Tag Archives: banking

Kapparova quits KazInvestBank

JAN. 11 2017 (The Conway Bulletin) — Gahaur Kapparova, the widow of the former head of Kazatomprom, the Kazakh nuclear agency, has quit her 10% stake in KazInvestBank, less than two weeks after the Central Bank pulled its banking licence. According to data filed at the Kazakh Stock Exchange, the biggest shareholder in KazInvestBank is now Nurzhan Dzhanabekov, the bank’s CEO, with 15.3%. Ms Kapparova’s husband, Nurlan Kapparov, died from a heart attack during a business trip to China in 2015.

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

Tajikistan prepares $490m rescue plan for failing banks

DEC. 21 2016 (The Conway Bulletin) — Tajikistan’s government said it would spend $490m, around a fifth of its total budget, on rescuing its banking sector from collapse.

It will pump the cash mainly into Tajikistan’s two biggest lenders, Agroinvestbank and Tojiksodirot- bank, to boost their liquidity and protect them from bankruptcy.

Both banks have neared collapse this year, only being saved by previous government bailouts. Earlier this month, Tojiksodirotbank was taken out of administration. It had been run by Central Bank officials since May.

Two smaller banks, Tajprombank and Fononbank, will also receive funds.

Abdusalom Kurbanov, the Tajik finance minister, said the government had no choice but to intervene heavily to save the banks.

“This decision is aimed at the sustainable development of the banking system, the preservation of public confidence in the banks and the return of deposits,” media quoted him as saying.

Tajikistan is the most remittance- dependent country in the world and a recession in Russia has sucked its economy dry. Its somoni currency has also fallen apart over the past couple of years as the US dollar strengthens and low commodity prices continue to undermine confidence in Emerging Markets.

Earlier this year, a run on the banks in Tajikistan betrayed just how nervous people had become over the stability of the banks. Many ATMs ran out of cash.

Tajikistan has asked for advice from both the European Bank for Reconstruction and Development (EBRD) and the IMF, although it has yet to take any financial aid. This is probably because, despite a handful of missions to Dushanbe, the IMF and Tajikistan couldn’t agree on a set of conditions to guarantee the loan.

On a visit to Central Asia in October, Juha Kahkonen, IMF deputy director for the Middle East and Central Asia, said that it had moved closer to agreeing conditions for a loan. It also described the state of the Tajik banking sector as dire.

“Discussions will continue in the coming weeks and we hope the programme can be agreed in the coming months,” he told Reuters on a trip to Almaty.

But he also said: “Their [Tajik banks] lending practices have not been very sound. Non-performing loans are about half of total loans.”

Central Bank data showed that the share of non-performing loans had risen to 58.7% of the banks’ loan portfolios from 37.8% in September.

Banking systems across the region are creaking. A Handful of smaller banks in Azerbaijan have gone bankrupt and several are under pressure in Kazakhstan. The region’s financial system has been fragile for years. After the 2008/9 Global Financial Crisis, Kazakh banks were left with one of the world’s biggest bad debt ratios, forcing the government to pump billions of dollars into the system.

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(News report from Issue No. 310, published on Dec. 23 2016)

Kazakh bank appoints new CEO

DEC. 20 2016 (The Conway Bulletin) — ForteBank, one of the biggest banks in Kazakhstan, appointed Magzhan Auezov, who had been CEO of Kazkommertzbank for one year until mid-April, as its new CEO. Mr Auezov, a career banker, was brought into Kazkommertzbank to oversee its merger with BTA Bank. He left Kazkommterzbank, now rebranded as QazQom, in April to head the local banking lobby group. As well as taking over as CEO of ForteBank, Mr Auezov has also been made the CEO of Kassa Nova Bank. Both banks are majority owned by Bulat Utemuratov, considered to be close to Kazakh president Nursultan Nazarbayev.

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(News report from Issue No. 310, published on Dec. 23 2016)

Comment: Kazakhstan wants to stimulate mortgages, explains Toleukhanova

DEC. 23 2016 (The Conway Bulletin) — Land has been an emotional issue in Kazakhstan.

In the spring, Kazakhstan saw some of its biggest ever protests with thousands of people demonstrating over plans to give foreigners more rights to land. The protests worried the government and also drew attention to existing laws which granted 1kmsq of free land to every Kazakh. Land is cheap in Kazakhstan, the ninth largest country in the world with a population of just 17m.

Since then hundreds of thousands of people have applied to receive their free slice of Kazakh steppe. This is rough land with no infrastructure, exposed to some of the harshest weather conditions south of the Arctic.

Faced with a sharp economic downturn, Kazakh President Nursultan Nazarbayev has been eager to please. He’s promised to build the infrastructure needed to make the land liveable. The problem is the Kazakh government doesn’t have much money.

Instead, the Kazakh government wants to attract private investment. Primarily, it aims to encourage private construction companies to stimulate construction with affordable loans and to trigger a house-buying boom by subsidising mortgages.

The new government program is called Nurly Zher, which means Bright Land in Kazakh.

Economy minister Kuandyk Bishimbayev has said that the government expects GDP to increase by 7.7% during the whole period of the programme and create annually 25,000 jobs.

