NOV. 18 2013 (The Conway Bulletin) — Halyk Bank, owned by Timur Kulibayev and his wife Dinara Nazarbayeva, turned down the option of exchanging its pension fund for the government’s shares in BTA Bank. By declining the swap, Mr Kulibayev potentially pit himself against Kazakh President Nursultan Nazarbayev, his father-in-law.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 18 2013 (The Conway Bulletin) — Halyk Bank, Kazakhstan’s second largest bank, reported that profits for the first nine months of the year grew by 4.1% compared to a year earlier, partly buoyed by an increase in consumer lending. The 8.3% increase in loans is more evidence, if it was needed, that consumer confidence in Kazakhstan has bounced back.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 15 2013 (The Conway Bulletin) — Azerbaijan has made decent economic progress but more needs to be done to continue to encourage business to develop, the IMF said in a statement after it concluded an assessment of the country’s economy.
The IMF said in general it supported the Azerbaijani Central Bank’s plan to force banks to strengthen their capitalisation levels. It was concerned, though, about the health of the state-owned International Bank of Azerbaijan (IBA).
“The mission calls for combining this capitalisation with the restructuring of this bank (the IBA) in line with internationally accepted practices,” the IMF said in a statement.
The IBA is so large and important to Azerbaijan’s banking sector, the IMF explained, that it needs to be reformed. Earlier this year, the IBA said it would increase its capitalisation levels to 500 million Manat (about $640 million).
In December 2012, the Fitch ratings agency downgraded the IBA’s credit rating because it said its capitalisation levels were too low.
Overall, the IMF said the Azerbaijani authorities were on the right track with reducing non-oil deficit levels.
“Azerbaijan’s near-term economic prospects are generally favourable, with overall gross domestic product growth projected at 5% in 2013 and 2014, following the successful stabilization of oil output,” the IMF concluded.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 20 2013 (The Conway Bulletin) — In an important, but little noticed, report Azerbaijan’s Central Bank said that plans to ensure that its banking sector holds enough capital to protect it from a sudden economic downfall are on track.
It said that of the 43 banks operating in Azerbaijan, those holding 95% of all deposits will hit the target of ensuring they hold a minimum capital of 50 million manat, roughly $64 million, by the end of the year.
Elman Rustamov, the chairman of the Azerbaijani Central Bank, said the smaller banks would be given until the end of 2014 to hit the required levels of capital.
“However, this does not mean that banks can relax. They need to work and grow,” Mr Rustamov said according to local media.
“Other countries also took such precedents to protect themselves.”
The Azerbaijani Central Bank ordered commercial banks to improve the amount of capital they hold as a reaction to the relative boom in consumer borrow that has taken off.
This year consumer credit has risen fast in Azerbaijan, worrying some analysts.
International financial institutions, including the IMF, have supported the new rules over bank capitalisation in Azerbaijan.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 15 2013 (The Conway Bulletin) — The state-run International Bank of Azerbaijan (IBA) plans to issue a $500 million Eurobond in 2014, its first debt issue since 2007, media reported. In 2007, the IBA $600m with a debt issue. It cancelled subsequent issues because of the poor state of the market during the global financial crisis.
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(News report from Issue No. 161, published on Nov. 20 2013)
NOV. 20 2013 (The Conway Bulletin) — When the Kazakh government orders something to be done, it generally gets done so when Halyk Bank declined an invitation to effectively buy out the state’s shares in BTA Bank, it was clear that something was up.
The Kazakh government wants to unite the country’s pension funds. It offered its 97% stake in BTA Bank in return for Halyk Bank’s private pension fund. Kazakh President Nursultan Nazarbayev’s second daughter Dinara and her husband, Timur Kulibayev, own Halyk Bank, the second biggest in Kazakhstan.
Mr Kulibayev used to be the darling of Kazakh politics and business and was talked about as a successor to Mr Nazarbayev. His star has waned, though, since a riot in western Kazakhstan killed 15 people in 2011.
At the time he was in charge of Samruk-Kazyna, Kazakhstan’s sovereign wealth fund. He was blamed for the riot and his rivals have been trying to undermine him since.
Reports from Kazakhstan have said that he has recently rowed with senior government officials and argued with his father-in-law.
Rejecting an order for his bank, Halyk Bank, to buy out the government’s shares in BTA Bank may be a public expression of this discontent.
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(News report from Issue No. 161, published on Nov. 20 2013)
OCT. 31 2013 (The Conway Bulletin) — Kazakhstan wants to turn itself into a regional centre for Islamic finance, various Kazakh officials said at a conference in London. Islamic finance is becoming an increasingly popular way of branding banks.
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(News report from Issue No. 159, published on Nov. 6 2013)
OCT. 31 2013 (The Conway Bulletin) — At a conference in London, Kazakh officials were eager to talk about plans to turn Kazakhstan into a centre for Islamic finance.
Islamic finance is the term used to define investments made, basically, with Islamic principles in mind. It’s a fluid concept but one that has picked up advocates in the Muslim world over the past few years. Kazakhstan though, has been a bit slow off the mark.
Although nominally a secular country, most people in Kazakhstan are Muslim and it has a fairly developed banking sector in Almaty.
Last year, the Kazakhstan Development Bank issued a $75.5m Islamic bond in Malaysia, which has become something of a centre for Islamic finance.
That, though, appears to have been just the start.
Now Asset Issekeshev, the Kazakh minister for new technology, has said Kazakhstan wants to join the International Islamic Financial Market (IIFM), a global watchdog for Islamic finance.
Yerlan Baidaulet, a Kazakh board member at Jeddah-based bank Islamic Development Bank (IDB), went further though. He said now that Kazakhstan had a new head of its Central Bank, Islamic finance would really take off.
Mr Baidaulet told Reuters at the conference that IDB was introducing an Islamic bank and a leasing company in Kazakhstan next year.
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(News report from Issue No. 159, published on Nov. 6 2013)
NOV. 4 2013 (The Conway Bulletin) — The volume of cashless transactions in Kazakhstan increased by 25% in the year to the end of September, the Kazakh Central Bank said. This shows that Kazakh consumers are becoming more sophisticated and comfortable with using debit and credit cards. Cashless transactions account for roughly 15% of all purchases.
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(News report from Issue No. 159, published on Nov. 6 2013)
OCT. 30 2013 (The Conway Bulletin) — Kyrgyzstan plans to sell a 51% stake in RSK Bank, the largest state-owned bank, by 2017, media quoted the IMF representative in Bishkek, Koba Gvenetadze, as saying. Over the past three years, Kyrgyzstan has tried, and often failed, to sell off various state assets. Investors are wary of instability.
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(News report from Issue No. 158, published on Oct. 30 2013)