Tag Archives: banking

Nazarbayev orders Central Bank to move to Astana

MAY 19 2015 (The Conway Bulletin) – Kazakh president Nursultan Nazarbayev ordered the Central Bank to move from Almaty to Astana by 2017.

The Central Bank is the last major government institution to move to Astana,
marking the final act of the ascendency of Mr Nazarbayev’s purpose-built capital over the far more louche Almaty.

He built up Astana, after declaring it his new capital in 1997, to reflect his status as the creator of a modern Kazakhstan. New buildings and towers dot the city’s skyline every year.

Now, it appears, Mr Nazarbayev has decided that it’s time for the economic and financial power to be transferred north. Both the Central Bank and Kazakhstan Stock Exchange had remained stubbornly based in Almaty, anchoring other commercial banks to the city. By wrenching the Bank to Astana, Mr Nazarbayev will pull other companies with it.

In 2013, Mr Nazarbayev replaced the popular and independent-minded Grigory Marchenko as Central Bank chief with the more pliant Kariat Kelimbetov.

At the time, the financial community speculated that the change would precede a move north to Astana by the Central Bank. This was denied. Now, it seems, this speculation has been borne out.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Kazakh Central Bank switches policy

MAY 15 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank said it will switch its monetary policy from targeting rigorous exchange rate stability to prioritising hitting inflation targets. Analysts have criticised the Central Bank for being too inflexible with its exchange rate controls.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Police in Azerbaijan question another businessman

MAY 13 2015 (The Conway Bulletin) – The authorities in Azerbaijan questioned businessman Ibrahim Ibrahimov over an outstanding loan from the state-linked International Bank of Azerbaijan (IBA), media reported, the second high-profile Azerbaijani company owner to be hauled into a police station in a week.

Turan news agency reported that Mr Ibrahimov took a loans $57m, but sources in IBA told the news agency that the sum was actually $850m.

Last week police detained Nizami Piriyev, head of Azerbaijani Methanol Company. He was charged with financial fraud. Mr Piriyev is also charged with not repaying bank loans.

Natiq Cafarli, economist and executive director of ReAL opposition movement said in an interview with faktxeber.com that he does not expect the oligarchs to stay in jail for a long time. He said that the government just wants to recover its money.

“The ruling party does not need a lot of news around famous people,” he said. “They will be released soon.”

ENDS

(News report from Issue No. 232, published on May 20 2015)

Georgian Bank’s profits rise

MAY 20 2015 (The Conway Bulletin) – London-listed Bank of Georgia reported Q1 profit up 16% because revenue from its banking and healthcare units offset weaker contributions from insurance and real estate sectors. The results are much needed positive news after a bleak economic Q1 dominated by the falling value of the lari currency.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Uzbek banks are running out of cash, says official

MAY 18 2015 (The Conway Bulletin) – Uzbeks’ lack of confidence in the som has weakened Uzbekistan’s banks, reduced their capital and hit their ability to pay salaries and pensions.

This was the withering assessment of Ulugbek Mustafayev, a deputy chairman of Uzbekistan’s Central Bank, according to a report by the US-funded Radio Free Europe/Radio Liberty (RFE/RL).

RFE/RL said it had seen a copy of a letter, dated April 10 and stamped “official use only” written by Mr Mustafayev to Uzbek PM Shavkat Mirziyoyev.

The letter gives a vital, and rare, insight into official Uzbek thinking on monetary policy. It’s virtually unheard of for a senior official to speak out against his or her bosses.

In the letter, Mr Mustafayev said a lack of confidence by the population in the som currency had pushed people into relying on the black market and US dollar payments over bank accounts. He said that this had created a shortfall in capital of more than 2 trillion som ($620m) and that state pensions and salaries to interior ministry officials, the defence ministry and other government workers were not being paid.

The regional financial crisis and the fall in the som/dollar exchange rate has reduced the population’s trust in the national currency and in financial institutions.

Most transactions in Uzbekistan are reportedly carried out in cash. Mr Mustafayev said that consumers had paid in far less than expected into Uzbek banks in the first quarter of the year.

The Uzbek system, already frail, is becoming weaker, Mr Mustafayev said in his letter.

ENDS

(News report from Issue No. 232, published on May 20 2015)

Georgia welcomes the EBRD for its AGM

MAY 13 2015 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) holds its 24th annual meeting and business forum in Tbilisi May 14-15, placing Georgia firmly at the centre of the region’s attention.

Georgia is the first country in the Caucasus to host the annual EBRD meeting. Uzbekistan hosted the event in 2003. The Bank is a major player in Georgia, and has invested a total of $3b over the last 22 years.

