Interview of Anvar Saidenov12.04.2009
/ Zhety Kun, Khabar
Host: Commenting this week on how much funds had been drawn under another programme by the government – the one for refinancing small and medium-sized businesses – an area where some banks aren’t quite up to speed, Prime Minister Karim Masimov said that funds would be recalled from such financial institutions and given to banks that are more efficient in refinancing businesses; BTA, which, I remind you, is an operator under all government support programmes for the economy, was mentioned as one positive example.
Once Samruk-Kazyna became a shareholder in BTA, the bank’s financial and investment strategy totally changed: instead of lending to dubious and high-risk projects abroad, which was standard practice under previous management, the new people in charge look to refocus its business on the domestic market with the emphasis placed on providing quality services to corporate and retail customers and investing into economically viable projects. The appointment of Arman Dunayev and Anvar Saidenov, both with cabinet-level government experience as heads of the Ministry of Finance and National Bank, respectively, is another testament to the government’s commitment to strengthening the position of the bank in the market.
We’ll talk about BTA’s new strategy with Chairman of the BTA Management Board Anvar Saidenov, whom we are pleased to have with us today.
So much has been said lately about the wrongs perpetrated by the previous management, that I’d rather move from this subject for once, the more so, because BTA is under a new management now, which you represent. Let’s talk about what’s going on with the bank now. Has the government support that you have received helped you solve the liquidity problems that you inherited from the previous management?
Saidenov: Of this there is no doubt and, first and foremost, this has to do with the support we’ve been receiving from Samruk-Kazyna, our main shareholder. This includes cash paid for the new share issue, deposits raised from both Samruk-Kazyna and its subsidiaries, and the bond programme placed by BTA. All of this helped us, on the one hand, to process all payment instructions by our customers – in Kazakhstan, first of all, because there, at a time, indeed was a backlog of them and payments took longer to get processed than they should have, on the other hand, such improvement in liquidity helped us remain current on all scheduled repayments of our foreign obligations. There are no delays with payments now.
- — — Host: Speaking of foreign obligations of Kazakh banks, more relevant than ever now are terms like “refinancing”, “restructuring” and “extension”. As far as BTA is concerned, what do your repayments look like this year and have you made any deals with your foreign creditors?
- — — Saidenov: Last month was the most difficult, a peak month to the entire Group BTA from the standpoint of foreign repayments, I also include Temirbank’s obligations here. We hired Goldman Sachs and UBS as our financial consultants and they are working on our business plan, including one for a possible adjustment of the structure of our foreign obligations.
- — — Host: What shape are your corporate and retail deposits in?
- — — Saidenov: In answer to your question, I could divide the whole time under new management into two clear-cut periods: the first such period would be February, when a lot of things about the bank, its new management and tasks ahead were still up in the air. The devaluation also played a role, it happened immediately after the new team came in, everybody got nervous and, as a result, both corporate and retail deposits were down and so was the number of our customers in February. Then, in the beginning of March, there was a drastic improvement and a new trend set in: retail deposits have been up, the number of customers has stabilised and so have deposits, corporate and retail. Is there a better confirmation of the fact that the situation is stable and under control?
- — — Host: I think you will concur that banks today have to balance between, on the one hand, a more conservative lending policy and, on the other, looking for profitable projects to lend to, which, of course, calls for a certain flexibility in your approach to the customer. It is quite a dilemma, isn’t it?
- — — Saidenov: As for loans, what borrowers want most of all is, of course, that their real capacity to service their loans be taken into account. I include everybody here, SMEs, corporate, retail. When a restructuring is requested, we use a fairly flexible approach. This is what we stress when it comes to our loan portfolio. Another important thing is our belief that ways to generate the so-called non-interest income must be explored a lot more actively. These include payments, credit and debit cards, in other words, major projects that we implement with many different companies. I may also mention here the customs payments project, which would enable importers and exporters to pay customs duties using these cards. We are going now to aggressively implement this one in cooperation with the Customs. Therefore, I think, the most important thing is to meet our customers’ needs as they arise and to be as flexible as possible in answering these challenges.
- — — Host: Many bankers say that Kazakhstan’s banking system continues to face what has been one of its biggest problems: its lack of access to foreign funding. It is obvious then that in conditions like these the role of the government as a substitute grows in stature immensely. BTA has been selected as an operator under government programmes, this includes mortgage refinancing and lending to SMEs. How much has been utilised already?
- — — Saidenov: Indeed, we are a middleman in a whole raft of government programmes. To the two that you, Fyodor, have just mentioned, I would add the funding of construction in Astana and Almaty that BTA is participating in and support to the farming sector. This is where we work with KazAgro. Under the mortgage rollover programme, a total of KZT 43 billion has been made available to the entire Group BTA, and KZT 1.45 billion has already been approved by the bank, meaning that this is the money that has already been disbursed to borrowers. Under the SME programme’s Tranche 3 with the Damu fund, we have been given KZT 22 billion, out of which KZT 15.7 billion has already been drawn down, which means loans that have already been granted and those that have been approved by our credit committees and are slated for being granted to SMEs, these two now equal KZT 8 billion and KZT 7.7 billion, respectively. Geographically, it’s our branches in the city of Almaty, West Kazakhstan, Karagandy and Aktobe regions that have led the way in this regard.
- — — Host: For our part, we’ve been monitoring the implementation of government programmes and have found that one of the problems that customers face is the sheer amount of time one needs to obtain the required papers, and it’s various government authorities, not banks, that are to blame. So much so that many banks now are even trying to help their customers overcome these problems. How efficient is BTA in this respect?
- — — Saidenov: Still, I think that these problems are solvable, by joint efforts. Banks, of course, can simplify things here and there, but common problems call for cooperation with the government. A case in point is the remote Public Service Centre (PSC) project: we now have these remote PSCs at 19 of our branches across Kazakhstan, which has reduced paperwork greatly. Now, if we turn to our own operations, this whole process has been streamlined, too, with many steps eliminated from the review of applications altogether. For example, when a mortgage rollover application is reviewed, we no longer ask for proof of income. If a borrower has made all his or her mortgage payments in a timely fashion in the past six months, then he or she will be entitled to have the mortgage refinanced at a better rate. I think that we, on our part, will do what it takes to reduce paperwork to a minimum, so that it could be over and done with, say, within a workweek.
- — — Host: “Trust” has become the watchword for the entire banking system now. How do you go about staying trustworthy? What will BTA’s new development strategy be like?
- — — Saidenov: I think that the most recent trends in customer numbers and deposits that I mentioned show that the trust is coming back. One major factor behind this is our biggest single shareholder, the Samruk-Kazyna fund, that holds 75% of our shares and represents the government. Of major importance is the fact that the government now plays a central role in stabilising the financial system – something that we’ve talked about already. Another important factor is that BTA’s new management is focused on the domestic market. Our key customers, those who we will be working with, are SMEs and corporate and retail customers within Kazakhstan. Also, it is a major difference from the bank’s previous strategy. Thirdly, our decision making is going to be as open and transparent as it can get, this will be the goal for every management level at the bank, from the Board of Directors to branch credit committees. If we are successful with our plans as I am certain we will be, the trust of our customers and the public at large will always be there.
- — — Host: Thank you very much for this interview and good luck with your new strategy.
- — — Saidenov: Thank you.