Tag Archives: banking

Kazakh bank says KKB needs to shed bad assets

JAN. 30 2017 (The Conway Bulletin) — Halyk Bank CEO Umut Shayakhmetova told the Forbes Kazakhstan website that for talks on a merger with Kazkommertsbank to continue, Kazkommertsbank needed to deal with a pile of bad debt it had acquired after taking over BTA Bank in 2014/15. A deal between Halyk Bank, which is owned by Kazakh President Nursultan Nazarbayev’s son-in-law and daughter, would create a banking giant in Kazakhstan that will dominate the banking sector.

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(News report from Issue No. 315, published on Feb. 3 2017)

Azerbaijani bank drops football sponsorship

JAN. 28 2017 (The Conway Bulletin) — The International Bank of Azerbaijan (IBA), majority owned by the Azerbaijani government, has dropped sponsorship of a Baku football team as part of a cost-cutting drive.

Dropping sponsorship of Inter Baku, a top tier team, is another sign that the tough economic conditions have hit IBA hard. A few years ago such a move would have been unimaginable.

“In accordance with new strategic goals limitation of the IBA’s sports support will help the bank optimise its expenses and direct resources to the sphere of finance and banking, which are priority,” IBA chairman Khalid Ahadov said in a statement released by the bank.

“That will increase the efficiency of the recovery processes, conducted with government’s support.”

At the end of January, the Azerbaijani government increased its stake in IBA to 77% from 56% in order to ensure the stability of the bank, Azerbaijan’s biggest. Analysts have been warning for the past 12 months that an economic downturn was pressuring the banking sector in Azerbaijan. The Central Bank has also withdrawn trading licences from some of the smaller banks.

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(News report from Issue No. 315, published on Feb. 3 2017)

New Uzbek bank to support agriculture set up

JAN. 30 2017 (The Conway Bulletin) — Uzbekistan will set up a new bank called Uzagroexportbank to support agriculture and farm exports, media reported. The new bank is another signal that new president Shavkat Mirziyoyev is trying to boost support for independent businesses. Analysts have previously identified agriculture as a way to boost Uzbekistan’s productivity.

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(News report from Issue No. 315, published on Feb. 3 2017)

Korea’s Kookmin Bank says will sell stake in Kazakhstan’s CenterCredit

ALMATY, FEB. 1 2017 (The Conway Bulletin) — After days of rumours, South Korea’s Kookmin Bank confirmed that it would sell its 41.93% stake in Kazakhstan’s CenterCredit Bank to a Kazakh consortium.

The sale will both end an unhappy time in the Kazakh finance sector for Kookmin Bank and also highlight the worsening weaknesses in the Kazakh system.

CenterCredit is Kazakhstan’s fourth largest bank by assets. The consortium buying Kookmin’s share is lead by Tsenabank, which is the third largest bank in Kazakhstan.

“On the basis of preliminary agreements, the Consortium has completed talks with Kookmin on the final conditions for the Consortium to purchase the stake by the now owned by Kookmin Bank,” Tsenabank said in a statement.

It also said that CenterCredit’s chairman, Bakhytbek Baiseitov, would by the 10% stake in the bank now owned by the International Finance Group, part of the World Bank.

Mr Baiseitov is one of the wealthiest men in Kazakhstan. He set up CenterCredit Bank in the late 1980s and made the original deal to sell a 30% stake in it to Kookmin Bank in 2008 for $500m. Kookmin Bankhave had to write down the value of their stake in CenterCredit Bank constantly and it has become to be viewed as one of their worst ever deals. Shortly after buying their first stake in the bank, the Global Financial Crisis hit the Kazakh finance sector, swamping it with bad debt, forcing the government to bail out a handful of banks.

And Kazakhstan’s banking sector has been hit again by a collapse in the value of the tenge, low oil prices and a recession in Russia. The proportion of non-performing loans has risen.

Last year, the ratings agency Fitch said CenterCredit Bank’s ratings were constrained by “high problem loans, low core capital ratios, and modest core profitability.” It said the proportion of bad loans in its portfolio was around 16%. This was one of the highest, with Tsenabank having a bad debt ratio of around 5%.

