Tag Archives: banking

Lender targets Kazakhstan

JULY 6 2017 (The Bulletin) — TWINO, the peer-to-peer loans company, said that it was going to start lending to Kazakh clients, a PR boost for Kazakhstan which has been trying to deflect from negative headlines about the rise of non- performing loans in its banking sector. TWINO, based in London, said that it was the first European peer-to-peer loans provider to lend to Kazakhstan. It already lends to Latvia. Poland, the Czech Republic, Russia, Georgia, Denmark, Mexico and Spain.

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(News report from Issue No. 336, published on July 16 2017)

Kazakhstan props up banks

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JULY 11 2017 (The Bulletin) — Kazakhstan is prepared to give up to 500b tenge ($1.52b) to its banks to help them weather an economic downturn that has piled their loan portfolios with bad debt, deputy central bank chief Oleg Smolyakov was quoted as saying. Kazakhstan’s bank have been listing worryingly after a collapse in oil prices in mid-2014 forced a sharp economic decline and the tenge to lose half its value.

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(News report from Issue No. 336, published on July 16 2017)

International Bank of Azerbaijan wins support for restructuring

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JULY 12 2017 (The Bulletin) — International Bank of Azerbaijan (IBA) said that it had secured support for its debt restructuring plan from creditors holding 87% of the debt. It missed a loan repayment in May triggering plans to restructure $3.3b of debt, effectively wiping 20% off the value of its debt. Western investors have complained that the restructuring plan is biased against them and had vowed to block it from being put into action. IBA said it would announce the formal results of a vote on its restructuring plan on July 18.

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(News report from Issue No. 336, published on July 16 2017)

Kazakh Halyk Bank completes KazKom takeover

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ALMATY, JULY 12 2017 (The Bulletin) — Kazakhstan’s Halyk Bank, owned by the daughter of Kazakh Pres. Nursultan Nazarbayev and her husband, completed the takeover of Kazkommertsbank, a deal officials say is vital to protect the banking sector but critics say cements the First Family’s power.

The complex deal involved the state writing off $7.5b of Kazkommertsbank and Halyk Bank bad debt. Halyk Bank officially paid only 185b tenge ($560m) for its rival. The combined market share of the merged bank will be around 37%, roughly four times its next competitor.

While opponents of Mr Nazarbayev and his son-in-law, Timur Kulibayev, have said that the long-planned deal gives the elite too much influence, its proponents have said that it is essential.

Kazakhstan’s banking sector is under increased pressure from nonperforming loans which have been mounting over the past few years, since an oil price collapse in 2014 triggered a downturn and a halving of the value of the tenge.

The Central Bank has said that it has prepared a $1.5b fund to bail out its banks. Some banks in Kazakhstan have already folded.

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(News report from Issue No. 336, published on July 16 2017)

Georgia’s BGEO to spin off non- banking investments

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TBILISI, JULY 3 2017 (The Bulletin) — BGEO, the London-listed Georgian investment company that owns most of Bank of Georgia and Georgia Healthcare Group, said it will split into two companies later this year in a move that surprised analysts but sent its share price up towards an all-time high.

The de-merger will give investors more opportunity to increase their exposure to Georgia with a new company focused on retail, healthcare, drinks and utilities.

Both Bank of Georgia and Georgia Healthcare have had strong years and have become two of the Central Asia and South Caucasus region’s favourite shares.

In a statement, BGEO said it would split into two London-listed companies — Bank of Georgia and BGEO Investments. BGEO will own a 10% stake in the bank; a 57% stake in Georgian Healthcare; M2, a real estate company; Aldagi, an insurance company; GGU, a utilities company; a 72% stake in Taliani Valley, a drinks company.

“The Board of BGEO Group believes a de-merger of the businesses will deliver additional long-term value to shareholders by creating two distinct entities, each of which will have enhanced growth opportunities

in the strongly growing Georgian economy,” the BGEO statement said. The news sent BGEO’s shares up and over the next couple of days they hit a peak of 3,721p, near a high of 3,744p in March. Shares in Georgia Healthcare were steady at 370p.

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(News report from Issue No. 336, published on July 16 2017)

Armenia’s Ardshinbank receives EDB loan

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JUNE 28 2017 (The Bulletin) — The Almaty-based Eurasian Development Bank (EDB) has loaned Yerevan-based Ardshinbank $20m for a three-year period, media reported. Specifically, the loan is to facilitate import-export deals among member states of the EDB. As well as Armenia, these are Russia, Kazakhstan, Kyrgyzstan, Belarus and Tajikistan. Other than Tajikistan, they are all members of the Kremlin-lead Eurasian Economic Union.

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(News report from Issue No. 335, published on July 3 2017)

Uzbek CB to check bank’s liquidity

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JUNE 30 2017 (The Bulletin) — Uzbek President Shavkat Mirziyoyev ordered Uzbekistan’s Central Bank to increase checks on commercial banks’ liquidity, media reported quoting a decree on an official website. The government is increasingly concerned about the stability of the banking sector.

