Tag Archives: banking

Business comment: Bailing out savers

OCT. 7 2015 (The Conway Bulletin) — Banks in Kazakhstan and Kyrgyzstan are bracing themselves for tough times ahead. The currency crisis that has hit the region has, it feels, still a long way to run. Central Banks in both countries have pledged to help commercial banks in the short term to prevent falls in the values of the tenge and som from spiraling into panic and a run on the banks.

This is sensible.

The Kazakh Central Bank said it would compensate savings accounts in tenge that have so far lost 46% in US dollar terms after the regulator moved to a free-float policy. Across the border, in Bishkek, the Central Bank laid out new measures to help customers pay their dollar- denominated mortgages, which have become more expensive as the som lost value.

When people lose confidence in their currency, as is happening across Central Asia and the South

Caucasus, Central Banks intervene. In both countries, new policies were adopted to limit the amount of loans in foreign currencies, to ensure stability in the market.

These short-term measures, however, may have serious repercussions down the road. Bailouts can have an adverse effect on these countries’ sovereign ratings and they could, in any case, be insufficient to reverse the economic downturn.

Let’s see how these policies fair against a falling currency market.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Tajikistan arrests bank chief

OCT. 7 2015 (The Conway Bulletin) -Tajik authorities arrested Samikhon Kurbonov, the former chairman of Fononbonk, because of his family ties to Saidumar Khusaini, a high- ranking member of the now banned Islamic Renaissance Party of Tajikistan (IRPT). Last week, Tajikistan’s Central Bank also placed Fononbonk under receivership.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakh bank completes buyback

SEPT. 29 2015 (The Conway Bulletin) — Kazakh lender BTA Bank completed the buyout of its shares from Samruk- Kazyna by buying the final 4.26% stake that Kazakhstan’s sovereign wealth fund owned in it. Samruk-Kazyna bought BTA to save it from collapse during the Global Financial Crisis of 2008/9. Over the past year, Kazkommertsbank, another Kazakh bank, has merged with BTA Bank.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Kyrgyzstan wants China to enter its banking sector

SEPT. 25 2015 (The Conway Bulletin) – Looking to court China, Kyrgyzstan’s deputy PM Valery Dil said China should buy one of the country’s commercial banks. China is a vital investor for Central Asian states.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Uzbek President meets Korea bank

SEPT. 23 2015 (The Conway Bulletin) – Uzbek president Islam Karimov met with Lee Duk-hoon, President of the Korean state-owned Eximbank in Tashkent to discuss Korean investments in the country. After the negotiations, Mr Lee brokered the signing of an inter-banking agreement with Asaka Bank, opening a credit line of $160m for Uzbekistan. Korean Eximbank is a key partner for Uzbekistan’s infrastructure and banking projects.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakh Central Bank wants loans in tenge

SEPT. 23 2015, ALMATY (The Conway Bulletin) — The Kazakh Central Bank presented a bill to parliament that will force people to take loans in tenge, a tactic it says is necessary to wean the economy off its addiction to US dollars.

Shaken by a 40% drop in the value of the tenge over the past 18 months, the Central Bank wants to ensure that commercial banks do not accrue a large amount of bad loans in US dollars as they did during the 2008/9 Global Financial crisis.

“This is an effort to protect customer’s rights and to decrease the rate of non-performing loans for second-tier banks,” Kuat Kozhakhmetov, deputy chairman of the Central Bank, said when he presented the bill to the parliament.

If the bill becomes law, people who have not earned their salary in a foreign currency for the 6 months before asking for a loan will will only be able to apply for a tenge loan.

According to a recent IMF study, almost 60% of the total loans issued by financial institutions in Kazakhstan are denominated in a foreign currency. The Central Bank also said that 14% of mortgages are currently denominated in foreign currencies.

People in Kazakhstan have used foreign currency loans to buy goods indexed to the US dollar or the Russian rouble, such as houses or cars. Salaries are often paid in tenge but are indexed to the US dollar.

A fall it the value of oil and a slump in the Russian economy has pressured the tenge and other regional currencies. Loans taken out in US dollars have become much more expensive to service.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Visa signs Tajik deal

SEPT. 21 2015 (The Conway Bulletin) — US-based Visa International and Tajikistan’s Central Bank signed an agreement to resolve a long-standing problem with payments and mutual settlements in the country. Media quoted Jamshed Nurmakhmadzoda, the Tajik Central Bank chairman, as saying: “Prior to this, Visa card holders could incur financial losses during the transactions.” The move is poised to increase the population’s confidence in cashless payment methods.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Stock market: Centerra Gold, KAZ Minerals

SEPT. 11-18 2015 (The Conway Bulletin) — Canadian mining company Centerra Gold saw its stock price on the Toronto Stock Exchange jump over 16% to 7.34 Canadian dollars, after having slumped in the past three weeks, due to the signing of a new exploration licence in British Columbia. Centerra’s main asset, the Kumtor gold mine, is located in Kyrgyzstan. London listed KAZ Minerals, was down 6% to 152 pence due to low copper prices. Kazakhstan-focused Roxi Petroleum gained 4.4% this week, to 8.75 pence.

Kcell, one of Kazakhstan’s largest telecoms, lost 2% on Sept. 17 after its mother company TeliaSonera said it would leave Eurasian markets.

London-listed Bank of Georgia surged 3.9% this week to 1,907 pence. The GDR stock of Georgia’s TBC Bank lost 6.5% this week in London, down to $9.25 per share, though it had fallen to $9.11 on Sept. 14.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Kyrgyz bank to issue debt

SEPT. 16 2015 (The Conway Bulletin) — The Kyrgyz Investment and Credit Bank (KICB), a popular lender in Kyrgyzstan, said it wants to issue debt worth 200m som ($2.9m), its largest ever issue. “The total amount of outstanding debt securities issued by the bank has reached 450m som, about 1% of the total volume of the bank’s liabilities,” Aliyev Bektur Kubanychbekovich, KICB deputy chairman, told local media.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

S&P affirms BBB- for Kazakhstan

SEPT. 11 2015 (The Conway Bulletin) — Rating agency Standard & Poor’s affirmed Kazakhstan’s long-term sovereign debt rating at BBB with a negative outlook, but said weak governance hindered economic performance. It also highlighted limited monetary flexibility and an over-dependence on hydrocarbons as weaknesses.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)