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(News report from Issue No. 315, published on Feb. 3 2017)

Analysts place Bank of Georgia shares on a ‘buy’ rating

FEB. 3 2017 (The Conway Bulletin) — Shares in the Bank of Georgia rose by more than 50% last year to a peak of 380/$1 in mid-December. Since then they have come off the boil slightly hitting a three-month low of 312/$1 on Jan. 12.

Now, though, things appear to be picking up again. The Bank of Georgia’s share price measured 350/$1 on Feb. 2 and analysts predicted more growth. London- based brokerage Peel Hunt said Bank of Georgia’s subsidiary Georgia Healthcare looked good this year and was likely to see profits rise.

“We update our model to incorporate the strong growth expected in Georgia Healthcare’s profitability,” the broker said, explaining that it had given Bank of Georgia a ‘buy’ rating.

It also said that Georgia’s macroeconomic outlook looked good for Bank of Georgia.

“In addition, we continue to expect Bank of Georgia to benefit from underlying Georgian economic growth, supporting the core Banking division,” the brokerage said.

Last month, Georgia’s Central Bank chief Giorgi Kadagidze said that Georgia’s GDP would grow by more than 4% because of tax cuts, an infrastructure investment plan and a free-trade deal with China.

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(News report from Issue No. 315, published on Feb. 3 2017)

Kazkom and Halyk Bank agree merger

Halyk Bank starts talk with Kazkommertsbank

JAN. 20 2017 (The Conway Bulletin) — Ending weeks of speculation, Halyk Bank, owned by the son-in-law and daughter of Kazakh President Nursultan Nazarbayev, said that it had started talks with Kazkommertsbank, the country’s biggest bank, on merging. A potential merger between the two banks would create a company that would dominate the Kazakh banking sector with a market share of around 40%. Unnamed sources in November 2016 had told Reuters that a merger between the two banks was being discussed in secret.

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(News report from Issue No. 314, published on Jan. 27 2017)

S. Korea to sell its bank in Kazakhstan

JAN. 22 2017 (The Conway Bulletin) — South Korea’s Kookmin Bank is likely to sell its 41.9% stake in Kazakhstan’s Bank CenterCredit because of mounting losses, Korean newspapers reported, a blow to the reputation of the Kazakh banking sector. Kookmin Bank bought its stake in Bank CenterCredit in 2008 for 940b won ($800m) but it has written down the value of the stake several times since then to virtually zero. Kazakh banks have been under mounting pressure over links to bad debt that have built up over the past couple of years as its oil-backed economy has weakened. Bank CenterCredit has been especially vulnerable because of its exposure to the mortgage sector which soured after a 50% devaluation of the tenge in 2015. Bank CenterCredit has not confirmed the reports.

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(News report from Issue No. 314, published on Jan. 27 2017)

Azerbaijani government increases IBA stake

JAN. 27 2017 (The Conway Bulletin) — Azerbaijan’s government has bought another chunk of equity in the country’s largest bank, International Bank of Azerbaijan (IBA), another indicator that its banking sector needs propping up to survive.

IBA issued more shares on Jan. 26, allowing the government to increase its stake in it to 76.73% from 54.96%.

The share purchase appears to fly in the face of a statement by Rufat Aslanli, chairman of Azerbaijan’s financial supervisory agency who said in November that the government would privatise IBA in 2017.

The Trend news agency quoted an IBA statement as saying that the government stake increase was needed to shore up the stability of the bank and to protect it from the downturn. Analysts have been warning that Azerbaijan’s banking sector is particularly fragile with many borrowers unable to repay loans. Azerbaijan’s economy shrank by 3.8% last year and its manat currency has halved in value.

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(News report from Issue No. 314, published on Jan. 27 2017)

Kazakh Central Bank to stress test the sector

JAN. 9 2017 (The Conway Bulletin) — Clearly worried about the solvency of its commercial banks, the Kazakh Central Bank said it intends to stress test the sector in H1 2017. Oleg Smagulov, the deputy chairman of the Kazakh Central Bank, told the kapital.kz website that it wanted to limit banks’ expose to bad debt. Last month it cancelled KazInvestBank’s licence to operate and unnamed sources also told Bloomberg that Kazkomertsbank, the biggest Kazakh bank, may be looking for a government loan.

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(News report from Issue No. 312, published on Jan. 13 2017)