Tag Archives: banking

EBRD sells Bank of Georgia stake

SEPT. 24 2014 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) sold its 5% stake in Bank of Georgia.

The sale ends the EBRD’s mission to support Bank of Georgia after the 2008 Global Financial Crisis. It took control of the stake in 2012 after a financial aid package put together in December 2008 was converted into shares.

“The EBRD’s role in supporting Bank of Georgia in the aftermath of the 2008 crisis is now complete,” Reuters quoted Nick Tesseyman, the EBRD MD, as saying.

“The EBRD will continue to provide debt financing to Bank of Georgia going forward as part of our continued support to the Georgian financial sector.”

The Bank of Georgia is publicly listed on the London Stock Exchange.

In many ways the sale of the EBRD’s 5% stake in Bank of Georgia is a success for Georgia as a country. The EBRD would not have sold its stake if it didn’t think that the bank was stable enough and if there wasn’t enough investor interest in Georgia and its finance industry.

Bank of Georgia CEO Irakli Gilauri acknowledged this.

“This transaction illustrates the depth of support for the bank from international investors and signals increasing investor interest in Georgia’s capital market,” he said.

ENDS

(News report from Issue No. 202, published on Oct. 1 2014)

Shares plummet for one of Kazakhstan’s biggest banks

SEPT. 30 2014 (The Conway Bulletin) – Shares in Kazkommertzbank have nose-dived since it bought a stake in BTA Bank from the Kazakh government.

By the end of September, shares in KazKom, as the bank is commonly known, traded at $1.65 on the Kazakh Stock Exchange, down by 37.5% since July when it completed buying nearly half of BTA.

Analysts said the drop highlighted the toxic nature of BTA’s bad debt portfolio and a drop in profit. KazKom said profit for the first half of 2014 was down by 6%.

A source from the banking industry said: “Most bad loans are with BTA which is unable to recover them from its debtors. This entails a huge cost.”

Mountains of bad debt still holds back Kazakhstan’s financial sector, a legacy of the Global Financial Crisis of 2008/9 when the government had to buy up a handful of banks. One of these was BTA Bank.

At the end of last year, the Kazakh government said it wanted to sell its shares in government-owned banks.

Kenes Rakishev, a young Kazakh businessman with strong links to the elite and KazKom, controlled by the London- based businessman Nurzhan Subkhanberdin agreed in February to buy the bank. At the time, sources with knowledge of the Kazakh finance centre said buying BTA Bank made no business sense for KazKom. Instead, they said, it was a political move by Mr Subkhanberdin to win favour.

ENDS

(News report from Issue No. 202, published on Oct. 1 2014)

Halyk Bank to buy HSBC Kazakhstan

SEPT. 18 2014 (The Conway Bulletin) – Kazakhstan’s Central Bank officially decreed that Halyk Bank, one of the country’s biggest banks, could buy HSBC’s Kazakh subsidiary. Halyk Bank agreed to buy HSBC’s Kazakh operation earlier this year for around $175m. HSBC is streamlining its business, cutting the less profitable operations.

ENDS

(News report from Issue No. 201, published on Sept. 24 2014)

Qatar to set up Islamic Banking in Tajikistan

SEPT. 19 2014 (The Conway Bulletin) – A delegation from Qatar visited Tajikistan promising various investments, including setting up an Islamic bank, media reported. Islamic banking has previously been discussed in Central Asia, especially in Kazakhstan. Qatar is looking to spread its influence across the Islamic World, including Central Asia.

ENDS

(News report from Issue No. 201, published on Sept. 24 2014)

Kazakh bank restructures debt

AUG. 4 2014 (The Conway Bulletin) – Kazakhstan’s Alliance Bank agreed a debt restructuring deal with creditors ahead of a merger with Temirbank and ForteBank, owned by Kazakh billionaire Bulat Utemuratov. It’s an important deal for the government, which owns 51% of Alliance Bank and has been looking to sell it.

ENDS

(News report from Issue No. 194, published on Aug. 6 2014)

Finance deals for Azerbaijani banks

JULY 25 2014 (The Conway Bulletin) – Azerbaijani finance looks in good shape.