But experts are doubtful. Kazakhstan needs comprehensive structural economic reforms rather than government handouts.

Representatives from business and the economy say people can’t even afford subsidised mortgages. Commercial banks are also wary of handing out mortgages. A 50% devaluation of the tenge has triggered a lack of confidence. Bad debt levels are approaching danger levels. This is coupled to a lack of political will. Ministers usually implement government programmes initiated by the President but rarely initiate something of their own. The price of failure would be too great. The unwillingness to dig deep into problems and concentrate only on surface issues is typical of the Kazakh government and reflect a political stagnation .

By Aigerim Toleukhanova, the Bulletin’s Almaty correspondent

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(News report from Issue No. 310, published on Dec. 23 2016)

Fitch downgrades Kazakh bank

DEC. 20 2016 (The Conway Bulletin) — The Fitch ratings agency downgraded the rating of Kazakhstan’s third largest bank Tsesnabank to B from B+ because of a drop in the quality of its loan portfolio. The downgrade and drop in loan quality are a reflection of the pressures that the Kazakh economy is under. The tenge has lost around half its value in the past couple of years, pressuring households with foreign currency loans and mortgages.

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(News report from Issue No. 310, published on Dec. 23 2016)

Tajikistan’s TSB bank re-starts normal activities after state rescue

DEC. 14 2016 (The Conway Bulletin) — Tajikistan’s Central Bank said that Tojiksodirotbank (TSB), the country’s troubled second-largest lender, has completed its temporary administration period and will now resume banking activities.

The Central Bank intervened in TSB in May, saving the bank from bankruptcy. It cut staff numbers and injected 2b somoni ($254m) into the bank, becoming an 80% shareholder. Sources cited by the Avesta news agency also said the government had injected 1.2b somoni ($152m) into Agroinvestbank and hundreds of millions of somoni into Fononbank and Tochprombank to save them from going bankrupt too.

These banks had suffered a liquidity shortage triggered by a fall in the value of the somoni and a steep rise in bad loans. Savers and government employees, who received salaries through banks were unable to access their funds.

Now, TSB said it will soon resume regular banking activity.

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(News report from Issue No. 309, published on Dec. 16 2016)f

EBRD gives loan to Armenian bank

DEC. 15 2016 (The Conway Bulletin) — The EBRD sent a $10m loan to Ameriabank, Armenia’s largest bank by assets, to promote credit to women-led small and medium enterprises. The EBRD also sent a $3b loan to ACBA-Credit Agricole Bank, one of the largest lenders to Armenia’s agriculture sector. The loan is part of the EBRD’s Women in Business programme, which includes Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

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(News report from Issue No. 309, published on Dec. 16 2016)f

Tajik Banks

DEC. 16 2016 (The Conway Bulletin) — News that Tojiksodirotbank had resumed banking activities might have been a relief for its many customers, but it’s still keeping the Central Bank’s officials on the edge of their seats.

Injecting around $500m, as it did to save Tojiksodirotbank from going bankrupt, into the banking system was not a joke for the Tajik government. It is struggling to keep its somoni currency afloat against a strengthening US dollar and has faced a severe downturn in remittances from migrant workers, an important part of Tajikistan’s economy.

Tajikistan is one of the world’s most remittance-dependent countries. Transfers from workers abroad accounted for around half of the country’s GDP a few years ago.

Now, the picture might be different. The Central Bank has blamed the liquidity crisis in the banking sector on the shrinking remittances, projected to decrease again this year. In two years, between 2014-2015, remittances had fallen by 47% from $3.9b.

The combination of these events put increasingly pressure on the banking sector, which risked default earlier this year. The government intervention seems to have plugged the main hole, but the crisis is far from over.

With the bailout, the government inherited the banks’ shaky credit portfolio. For regular people, the pressure on the economy has made it increasingly difficult to pay back their debt. In addition, several state-owned companies that had borrowed heavily in previous years have started to show signs of insolvency.

The government knows well enough that it is simply not in a position to bail out its entire economy.

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(News report from Issue No. 309, published on Dec. 16 2016)f

Kazakhstan’s Samruk-Kazyna fails to obtain a review

NOV. 28 2016 (The Conway Bulletin) — Kazakhstan’s sovereign wealth fund Samruk-Kazyna failed to obtain a review of a US court case that deemed the fund liable for the misrepresentation of BTA Bank bonds sold abroad in 2010-2012. The US court said in February that the Kazakh fund had concealed information regarding dealings with BTA that led to the bank’s default in 2012. The decision was significant because it marked an exception to the Foreign Sovereign Immunities Act which protects activities by sovereign wealth funds.

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(News report from Issue No. 307, published on Dec. 2 2016)

BGEO results on Georgia increase

NOV. 21 2016 (The Conway Bulletin) — London-listed investment holding BGEO posted a 24% growth in revenues in Q3, compared to the same period last year. BGEO’s main assets are Bank of Georgia and Georgia Healthcare Group (GHG). GHG accounted for the group’s largest growth rate. In the first nine months of the year, GHG posted revenues for 290.4m lari ($116.6), up 64.8% from 2015.

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(News report from Issue No. 306, published on Nov. 25 2016)