This meeting is strategically important for Georgia to demonstrate its economic development, especially now, when the country is mired in a currency crisis. The lari has lost around 32% of its value since November.

Deputy minister of finance Davit Lezhava said the meeting was a perfect opportunity to spread information about Georgia to the outside world.

“I hope that the meeting will result in more investment, greater integration with the democratic world and in more political support,” Mr Lezhava told the Bulletin.

Over $7.2m was spent in preparing the EBRD annual meeting by the private sponsors and the government, media reported.

Mr Lezhava said that he didn’t know how much came from the state’s budget.

“But whatever the governmentcontribution was, it is not a waste of money because we will have great benefits from this event,” he said.

ENDS

(News report from Issue No. 231, published on May 13 2015)

Kazakh Central Bank sets up $700m fund for bad mortgages

MAY 13 2015 (The Conway Bulletin) – The Kazakh Central Bank has created a $700m fund to help people pay their mortgages, a move designed to ease Kazakhstan’s mountain of bad consumer debt.

Banks in Kazakhstan have one of the highest ratios of non-performing loans in the world, a legacy of the 2008/9financial crisis. Now, with a new financial crisis linked to the drop in global energy prices and a sharp fall in the performance of the Russian economy, also hitting Kazakhstan’s mortgage holders, policy makers have been looking for ways to ease the burden.

Low-income households are the principal target of the measure, according to official sources. Families at risk will be able to access new credit at advantageous rates, in order to pay off their outstanding bill.

Around 20,000 loans obtained between 2004 and 2009 should be affected by this measure. The largest contribution will go to Kazkommertsbank, which will receive $205m and refinance the debt of 12,500 borrowers.

The rationale is simple. Policymakers have argued that people taking out mortgages between 2004-9 were relatively uneducated in the practise and may have been mis-sold a product or taken out debt that they could not finance.

Most mortgages during this period were also taken out in US dollars. The

Kazakh tenge has dropped markedly against the US dollar since then, making the loans harder to service.

Some analysts, though, have questioned the spirit of the measure.

Quoted on Forbes.kz, financial analyst Murat Temirkhanov said: “The word ‘refinancing’ has little to do with this measure. It should be described as a restructuring, i.e. an exchange of bad loans for cheap money from the state.”

Still, the new measure has the potential to revive the financial market in Kazakhstan.

ENDS

(News report from Issue No. 231, published on May 13 2015)

European bank opens office in Georgia

APRIL 30 2015 (The Conway Bulletin) – The European Investment Bank, the EU’s institution for giving long-term funding, opened an office in Tbilisi. The office will serve the whole of the South Caucasus and underlines the EU’s commitment to the region. It also announced a $40m loan to the Bank of Georgia to fund small sized projects.

ENDS

(News report from Issue No. 230, published on May 6 2015)

Kazakhstan aims help for mortgages

APRIL 30 2015 (The Conway Bulletin) – Apparently worried about people defaulting on mortgage payments, the Kazakh Central Bank has set up a 130b tenge ($700m) fund. Kazakh media said the Central Bank will loan cash to commercial banks who will then help people who took out mortgages, possibly in dollars, between 2004 and 2009.

ENDS

(News report from Issue No. 230, published on May 6 2015)

Kazakh Kommertsbank director resigns

MAY 5 2015 (The Conway Bulletin) – Nurzhan Subkhanberdin resigned as director of Kazkommertsbank after selling a 7.2% stake in the bank, one of the largest in Kazakhstan, to Kenes Rakishev, the son-in-law of the Kazakh defence minister.

Although Mr Subkhanberdin still owns 37.8% of Kazkommertsbank his ousting from the board effectively completes the takeover of Kazkommertsbank by businessmen
loyal to President Nursultan Nazarbayev.

Earlier this year Mr Subkhanberdin was replaced as chairman of Kazkommertsbank, a position he had held since setting it up in 1991.

The London-based Mr Subkhanberdin was viewed with suspicion. He had openly sup- ported opponents of Mr Nazarbayev in the early 2000s.

Last year, Kazkommertsbank had been cajoled into a merger with BTA Bank, which the government rescued from bankruptcy in 2009. The merger imposed BTA Bank’s large portfolio of bad loans onto Kazkommertsbank, hitting its profits. In 2014, Kazkommertsbank said on April 30, profit dropped by 55%.

The deal is another major boon for Mr Rakishev too. He now owns 23.34% of the bank.

Mr Rakishev, 35, is closely linked to the Kazakh elite. Analysts have said the Kazakh elite use Mr Rakishev to buy companies and to hold shares in businesses.

He is married to the daughter of the minister of defence Imangali Tasmagambetov, one of President Nazarbayev’s closest associates.

ENDS

(News report from Issue No. 230, published on May 6 2015)