Tag Archives: business

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)

Start of CASA-1000 pushed back to 2020

BISHKEK, FEB. 1 2017 (The Conway Bulletin) — A delay in handing out a contract to build two converter stations has pushed back the start date of the CASA-1000 project which aims to send electricity generated by hydropower stations in Tajikistan and Kyrgyzstan to Afghanistan and Pakistan.

Pakistan’s Express-Tribune newspaper quoted an unnamed Pakistani official as saying that French engineering company Alstom had asked for more time to put in a bid to build two converter stations.

“Four countries that are part of the project – Tajikistan, Kyrgyzstan, Afghanistan and Pakistan – have agreed to give relaxation in the timeframe keeping in view the request of Alstom, which is a credible name and a major supplier of converter stations across the world,” the newspaper quoted the official as saying.

“Now, this project is likely to be ready in 2020.”

CASA-1000 had been due to start up either at the end of this year or in 2018. It is backed by the World Bank and is considered a vital economic and strategic link between Central Asia and South Asia, binding the two regions together, providing an export product for Tajikistan and Kyrgyzstan and electricity for Pakistan and Afghanistan.

The two converter stations are vital to the CASA-1000 project. One will be sited in Tajikistan and the other in Pakistan.

The value of the tender has not been released but the names of the companies bidding for it have been. They are the US’ GE, Japan’s Mitsubishi, Germany’s Siemens and Alstom.

For the West the CASA-1000 project also has major significance as the physical implementation of the north-south Silk Road trade route that Hillary Clinton touted in 2011 when she was US Secretary of State.

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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)

Armenia and Russia to set up new airline

JAN. 26 2017 (The Conway Bulletin) — Russia and Armenia are likely to set up a new airline to fly routes between Yerevan and Moscow, Vahan Martirosyan, Armenia’s communications and technology minister, was quoted as saying. Armenia has been without a national flag-carrier since 2013 when Armavia was declared bankrupt. The privately-owned Armenia, a low-cost airline, started flights last year to Russia.

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

Gazprom to buy Kazakh gas

JAN. 24 2017 (The Conway Bulletin) — Russia’s Gazprom will buy 12.8b cubic metres of gas from Kazakhstan in 2017 continuing its strategy of preferring Kazakh gas suppliers over other regional companies. Kazmunaigas has boosted its cooperation with Gazprom over the past few years while other state companies linked to Turkmenistan and Uzbekistan have lost ground.

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

Dutch chip maker to set up plant in Kazakhstan

JAN. 25 2017 (The Conway Bulletin) — Dutch potato chip manufacturer Farm Frites is considering setting up a plant in northeast Kazakhstan, Kazakh deputy PM Askar Myrzakhmetov, Kazakh deputy PM and agriculture, said. Farm Frites supplies frozen potato chips to restaurants. A deal with Koktem Agricultural services, the company it is negotiating with, would give the Kazakh government a boost as it has said it wants to diversify away from oil and gas.

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

Azerbaijan to complete railway to Turkey

JAN. 22 2017 (The Conway Bulletin) — The 840km Baku-Tbilisi-Kars railway link between the Caspian Sea and central Turkey will be completed in the next two months, Turkish energy minister Ahmet Arslan told media. The route is seen as a vital piece of infrastructure linking Europe and China. Mr Arslan said is would double the cargo capacity between Turkey and the Caspian Sea and become an important part of China’s so called “One Belt, One Road” trade project.

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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)