Tag Archives: economy

Standard & Poor’s questions Kazakh bank reform

SEPT. 8 2014 (The Conway Bulletin) – Plans to increase the amount of capital held by Kazakh banks won’t solve all its structural weaknesses, the Standard & Poor’s ratings agency said in a new report.

The Kazakh Central Bank has been trying to work out just how to improve its banking system ever since the global financial crisis of 2008/9 toppled three of the biggest banks. Only government takeovers saved the Kazakh banking system. Most recently the Central Bank said that from Jan. 1 2019, banks would have to hold a minimum of 100b tenge (roughly $550m), a ten-fold increase from the current requirements.

But although the increase in capitalisation requirements may force various mergers in the system and rid it of the smaller, more fragile, banks, the Kazakh Central Bank also needs to address serious structural weaknesses, Standards & Poors said.

“Although consolidation could create opportunities for the Kazakh banking sector over the long term, the system’s major weaknesses–the lenient banking regulation and supervision, banks’ aggressive risk management practices, and sometimes deficient corporate governance procedures are very likely to remain,” the report said.

And the move may even backfire.

“Furthermore, the resulting higher barriers to entry could lower the sector’s attractiveness to foreign investors,” Stand & Poors said.

There are currently 38 banks in Kazakhstan. Of these, 35, it has been estimated, would fail a move to a capitalisation of 100b tenge.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Banks to keep assets in Kazakh tenge

SEPT. 9 2014 (The Conway Bulletin) – Kazakhstan’s Central Bank said that it would ban domestic banks from keeping most of its cash overseas from next year.

The announcement is another move aimed at strengthening the local banking sector.

Kairat Kelimbetov, the Central Bank chief, said that banks currently kept most of their assets in foreign currency, undermining the tenge.

“We have taken appropriate action. Firstly, limiting the ability to work with derivative financial instruments at 30 per cent on the balance. Roughly speaking, not allowing to play with currency derivatives,” he said, according to the media.

One of the biggest challenges facing the Kazakh Central Bank currently is trying to stop a slide in the value of the tenge. It has already had to devalue the national currency by 20% earlier this year and has come under sustained pressure to devalue again.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Gas price in North Kyrgyzstan to drop

SEPT. 8 2014 (The Conway Bulletin) – The price of gas in north Kyrgyzstan will drop by up to 40% because of extra supplies, the head of Gazprom, now owners of Kyrgyzgaz, Alexei Miller said according to media. Although Mr Millar’s comments will be welcomed in the north, caution should be added. The dangerous north-south divide in Kyrgystan may be increasing.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Uzbekistan invests in cotton

SEPT. 5 2014 (The Conway Bulletin) – Uzbekistan’s state-run cotton company will spend $1b building its own cotton processing plant, media quoted a senior official as saying. Uzbekistan wants to double its cotton processing capacity. Human rights workers have accused Uzbekistan of suing slave labour to pick its cotton harvest.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Armenia jewellery output falls

SEPT. 9 2014 (The Conway Bulletin) – Armenia’s jewellery output fell by over 41% in the first six months of the year, the national statistics agency reported, underlining the problems facing the economy. Jewellery processing is one of Armenia’s most important industries. Sanctions on Russia have severally dented Armenian economic growth this year.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Iran reduces Turkmen gas imports

SEPT. 7 2014 (The Conway Bulletin) – Highlighting its break from Turkmen gas imports, Iran opened what it said was the largest liquefied natural gas storage depot in the world in the north of the country. Iran has said that it wants to reduce expensive gas imports from Turkmenistan, which has propelled itself into the top tier of world gas producers.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Oil output to stop falling in Azerbaijani energy company

SEPT. 9 2014 (The Conway Bulletin) – In a thinly veiled warning to the BP-led ACG oilfields, Rovnag Abdullayev, head of Azerbaijani energy company SOCAR, said he expected its output to hit 30m tonnes this year and next year. ACG is key to Azerbaijan’s oil wealth but output has been falling.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

Kazakhstan readies Eurobond

SEPT. 8 2014 (The Conway Bulletin) – Kazakhstan has hired Citi, JP Morgan and HSBC to arrange a potential new Eurobond, Reuters quoted sources close to the deal as saying. The sources told Reuters the Eurobond was due to be denominated in US dollars but didn’t put a value on it.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

FDI drops in Georgia

SEPT. 9 2014 (The Conway Bulletin) – Preliminary data from Georgia’s national statistics agency has shown that direct foreign investment measured $415m in the first half of 2014, a drop of nearly 10% from a year earlier. Foreign investment is vital for Georgia and the figures will be seen as negative for the government.

ENDS

(News report from Issue No. 199, published on Sept. 10 2014)

China builds cement factory in Kyrgyzstan

AUG. 29 2014 (The Conway Bulletin) – China has started work on building a new cement factory in Kyrgyzstan, underlining its commitment to Central Asia. The cement factory will be the biggest in Kyrgyzstan and will cost $70m. China has assumed an increasingly tight grip on Central Asia’s economies.

ENDS

(News report from Issue No. 198, published on Sept. 3 2014)