from when TBC listed in August.

The main driver of this improvement has been an overall strengthening of Georgia’s economy. The region has been hit hard by a downturn in economic conditions, linked to a collapse in oil prices and also a recession in Russia.

TBC’s main rival, the London- listed Bank of Georgia, has also been hitting similar all-time highs. As well as boosting its stock price, Bank of Georgia also gain a PR boost when it issued 500m lari debt, the first corporate issue in lari.

Elsewhere, KAZ Minerals has been performing well. It’s been yoyo-ing around and has regained much of the ground lost in March. KAZ Minerals is a major copper producer and its share price follows copper prices to a large extent.

It is now trading at 506p, up from 430p at the beginning of the month but down from highs of 589p hit in mid-February.

KAZ Minerals used to by known as Kazakmys, which was linked by transparency campaigners to Kazakh Pres. Nursultan Nazarbayev.Stock market: Georgia’s TBC, Kaz minerals