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Eurasian Business Briefing Banking & Finance

Governor looks to position AIFC as centre for Islamic banking in CIS

AIFC Governor Kairat KelimbetovKazakhstan is planning to promote its new Astana International Financial Centre (AIFC) as a leading regional platform for the spread of Islamic finance and banking across the CIS region, the centre’s governor Kairat Kelimbetov confirmed this week. (more…)

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More Russian IPOs planned as investors return to Moscow

Detsky MirForeign investors are being lured back into Russia by businesses seeking to tap the public equity and bond markets, the Financial Times reports today, after almost three years when they have shied away over concerns of the impact of sanctions as well as worries over the economy.
(more…)

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Gazprom’s Asian charm offensive struggles to excite investors

Singapore Stock ExchangeAs their board considers the possibility of a share placement on one of Asia’s major stock exchanges – most likely Hong Kong – executives from Russian energy giant Gazprom flew into Singapore and Hong Kong this week for the first time since 2015 in a bid to drum up interest; but even after last year’s commodities rally and a revival in Russian stocks, Asian money managers have yet to be persuaded that Gazprom is worth adding to their portfolio.
Deputy Chief Executive Officer Andrey KruglovNews that Gazprom (more…)

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Saudi Aramco to woo Chinese with IPO

Saudi Aramco compound DahranSaudi Aramco has asked JPMorgan Chase & Co and Morgan Stanley to help with what, at $100bn, is expected to be the world’s biggest IPO, according to the Wall Street Journal, while HSBC has emerged as the leading contender for a role among a list of five banks that could provide a pipeline to Chinese investors. (more…)
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Kazakh banking consolidation continues with Halyk and Qazkom in merger talks

Qazkom BankHalyk Bank logoThe ongoing consolidation of Kazakhstan’s banking sector could be about to undergo a major step change after it emerged that two of the country’s largest financial institutions, Halyk Bank and Qazkon were in merger talks. If successful, the new bank would command 38% of the country’s total bank assets (around $30bn) and have a combined loan base of approximately $20bn.
A rationalisation of the sector has been under way since 2015 when, with almost all of Kazakhstan’s banks still coming to grips with the fallout from the financial crisis of 2008/9 which left them grappling with weak balance sheets and a large number of non-performing loans (NPLs), the sector began coming under added pressure from the slowdown in the Chinese and Russian economies and plunging oil prices. Real GDP growth dropped from 4.3% to 1% and in August 2015 the authorities in Astana decided to float the tenge, causing its value to drop by 30% overnight,.
The devaluation impacted on all the country’s banks with Qazkom’s woes compounded by its acquisition of the nationalised BTA Bank (whose NPL rate stood as high as 89%) earlier in the same year.
Following government intervention, principally through the launch of a $2.8bn fund to help its banks tackle the problem of their ever-present NPLs, the National Bank of Kazakhstan (NBK) last year introduced new rules forcing them to raise their equity-deposit ratio and to increase the maximum permissible tenge deposit rate from 10% to 14%. Having also signed up to the Basel III regulatory framework accord (the global voluntary regulatory framework that calls for participating countries to strengthen their banks’ capital requirements by increasing liquidity and decreasing leverage) it then demanded that they raise their minimum equity levels to $300m – a 1000% increase – by 2021.
With only a handful of banks (including Halyk and Qazkom) currently meeting those requirements, the NBK’s policy was bound to trigger a wave of mergers and acquisitions. In the same year that Kazkommertzbank bought BTA, Forte Bank executed a reverse merger the Alliance and Temir banks, while the Eurasian Bank took over BankPozitiv.
Following news of the possible merger shares in Halyk Bank fell by 11.4% percent and those Qazkom increased by 6%.

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Trump victory gifts Russian oligarchs $29bn as energy share prices soar

Gennady TimchenkoRussian oligarchs: Rising share prices and a resurgence in the value of the rouble brought on partly by the prospect of a Trump administration have added approximately $29bn to the fortunes of some of Russia’s richest men, making President Putin’s inner circle among the chief beneficiaries of last November’s presidential election, according to figures compiled and released by Forbes this week.
Among the biggest winners (more…)

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Nabiullina named best European central banker as purge continues

CBR Chief Elvira NabiullinaThree years into her purge of the country’s banking sector which to date has seen 276 financial institutions driven out of business and a further 28 put through the regulator’s financial rehabilitation programme, the Central Bank of Russia’s Elvira Nabiullina has been named Europe’s best central banker for 2016 by the UK magazine The Banker. (more…)

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Islamic banking proposal could see ‘trillions of dollars’ flood into India

Islamic bankingIslamic banking: Moves by the Reserve Bank of India (RBI) to offer its banks an “Islamic window” through which they would be able to introduce a limited number of Sharia-compliant or interest-free banking services could lead to “trillions of dollars” of Gulf money being invested in the sub-continent, the Indian Centre for Islamic Finance (ICIF) said yesterday. (more…)

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Thousands apply for Iranian credit cards as consumer boom heats up

