Author: Chris Cockerill
Best domestic bank: International Bank of Azerbaijan
Best foreign bank: HSBC Bank Middle East
International Bank of Azerbaijan (IBA) is the largest bank in Azerbaijan. The banks assets account for $300 million out of the country’s total banking assets of $650 million. IBA’s excellent relationship with the National Bank of Azerbaijan and other government entities gives the bank a competitive advantage over its peers - the majority of state and government business is directed towards it. Last year the bank was awarded the mandate to act as agent for all government-guaranteed credit lines.
Its asset quality is stable since the loan portfolio is concentrated on the higher-profile, more stable Azeri companies. It is dominant in foreign currency operations in the country dealing with 85% of all transactions and is the only bank with a licence to issue credit cards. Its IT systems have been described by Thomson Bankwatch as some of the most advanced in the CIS and the bank continues to invest heavily in them.
HSBC Bank Middle East is the largest established foreign bank in Azerbaijan. However the Turkish group Koç has just received a banking licence, so HSBC’s position as the premier foreign bank may soon be challenged. HSBC has positioned itself very early in the market in the hope that there will soon be greater development of the country’s oil and gas resources. The economy at present is fragile, GDP decreased 7%, but HSBC’s balance sheet has been growing. It has an estimated 20% to 30% share of the $50 million personal deposits market. CC
Best bank: Kazkommertsbank
Best foreign bank: ABN Amro
There are 55 banks in the Kazakhstan banking sector with five making up 60% of the country’s total banking assets. The largest is Kazkommertsbank with total assets of $521 million. It is Kazakhstan’s premier bank and is the country’s most active bank internationally. It has issued Eurobonds and established credit lines with international banks for money market transactions. Its products are innovative and the bank offers a higher quality of service than its rivals. In 1999 the bank reported a consolidated profit of $25.1 million and a return on average assets of 4.6%. Kazkommertsbank’s corporate banking side is strong. It has a 32% share of the corporate loan market. The bank is developing its retail arm in an effort to increase its 12% market share of customer deposits.
ABN Amro is the most active foreign bank within the market. In terms of assets it is ranked as the fourth-largest bank in the country. It entered Kazakhstan’s market six years ago, giving it a four-year head start over other foreign banks. It focuses on trade finance and foreign exchange. In project finance it is adviser to Krachakanak, a consortium of Agip, British Gas, Texaco and Luk-Oil, on the development of properties in the country and also on the various pipeline projects under discussion in the region. In September last year it was lead arranger with Deutsche in a $350 million deal for the sovereign. The bank’s return on average equity is 50% and the bank’s capital adequacy ratio is 21%. CC
Best foreign bank: Turkish Demir International Bank
Established in 1997, Turkish Demir International Bank is held up as an example for the rest of the Kyrgyz Republic’s banking sector. Now one of the largest banks in the country it employs around 78 people. The country’s low income per capita means retail opportunities are low, leading the bank to focus on its corporate side. However because of instability and the risk of lending in the Kyrgyz Republic it concentrates mainly on fee and commission income. The bank has just completed the first stage of its IT investment which involved upgrading systems and automating the bank’s processing operations. Foreign competition will soon increase as National Bank of Pakistan and The Bank of Asia enter the market. CC
Best bank: National Bank of Uzbekistan
State-owned National Bank of Uzbekistan operates as a universal commercial bank within Uzbekistan and as a government agent in international markets. NBU accounts for over 60% of the country’s total banking assets. The recent decision to privatize may bring in a foreign strategic partner to help expansion in central Asia. Its non-performing loans are very low 0.1% as many of the largest are new.
If government loans are excluded, this figure rises to 13%. But with government guarantees, its high level of liquidity and a capital adequacy ratio of 52%, the bank is secure. CC
