The FINANCIAL — Shahin Mammadov, newly appointed CEO at PASHA Bank Georgia, gave his first exclusive interview to The FINANCIAL. In the interview, Mammadov talks about the main challenges he has faced in Georgia and the features that both separate and connect Azerbaijanis and Georgians.
“We started our operations in February 2013. It has been more than a year since we entered the Georgian market. In Georgia we tried to establish the same corporate strategy which we had already developed in Azerbaijan. However, the two markets are quite different. We were focusing on corporate and investment banking and found that the stock market is not well developed in Georgia. The investment banking is one of the main business lines of PASHA Bank in Azerbaijan. We have a good practice of supporting corporations to develop and get financing for their bond issuance. In Azerbaijan PASHA Bank is the market leader in that area. Accordingly, we have found it to be one of the main tasks here in Georgia. Georgian corporations are quite well developed,so attracting them and offering adequate services has been an additional task for us. Meanwhile, with our individual approach we do not find it difficult to supply all corporations with the requested services,” said Mammadov.
Q. Which steps does Georgia need to take to develop its stock market?
A. The stock market remains a developing issue in the majority of post-Soviet countries. When we first started developing the stock market in Azerbaijan we overcame the challenges by making changes in the legislation, in the education of corporations and explaining the main advantages of security issuance. Creating the first success story was the hardest but the most instrumental step in its further development. After that we achieved agreement in terms of legislation. This is the first issue that needs to be developed in Georgia. Articles relating to corporate issuance should be more concrete. These issues can be easily solved. We just need one or two cases of cooperation with large corporations.Furthermore, it will boost the market. The finance sector is also less active in Georgia in comparison to in Azerbaijan. We started from non-banking credit institutions in Azerbaijan. Later on, we made good deals with the telecommunication, oil and gas industries. In Georgia we also need to find some good partners, either financial institutions or big corporations. In terms of this we need to negotiate with the National Bank, with the Ministry of Economic Development and with the Ministry of Finance. One or two such cases will then be a sufficient base for its further development. Here in Georgia we do not have a fully developed investment banking team. Therefore, at the beginning we will use our resources in Azerbaijan. They have good experience and will be useful in this process. During our work here the main obstacles in this direction have been the legislation, meeting with the large corporations, and explaining the difference between lending and stock issuance. We are open to holding discussions with any financial institution in regard to this.
Q. What are the main distinguishing features of doing business in Georgia compared to in Azerbaijan?
A. Banking is banking everywhere. But some features differentiate Georgia from Azerbaijan. Georgian corporations are more transparent in terms of doing business. There is good financial management and financial control here. It is easy to understand their business. The Georgian market is technologically driven. You can find customers who are not physically communicating with their banks at all as they are conducting all their dealings online. However, that is not our tactic. We are all about developing relationships with our customers and approaching them individually. We find it hard to deal virtually. Face-to-face cooperation is preferable when referring to corporations. However, saving time is a most valuable issue so we are working on this direction. Georgian consumers are very price sensitive. They openly negotiate prices with banks. I think that this is one of the advantages of the Georgian market. Customers are aware of the terms, the costs, and it is easy to communicate with them. Rates are lower in Georgia than in Azerbaijan but still remain a point of negotiation. It is all of this that makes the Georgian market more interesting for us.As well as these factors, exchanging experiences between Georgia and Azerbaijan has been an important element for me.
Q. How does consumer behavior vary between the two neighboring countries?
A. Georgian retail clients are more prone to technological advancements. This is also developing in Azerbaijan and gaining popularity. As already mentioned, Georgian consumers are more sensitive towards prices. While as for the corporate sector, the services are more complex and consumer behavior in Georgia and Azerbaijan is almost equal. However, customers are customers all over the place. All of them demand an individual approach, require cheaper resources and funding.
One year back we launched internet banking in Azerbaijan. It gained huge popularity as everyone is looking to save time in their lives. Meanwhile, contrary to in Georgia, such services are not offered by all of the banks operating in Azerbaijan. Hence, as the service is so crucial in Georgia we have already started working on it and will launch it by the end of the year.
Q. What are your plans for 2014?
A. Our strategy is to become one of the leading corporate bank in Georgia. We want to supply our customers with their partner bank in Azerbaijan, Georgia and Turkey. Georgia has the largest share of trade with its neighbor countries. Accordingly being nominated as the corporate regional bank is a huge advantage for our customers. PASHA Bank has a number of strong international partnerships. For example, we are corporate governance beneficiaries of the IFC program in Azerbaijan and work with the Black Sea Trade and Development Bank. We also work with banks in Europe, the US, Southeast Asia, China, and Japan. This broad global footprint allows us to support any client who is looking to do business in different parts of the world. We are able to accompany them, help them establish local relationships, and provide insights into new markets. In Georgia, we are also eager to develop trade finance services, which we have found to be less developed.
Q. PASHA Bank is actively sponsoring various projects in Georgia. What are the main criteria by which you determine which projects to support?
A. One of our goals is to be a socially responsible company. This is part of the overall strategy that we have planned for the end of 2017. Therefore, the main criteria we refer to when selecting a project to support is to understand what the specific project will bring to the country and its economy. Helping to develop the business environment and committing to the welfare and cultural development of society is a key point for us. When considering specific cases it is important for us that they should fit with our strategy to benefit the community and society as a whole.
Q. What is the main goal that you want to achieve while in this post?
A. We are planning to sustain our strong financial position and to develop as a corporate institution. The philosophy of our bank is integrity, quality and profitability. And this is what we want to deliver to Georgian customers.Our corporate clients are mostly active in the transport, ICT, agribusiness, trading, services, hospitality, construction, and energy sectors. So, with such a wide range of sectors we are focused on increasing our customer base and keep leadership position in corporate banking segment.
We believe in the relationship-banking model, for both corporate and private banking. We focus on what clients need rather than on selling banking products and have developed an open-architecture system, meaning that we do not limit our clients to specific services. We are prepared to support our clients’ activities inside and outside of concrete market, to open accounts at other banks, and to handle deposits. This is something we are promoting. Ideologically, it is different from what we have traditionally seen in banking sector, but we are always with our clients.
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