The FINANCIAL — PASHA Bank Georgia has identified its market niche and finalized localization of brand platform. All in all, for the two years of its operation in Georgia the bank positioned itself for sustainable growth for 2015. With PASHA Bank now already in Turkey, the bank believes, that its operation in the region will become more efficient from 2015.
“PASHA Bank has been operating in Georgia for two years already. First year we were mainly focused on administrative issues while 2014 was a formative year in many other respects. We completed staffing of the front-office by the mid of the year. For the first time we became able to cover the entire target segment of ours, which is made up of large and medium-sized enterprises. Apart from that we also increased our portfolio almost ten-fold compared to January 2014. While the growth is rather aggressive, the base from where we started was fairly small, which accounts for the unusually rapid growth,” said Shahin Mammadov, CEO at PASHA Bank Georgia.
Q. PASHA Bank is a Baku-based regional financial institution, a part of investment group – PASHA Holding. Can you tell us shortly about the group?
PASHA Holding is a diversified investment vehicle with interest in banking, insurance, property development, construction, tourism and other sectors. As of December 2014 its Total Assets are approximately AZN 3 billion.
I will try to provide you with brief information about the companies of PASHA Holding: PASHA Bank was incorporated in 2007 and it focuses on delivering best in class banking services to the rapidly growing corporate sector of Azerbaijan. The bank is rated B+ by Fitch Ratings and bb- by S&P. It has been actively providing capital raising services and was named Azerbaijan’s Best Investment Bank by Emeafinance (2012) as well as International Finance Magazine (2013, 2014).
Kapital Bank is also a member of PASHA Holding. It was formed as a result of a merger of three major State owned banks – Agro-Investment Bank, Industrial-Investment Bank and Savings Bank in 2000. Kapital Bank boasts the most extensive branch network in Azerbaijan and is rated B+ by Fitch Ratings and B1 by Moody’s.
PASHA Holding owns two companies in insurance sector: PASHA Insurance and PASHA Life. PASHA Insurance offers more than 30 types of products to corporate and retail customers, while PASHA Life is mainly focused on retail services. Along with standard insurance products it has developed a high-end Key Man Insurance product aimed at top executives who play a crucial role in the day to day management of their respective organizations.
PASHA Holding is represented in hospitality sector by PASHA Travel, a company with the leading position in the Azerbaijani market. Over the course of the last several years PASHA Travel has developed a network of global alliances allowing the company to put together variety of travel packages for budget travelers and premium customers alike. PASHA Travel succeeded in building a strong reputation of a reliable outsource partner for corporate sponsored business trips.
PASHA Holding is the owner of PASHA Construction, one of the largest businesses of its kind in Azerbaijan. As of the end of 2014 its completed project portfolio exceeds 1,000,000m2 worth of projects, with further 756,000m2 currently under construction. These developments include retail, residential, office space, hotels and large mixed use properties. The list of the successfully completed projects includes but is not limited to – Four Seasons Hotel, Absheron JW Marriott Hotel, Port Baku Towers, Nizami Residence and others.
Q. How long has PASHA Bank been operating in Georgia and how would you estimate this period?
A. PASHA Bank has been operating in Georgia for two years already. First year we were mainly focused on administrative issues while 2014 was a formative year in many other respects. We completed staffing of the front-office by the mid of the year. For the first time we became able to cover the entire target segment of ours, which is made up of large and medium-sized enterprises. Apart from that we also increased our portfolio almost ten-fold compared to January 2014. While the growth is rather aggressive, the base from where we started was fairly small, which accounts for the unusually rapid growth.
We entered a number of syndicated deals with Georgian banks: considering their scale and other characteristics, some of them were unprecedented even in the original Azerbaijani market of PASHA Bank.
We have identified our market niche and have finalized localization of brand platform. All in all, for the two years of our operation in Georgia we have positioned ourselves for sustainable growth for 2015. With PASHA Bank now already in Turkey, we believe, that our operation in the region will become more efficient from 2015.
Q. You mentioned the news regarding PASHA Bank entering Turkish market. Can you tell us what this means to Georgian customers?
A. Turkey is Georgia’s largest trading partner. Basically all local companies that do business with Turkey now have the opportunity to deal with a single financial institution in both countries. Like Georgia, Azerbaijan has a very significant trade turnover with Turkey. Any company from our region now is able to access financial services at a single institution, regardless of which country it is physically based in.
Q. Are there any new businesses lines that PASHA Bank is planning to launch in the nearest future?
A. Natural extension of our current core competence of large-scale corporate banking is entering into SME segment. We are presently researching this opportunity. We want to make sure that as an institution we are ready to cover the SME sector, which is several times larger, by number of entities, than large corporate segment. This is something we are looking at and most likely we will decide upon our next steps closer to the end of the year.
Q. At present PASHA Bank offers solely corporate banking service. Are there any expectations for you to start serving retail segment as well?
A. As for the retail banking, we are not planning to enter retail for the current strategic period which encompasses next three years.
Q. What are your plans for developing bond market in Georgia?
A. PASHA Bank in Azerbaijan is one of the leading banks in terms of handling bond originations. We are looking at ways to transfer our parent’s expertise to Georgia and try to duplicate our success in Azerbaijan in our local market as well. At the same time we should keep in mind that the market realities in Georgia and Azerbaijan are quite different. Interest rates on corporate loans in Georgia are lower than those in Azerbaijan, which somewhat limits the appeal of bond financing to the largest corporates. But there are many other reasons apart from cost of funding that might induce a corporate to issue a bond. We already have certain indications of interest, hopefully mid-year we will know more about the market.
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