Tag Archives: banking

Kazakhstan promises to prop up banks with $6.5b fund

ALMATY, FEB. 13 2017 (The Conway Bulletin) — The Kazakh government is preparing what would amount to a 2 trillion tenge ($6.5b) bailout of its banking sector only eight years after it was forced to buy up a handful of failing banks during the Global Financial Crisis of 2008/9.

The plan is a virtual admission that policies brought in by the Central Bank since the Global Finance Crisis have failed to prevent another banking meltdown.

The sharp economic downturn triggered by a collapse in oil price in mid-2014, has wiped out jobs, pressured inflation and knocked 50% off the value of the tenge. Despite being forced to increase their capital and pass Central Bank stress tests, the Kazakh banking sector has been hit badly and is now holding billions of dollars of bad debt.

Earlier this month, the IMF said that urgent action was needed to stave off another banking collapse. Now that warning appears to have been heeded by the Kazakh government after it announced the emergency plan.

In a statement on the finance ministry’s website, Bakhyt Sultanov, the finance minister, said that the government would pull in funds from the country’s oil wealth fund to plug the financial shortfall.

The Interfax news agency later reported by quoting the deputy governor of the Central Bank, Oleg Smolyakov, that the cash would be injected into the government’s Problem Loan Fund, through which it has been funnelling cash to banks.

The government has already doubled its loans to troubled banks to 400b tenge ($1.3b), half of which has been borrowed by Kazkommertsbank.

Kazkommertsbank bought the debt-laden BTA Bank in 2014/15 in a deal heavy with political undertones. It is now in talks with Halyk Bank, owned by President Nursultan Nazarbayev’s daughter Dinara and her husband Timur Kulibayev, to merge and create a banking giant.

ENDS

(News report from Issue No. 317, published on Feb.17 2017)

Iran considers setting up bank in Azerbaijan

FEB. 16 2017 (The Conway Bulletin) — Iran’s state-owned Bank Melli is considering spinning off its branches in Azerbaijan into an independent bank, Valiollah Seif, the Iranian Central Bank chief, told the Trend news agency.

If a new Iran-owned bank does emerge in Azerbaijan, it will mark a major watershed in relations between the two countries. These relations have improved markedly over the past couple of years, since Hassan Rouhani became Iran’s president in 2013. Under Mr Rouhani’s predecessor, Mahmoud Ahmadinejad, war had at times appeared likely.

In the interview, Mr Seif also said that he had held talks with this counterparts in Azerbaijan to set up a joint bank run by the two neighbours.

Azerbaijan’s banking sector has been roiled by an economic down- turn linked to a collapse in oil prices and it is likely that any move by Iran to set up a fully-owned bank in Azerbaijan will be driven by politics as much as by economics.

ENDS

(News report from Issue No. 317, published on Feb.17 2017)

Kazakh banking sector in bad shape, say IMF

FEB. 9 2017 (The Conway Bulletin) — Kazakhstan’s banking sector needs urgent care and attention if the country is going to be able to pull through an economic downturn that has destroyed growth and wiped out people’s ability to pay back loans. The IMF said that a large proportion of the banks’ loans and assets were linked to the construction sector which has been particularly hard hit. Kazakhstan’s Central Bank has said that it would be willing to use state funds to support banks.

ENDS

(News report from Issue No. 316, published on Feb. 10 2017)

Tajik banks to be investigated

FEB. 8 2017 (The Conway Bulletin) — Prosecutors in Tajikistan have opened investigations in four banks for mismanagement, the US-funded Radio Free Europe/Radio Liberty reported, adding another twist to a worsening Tajik banking crisis. The government had already said that it will bail out three of the bank — Tojiksodirotbank, Agroinvestbank and Tojprombank — before prosecutors said they were going to investigate them too. The fourth bank set to be investigated is state- owned Amonatbank.

ENDS

(News report from Issue No. 316, published on Feb. 10 2017)

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.

ENDS

(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.

ENDS

(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.

ENDS

(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%.

ENDS

(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.

ENDS

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

Kazkom and Halyk Bank agree merger