The FINANCIAL — “Despite the fact that Halyk Bank has a huge amount of assets and resources available, we are not going to grab a big market share,” Nikoloz Geguchadze, General Director of Halyk Bank Georgia, told The FINANCIAL. “We were and are going to establish a universal bank in Georgia,” Grigoriy Marchenko, CEO and Chairman of the Management Board of Halyk Bank, explains. “Risks have risen and Georgian banks are still under the negative effect of the war. However Halyk Bank Georgia is at the starting point and thus has the advantage.” In an exclusive interview with The FINANCIAL Halyk Bank representatives reveal their plans regarding Georgia.
“The mission of Halyk Bank of Kazakhstan, in entering the Georgian banking market, was not only to serve Kazakh companies, but also to develop the potential of a new Georgian financial market,” Grigoriy Marchenko, CEO and Chairman of the Management Board of Halyk Bank, told The FINANCIAL.
“We are going to develop within the market and offer the best service to our clients. We’ve invested approximately USD 21 million in Halyk Bank Georgia,” Nikoloz Geguchadze, General Director of Halyk Bank Georgia adds.
“We were and are going to establish a universal bank in Georgia which will be working in all directions: retail banking, small, medium and corporate business. BTA will be our competitor on the Georgian market too, like other banks. We are working with BTA in Russia, Kyrgyzstan, Kazakhstan and now Georgia too. Our advantages will be high quality service, differentiated products, highly qualified employees and competitive tariffs,” Marchenko says.
Halyk Bank designed its first branch on Kostava Street, Tbilisi recently.
Even though Kazakhstan had financial difficulties a year and a half ago, Halyk Bank increased its number of deposits and amount of assets. While other banks in Kazakhstan had an outflow of funds, Halyk Bank managed to increase its inflow. This was thanks to much diversified assets and a high reputation among the public.
“As for the influence of the August military operations on our investments, we think that the situation is getting back to normal. Standart&Poor’s has already annulled the negative forecast for Georgia. The foundations of the Georgian economy have not been broken plus there has been aid of USD 4.55 Billion from western donors. As I know the aid will be provided by 38 countries and 15 international organizations. Of course the risks have risen and Georgian banks are still under the negative effect of the war, but it needs to be mentioned that Halyk Bank Georgia is at the starting point of its operations here and thus has an advantage,” said Mr. Marchenko.
“Georgia has a very attractive strategic position for Kazakh investors. They have many businesses here. The world financial crisis didn’t have much of an effect on the banking sector in Georgia. All this served entirely as a reason for Halyk Bank to enter the Georgian banking market,” told Mr. Geguchadze.
• Best Bank in Kazakhstan by Euromoney, July 2008
• Best Managed Bank in Emerging Europe by Euromoney, July 2008
• Best Retail Bank in Central Asia by The Asian Banker, May 2008
• Best Retail Bank in Kazakhstan by The Asian Banker, May 2008
• Leading Bank in Corporate Governance in Emerging Europe by Euromoney, January 2008
As for the Kazakh banking system, it is highly concentrated. Ten of the largest banks control 94% of total assets. It means that the whole system enjoys the highest possible pre-investment credit ratings. The ten stated banks therefore set the general trend. In Russia, ten of the largest banks control only 54% of all assets. Reduction of the number of financial institutions usually boosts investment attractiveness of the remaining ones, in the eyes of foreign players.
According to the General Director of Halyk Bank Georgia the only effect of the war was the postponement of the opening date of the branch.
“We were going to open the branch at the end of September, but it was opened at the end of October. The materials needed for the office couldn’t be transported by our suppliers,” the General Director told The FINANCIAL. “We have not given credits to the companies that could have had problems during the war. As we are starting from a clean page we will have the opportunity to attract the best clients. We are going to open about 10 new branches in the next two years. Halyk Bank Georgia will offer high quality service and competitive interest rates on loans. Our interest rates on loans will be a bit lower than our competitors’ rates.”
1H 2008 Total Market Shares of Kazakhstan (Halyk Bank Kazakhstan)
Total Assets 14.0%
Corporate Loans 13.9%
Total Retail Loans 18.2%
Consumer Loans 15.1%
Payment Cards 50.3%
Fees and Commission Income 17.2%
Total Deposits* 22.2%
Total Retail Deposits 23.7%
Total Corporate Deposits* 21.4%
Current Accounts 38.0%
Term Deposits 21.6%
Pension Fund 29.6%
Source: NBK and FMSA statistics, Halyk Bank
Written By Levan Lomtadze