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(News report from Issue No. 335, published on July 3 2017)

Tajik CB auctions failed banks property

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DUSHANBE, JUNE 29 2017 (The Bulletin) — Tajikistan’s Central Bank said that it would auction off property belonging to two failed banks Tochprombonk and Fononbonk, a very public humbling for two prominent Tajik financial institutions.

The government withdrew the banking licences for Tochprombonk and Fononbonk on Feb. 24, effectively declaring them bankrupt, having tried to rescue them last year in a $490m bailout of the banking sector. It was more successful propping up Tajikistan’s two main banks, Tojiksodirotbonk and Agroinvestbank, which appear to have survived an economic downturn.

Tajikistan, like the rest of Central Asia, has been grappling with the impact of a collapse in oil prices that triggered a recession in Russia. Russia is the main driver of economic activity in the region and its recession had a heavy knock-on effect in Central Asia, which, to a large extent is reliant on remittances sent back by migrants working in Russia.

The Tajik banking sector has been heavily criticised by international organisations for is weaknesses. In April the Asian Development Bank (ADB) said that the Tajik banking sector needed to improve is transparency and increase capital levels. Last year the IMF said that the banking sector in Tajikistan was “dire”. Bad loans were now over 50% of the total loan portfolio.

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(News report from Issue No. 335, published on July 3 2017)

EBRD and DEG stabilise Azerbaijan’s Unibank

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JUNE 24 2017 (The Bulletin) — The European Bank for Reconstruction and Development (EBRD) and Germany’s state development agency, DEG, agreed to recapitalise Azerbaijan’s Unibank, highlighting the precarious state of the Azerbaijani finance sector (June 26).

In a statement, the EBRD said it had written off $9m of debt in exchange for increasing its stake in Unibank to 22% and that DEG had written of $15m of debt to increase its stake to 27.5%. Previously, media reported that the EBRD had owned a 12.15% stake in Unibank, a mid-sized
bank, and DEG had owned a 6.7%.

Unibank’s main shareholder is in Unibank’s mid-sized Azerbaijani Eldar Garibov, an Azerbaijani businessman with stakes in a range of companies.

Although there was no overt indication of why the EBRD and DEG had written of Unibank’s debt, last year Fitch, the ratings agency, downgraded the bank’s debt to default.

In a statement, Ivana Duarte, head of the EBRD office in Baku, said: “The EBRD supports Unibank, its longstanding partner in Azerbaijan, to recapitalise it alongside its main shareholders and contribute to the stabilisation and recovery of the economy and banking sector in the country.”

In May, the EBRD said that it was also considering buying a large stake in Unibank’s mid-sized Azerbaijani rival Demirbank.

Azerbaijan has been particularly hard hit by a collapse in oil prices since 2014, with GDP shrinking and the manat currency devaluing. And this economic malaise has hurt the finance sector which had lent heavily to Azerbaijani consumers.

The proportion of bad loans in the system jumped up, forcing smaller banks to merge or fold. In 2016, a quarter of Azerbaijan’s 44 banks had their licences revoked for being too unstable.

The country’s biggest bank, International Bank of Azerbaijan (IBA), is currently trying to persuade its creditors holding debt of $3.3b to take a 20% writedown in their investments to allow it to restructure.

” A court in New York granted IBA bankruptcy protection on June 28, a month and a half after it said it needed to restructure its debt.

Western creditors have complained that the restructuring scheme, triggered after IBA missed defaulted on a debt repayment in May, was unfair and stacked against them in favour of Azerbaijani creditors. They had threatened to scupper the restructuring unless more favourable terms were agreed.

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(News report from Issue No. 335, published on July 3 2017)

Azerbaijan’s IBA improves restructuring deal

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JUNE 19 2017 (The Bulletin) — The International Bank of Azerbaijan bowed to pressure from its creditors to improve the terms of its proposed restructuring deal.

Essentially the new terms ensure more flexibility for IBA creditors and slightly higher and more frequent interest payments. They had accused the bank of preparing a restructuring programme that favours Azerbaijani debt holders.

IBA has presented different options to creditors holding $3.3b of debt, although the bottom line was that they will lose around 20% of their investments. It had said that creditors could only choose one option although it has now mellowed on this demand.

“The ‘first come, first served’ allocation mechanism has been changed to an 11 business day early bird period,” IBA said in a statement.

IBA said in May that it had missed a deadline to repay a creditor and that it needed to restructure $3.3b of debt. The announcement rocked investors and analysts who have been warning that the Azerbaijani banking system was teetering towards a default.

Bondholders were still sceptical of the new deal, saying that it was not much improved from the original proposition.

The FT quoted Lutz Roehmeyer, a portfolio manager at Landesbank Berlin as saying that he would vote against the new proposal. “International investors can’t understand why an oil-rich country with a huge sovereign wealth fund does not have the money to pay back,” he said.

Other creditors warned that Azerbaijan has damaged its reputation and will find it harder to borrow money in the future and that it needed to do much more to diversify its economy away from oil and gas.

They now have until July 18 to approve the deal.

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(News report from Issue No. 334, published on June 26 2017)