Valiollah Seif Governor Central Bank of IranIranian credit cards: More than 12.000 Iranians rushed to apply for credit cards yesterday as its Central Bank authorised their issue for the first time in the country’s history. But (more…)

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US treasury accused of ‘terrorism’ as Russia looks to win race to secure foothold in Iranian banking sector

Iranian women in banksIranian banking sector: Russian banks are ready to steal a march on their Western counterparts by establishing a foothold in Iran, according to a senior figure in the Russian banking sector, just weeks after (more…)

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Shariya Review Bureau to help Zaman roll Islamic banking across CIS

Shariyah review bureau logoIslamic banking in CIS: Kazakhstan’s Zaman Bank has appointed the Shariyah Review Bureau (SRB) to help roll out its portfolio of Shariah-compliant financial products and services across the countries of the CIS, it announced last week. (more…)

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Moscow rules out VTB sale in 2015

VTB Office towerVTB sale: Russia’s state-owned VTB will not be privatised this year, Deputy Prime Minister Igor Shuvalov announced today. “We consulted and decided that this is not the best time. We will not offer VTB shares this year,” he told Interfax. With (more…)

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Tehran Stock Exchange accepted for WFE membership

TSE chairman Hassan Qalibaf AslThe World Federation of Exchanges (WFE) has written to he chairman of of the Tehran Stock Exchange (TSE) approving the Iranian exchange’s membership of the 63-strong international trade association of publicly regulated stock, futures, and options exchanges, TSE chairman Hassan Qalibaf Asl confirmed this month. The move will ease Iranian capital’s entry into the global network of the stock exchanges and investors access to their data and information, he said.
TSE membership (more…)

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AIIB membership set to rise by over 50%, President predicts

AIIB President elect Jin LiqunAIIB membership: The number of AIIB member states is likely to rise from 57 to almost 90 by the end of the year, AIIB President Jin Liqun told a side meeting at the World Economic Forum’s annual New Champions meeting in Tianjing this week. “We have almost 30 countries (more…)

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$100m CAREC motorway becomes first ADB-AIIB co-financed project

CAREC Transport corridor CAREC motorway: The Asian Development Bank (ADB) yesterday agreed to lend Pakistan $100m to complete the remaining 64km section of the M4 motorway linking the towns of Shorkot and Khanewal in the province of Punjab, giving it the distinction of being the first project to be co-financed by the ADB and the newly established Asian Infrastructure Investment Bank (AIIB).
Pakistan’s Secretary for Economic Affairs Tariq Bajwa and ADB Country Director for Pakistan Werner E. Liepach signed the loan agreement during a ceremony which was also attended by Finance Minister Senator Ishaq Dar and ADB Vice President Wencai Zhang.
“Pakistan must grasp the opportunities presented by its strategic location. Investments in transport and connectivity under the framework of Central Asia Regional Economic Cooperation (CAREC) programmes, as well as other regional cooperation initiatives,” ADB Vice President Wencai Zhang at the signing.
The project marks ADB’s first co-financing agreement with the AIIB which is expected to approve the $100m at a board meeting later this month. The United Kingdom’s Department for International Development (DFID) has also committed a $34m grant for the project. ADB will administer both the AIIB loan and the DFID grant. The project is part of the 1,800 km CAREC transport corridor linking the port city of Karachi in the south, to country’s inland urban centres and onward to Afghanistan and the Central Asia countries.

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EBRD signs MoU with Silk Road Fund in boost to One Belt One Road initiative

EBRD VP Phil Bennet and Silk Road Fund Wang Yanzhi 150616The European Bank for Reconstruction and Development (EBRD) yesterday signed an MoU with Beijing’s Silk Road Fund in a move that is expected to give added impetus to China’s One Belt One Road initiative, the EBRD press office said.
Under the terms of the MoU, (more…)

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Financial centre planned for Iran’s Qeshm Island as window to mainland

Qeshm IslandIran wants to set up a financial centre on Qeshm Island in the Strait of Hormuz to act as a gateway for banks and other institutions looking to gain a foothold in the country, according to Farhad Taghizadeh-Hesary, a senior adviser to the island’s development agency. A number of Chinese and (more…)

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China to open yuan trading branches in London and New York as currency

Yuan

The China Foreign Exchange Trade System (CFETS), China’s state-owned currency marketplace is preparing to open yuan trading branches in London and New York as part of efforts to promote the yuan’s global status, it has confirmed. It is also planning (more…)

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Bejing opens up $8trn Chinese credit card clearing market up to competition

Chinese credit cardsBeijing this week officially ended UnionPay’s longstanding monopoly and opened up the CNY 55 trn ($8.4bn)  Chinese credit card clearing market to domestic and foreign players. The move has been four years in the making since (more…)

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AIIB membership set to hit 100 by year end, predicts president

AIIB President Jin Liquin at Asia News Network June 2016AIIB membership: The 57-strong Asian Infrastructure Investment Bank (AIIB) will have almost 100 member countries and regions by the end of the year, its president Jin Liqun told editors at the Asia News Network’s annual board meeting in Beijing this week. “Up to 30 countries (more…)

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