Tag Archives: banking

US investors criticise Azerbaijan’s IBA restructuring

JUNE 14 2017 (The Bulletin) — The Wall Street Journal quoted US holders of International Bank of Azerbaijan (IBA) debt as saying that the proposed restructuring deal was unfair and designed to benefit the bank’s Azerbaijani owners. IBA has asked debt holders to write off 20% of their investments in a deal to restructure $3.3b worth of debt. Part of the restructuring process would also mean that the debt is reissued as sovereign bonds.

ENDS

(News report from Issue No. 333, published on June 19 2017)

Kazakhstan does not receive special treatment over IBA debt

Leave a Reply

JUNE 13 2017 (The Bulletin) — Kazakhstan’s Central Bank will not receive preferential treatment from Azerbaijan’s majority state-owned IBA bank when it restructures its debt, a source close to the negotiations told Reuters. Kazakhstan’s state pension fund bought $250m worth of IBA debt in 2014 just as the oil price started to fall. Earlier this year it said that it was having to restructure debt totaling $3.3b. Most creditors face losing 20% of their investments.

ENDS

(News report from Issue No. 333, published on June 19 2017)

Kazakh CB to use Bitcoin

Leave a Reply

JUNE 12 2017 (The Bulletin) — Kazakhstan’s Central Bank said that it was road testing a Bitcoin application for selling short-term notes. Bitcoin is a controversial technology as it has been associated with money laundering and other crimes. It’s technology, though, has been acclaimed for allowing multiple small trades at a low cost. The Kazakh Central Bank said it was looking at using the technology for selling 100 tenge notes (around a third of a US dollar).

ENDS

(News report from Issue No. 333, published on June 19 2017)

Stock Market: Central Asia Metals

Leave a Reply

JUNE 12 2017 (The Bulletin) — Shares in Central Asia Metals (CAM), the Kazakhstan focused miner, stayed steady this week on the London Stock Exchange despite some early calls by stock analysts to buy into it.

At the end of the week it was trading at 220p, roughly the level it has been anchored to since the start of May.

Still, some analysts said that now was a good time to buy into CAM. Peel Hunt has a target price of 290p against CAM, up from 270p. Canaccord Genuity also gives the stock a buy rating.

Across the Caspian Sea, Bank of Georgia, has also been given a lift by analysts. Investec raised its target price for Bank of Georgia to 4,000p from 3,950p. Several other brokerages moved their guidance to a ‘buy’ rating too.

Last month it issued the first ever corporate debt in Georgian lari, attracting widespread publicity. The IFC, part of the World Bank, said that it would step into support the lari issues, agreeing to buy up to a third of the $250m bond sale. Reports said that 20 other institutional investors had applied to buy a total of $207m of the bond, meaning the the IFC ended up with a smaller stake than it had offered.

Kaha Kiknavelidze, Bank of Georgia CEO, said: “IFC’s bid gave us great support in building investor confidence and creating early momentum in book build.”

ENDS

(News report from Issue No. 332, published on June 12 2017)

China buys first bank in Kazakhstan with swoop for Altyn

Leave a Reply

ALMATY, JUNE 8 2017 (The Bulletin) — Chinese Citic Bank Corp completed the purchase of a 60% stake in Altyn Bank from Halyk Bank for an undisclosed amount, marking China’s first investment in the Kazakh banking sector.

The deal also lays down yet another marker of intent by China over its push to develop Central Asia, and in particular Kazakhstan, as the fulcrum of its ‘One Belt. One Road’ development policy. It envisions a new Silk Road, connecting China and Europe, which means developing infrastructure in Kazakhstan.

This is also China’s first bank deal in Kazakhstan and comes in the midst of a lack of confidence in the Kazakh banking sector, linked to a three year-long economic downturn. China’s CITIC bank has not commented but Umut Shayakhmetova, the Altyn Bank CEO, did.

“Within the ‘One Belt. One Road’ Chinese initiative we are seeing Kazakh companies expressing a clear desire to develop their business in China as we continue to follow the needs of our clients,” she said.

The deal was announced last year.

Altyn Bank is described as a medium-sized lender with assets of $930m. Halyk Bank said it would retain a 40% stake in the bank. Altyn Bank was formed in 2014 when Halyk bought HSBC Kazakhstan.

China’s ‘One Belt. One Road’ policy has lead to a rush of Chinese deals in Kazakhstan. COSCO Shipping Corporation and Jiangsu Lianyungang Port Co bought a 49% stake in the Khorgos dry port on the Kazakh-Chinese border last month and this month the Shanghai Stock Exchange said it would buy a 25.1% stake in the Astana Stock Exchange.