At a local finance level, the European Bank for Reconstruction and Development (EBRD) has handed a $42m loan to Demirbank earmarked to help smaller businesses raise funds.

At an international level, Citi Group said it is now selling more Azerbaijani debt than at any time since 2008.

Both pieces of news are good general indicators for the Azerbaijani economy. Most analysts agree that the economy is in pretty good shape although domestic consumer lending needs to be tapered.

Bloomberg quoted Citi Group as saying that it had debuted nearly $15m of debt for Kapital Bank having issued $38.5m of debt for the International Bank of Azerbaijan earlier this year.

“Investors are seeking risk in emerging markets as central bank stimulus measures suppress returns on debt issued by companies in developed nations,” Bloomberg wrote.

Even so, the yield on the Azerbaijani bank debt is high at nearly 9%, reflecting the risk involved.

The Demirbank deal is more the culmination of a long term project by the EBRD to improve access to finance for smaller businesses in Azerbaijan. In April AccessBank, another Azerbaijani bank, secured a $60m loan from 16 lenders also for micro-finance.

ENDS

(News report from Issue No. 193, published on July 30 2014)

Georgia’s TBC Bank lists on London Stock Exchange

JUNE 11 2014 (The Conway Bulletin) – TBC Bank became the second Georgian company to list on the London Stock Exchange (LSE) after it raised $240m at an IPO. The IPO valued TBC at around $640m and demonstrated that investors are keen to buy shares in companies in Georgia once again, nearly six years after it fought a brief war with Russia.

ENDS

(News report from Issue No. 189, published on June 18 2014)

World Bank pledges $2.5b for Kazakhstan

MAY 5 2014 (The Conway Bulletin) — The World Bank signed a framework agreement with Astana to invest a further $2.5b into small and medium sized businesses and to help reform the banking sector.

This is a strong statement of intent from the World Bank.

“We are ready to start the first project on easing the access to financing for SMEs. We are glad that our collaboration with the government has been renewed,” said a spokesperson at the World Bank’s office in Astana.

In the same week, the Asian Development Bank (ADB) also signed an agreement to join its proposed $1.6b investment with a $5.5b cash injection from Kazakhstan’s own national funds.

ADB top management described the investment as “groundbreaking” as they gathered at a summit with the government in Astana.

Their investments will be primarily focused on the development of small and medium enterprises and strengthening the non-oil sector of the economy.

Both deals are important for propelling Kazakhstan further towards its stated aim of becoming one of the world’s top 30 economies by 2050.

The world’s main financial institutions appear to believe that the Kazakh economy can achieve this, or at least can punch further above its weight.

One experienced financial professional in Almaty was more candid, however. “If the money is directed towards the development of infrastructure and the private sector, then it’s a good thing. Otherwise, it can be a waste,” he said.

(News report from Issue No. 183, published on May 7 2014)

Kazakhstan increases banking capital levels

APRIL 29 2014 (The Conway Bulletin) — Kazakhstan is going to introduce a minimum capital banking requirement that will probably whittle down the number of banks in the country.

The head of the Kazakh Central Bank, Kairat Kelimbetov, said that to meet requirements laid out in Basel-III, a set of banking benchmarks drawn up after the global financial crisis of 2008/9, banks in Kazakhstan would have to increase their capital to 100b tenge ($550m) by 2019. T

his new requirement, analysts have since said, will cut the number of banks in Kazakhstan to roughly 15 to 20, from the current 38.

For Kazakhstan’s Central Bank this is undoubtedly a positive. It takes the view that the Kazakh banking sector needs to be reformed. There are currently too many banks and too many banks with large bad loan portfolios.

(News report from Issue No. 182, published on April 30 2014)

Foreign lenders send millions to Azerbaijan’s banks

APRIL 14 2014 (The Conway Bulletin) — Two Azerbaijani banks secured multi-million dollar loans from foreign lenders, underlining confidence in Azerbaijan’s economy. AccessBank secured a $60m loan for microfinance deals and International Bank of Azerbaijan secured a $125m loan to lend to other companies.

(News report from Issue No. 180, published on April 16 2014)