ENDS

(News report from Issue No. 332, published on June 12 2017)

Kazakh Banks make deal

Leave a Reply

JUNE 2 2017 (The Bulletin) — Halyk Bank will buy Kazkommertsbank’s two largest shareholder’s combined stake of 54% for a nominal fee of $1, Reuters reported. The nominal fee highlights the state-sponsored natured of the merger, agreed in March, between the country’s two largest banks. Under the deal, a government unit set up to buy banks’ bad debt will buy 2.4 trillion tenge ($7.5b) of bad debt from the new bank. Kazkommertsbank’s two biggest shareholder are Kenes Rakishev, a financier close to the elite, and Samruk Kazyna, the sovereign wealth fund.

ENDS

(News report from Issue No. 331, published on June 5 2017)

More Azerbaijani banks rely on state support to survive

Leave a Reply

MAY 30 2017 (The Bulletin) — Five more Azerbaijani banks are currently failing to meet their capitalisation requirements, Rufat Aslani, head of the Financial Markets Supervisory Authority told media, suggesting more weakness in the sector.

In May, Azerbaijan’s biggest bank, the International Bank of Azerbaijan, which is 80% owned by the government and has a market share of around 60%, said that it needed to restructure its debt to stave off bankruptcy.

Now, after a series of small banks merged or went bankrupt in 2016, it has emerged that five mid-sized banks are still under the special supervision of Azerbaijan’s Financial Market Supervisory Authority.

“Today, under our supervision, there are five banks, capitalisation programs of which should be completed by mid-2017,” media quoted Mr Aslani as saying at a banking conference in Baku.

Mr Aslani did not name the banks but the Business New Europe magazine named three of them as Unibank, AtaBank and DemirBank — all mid-sized banks. None of the banks responded to requests for comment. The EBRD owns a 25% stake in DemirBank and Dutch development finance company FMO owns a 10% stake.

The Central Bank has imposed increased capitalisation rules to strengthen the sector. A recession in Russia and a collapse in oil prices since 2014 have halved the value of the Azerbaijani manat and heavily dented the banking sector.

Analysts had warned that Azerbaijani banks have been too relaxed about lending.

The currency devaluation and poor economic conditions have triggered a surge in bad debt which Moody’s, the rating agency, said stood at 30% of the banking sector’s loan portfolio.

ENDS

(News report from Issue No. 331, published on June 5 2017)

Profit at Georgia’s TBC Bank rises 65%

Leave a Reply

TBILISI, MAY 22 2017 (The Conway Bulletin) — Georgia’s TBC Bank posted Q1 profit up by around 65% because it completed the integration of a smaller bank it bought last year sooner than expected.

Specifically, pre-tax profit rose to 96.6m lari ($40.08m) and revenues rose 40% to 203m lari. TBC Bank is listed on the LSE. Its share price rose to 1,700p from around 1,600p after the results announcement. At the end of last year, TBC bought Bank Republic, making it the biggest bank in Georgia in terms of loans.

TBC Bank said: “One of our main strategic objectives for 2017 is to deepen the relationship with our clients and offer our existing and newly acquired Bank Republic customers the best-in-class products and services.”

ENDS

(News report from Issue No. 330, published on May 28 2017)

Kazakh CB chief orders IBA debt investigation

Leave a Reply

MAY 24 2017 (The Conway Bulletin) — Kazakh Central Bank chief Daniyer Akishev said that he had ordered an investigation into why Kazakhstan’s state-run pension fund had bought $250m of debt from the International Bank of Azerbaijan (IBA) in October 2014, just as the price of oil started to collapse. Oil is Azerbaijan’s main export and its collapse triggered an economic downturn. This month IBA said that it was having to restructure its debt.

ENDS

(News report from Issue No. 330, published on May 28 2017)

Two smaller Kazakh banks set to merge

Leave a Reply

ALMATY, MAY 23 2017 (The Conway Bulletin) — Two small Kazakh banks, RBK Bank and Qazaq Banki, said that they were preparing to merger, marking more consolidation in Kazakhstan’s finance sector.

Kazakh banks have been encouraged to merge in a drive designed to strengthen the sector which analysts have said has become weak and fragmented.

In a statement, RBK said: “The decision to merge was dictated by a desire from shareholders to use the new business opportunities in a changing economic environment.”

Both RBK and Qazaq Banki are linked closely to members of the Kazakh elite, including Dinmukhamed Idrisov, Kazakhstan’s 20th wealthiest man according to Forbes. He owns stakes of under 10% in both banks.

Earlier this year, Halyk Bank and Kazkommertzbank, Kazakhstan’s two biggest banks, agreed to merge creating a mega bank with around 40% of the market. The new bank will be controlled by Halyk, which is owned by the daughter of Kazakh President Nursultan Nazarbayev and her husband, Timur Kulibayev.

Kazakh banks accrued a high proportion of bad loans over the past few years because of a downturn in economic conditions linked a fall in oil prices and a recession in Russia.

ENDS

(News report from Issue No. 330, published on May 28 2017)