TBY talks to Salim Kriman, CEO of Bank Standard, on the bank’s operations, its credit strategies, and the strength of the sector.
TBY Bank Standard has become the largest private bank in Azerbaijan. How did it become such a major player in the banking sector?
SALIM KRIMAN Bank Standard has grown organically along with the economy supported by the oil boom and the continuous efforts of the state to develop non-oil industries. At the same time, it has benefited from the strategic mix between the inflow of individual clients in a fast-growth environment of personal income as well as the rapid expansion of the corporate sector. The bank has also been successful in offering competitive products to the market while maintaining unparalleled customer service quality.
In 2004, the bank underwent a major rebranding exercise, opening services to corporate clients. What were the core reasons for this move, and how has rebranding helped improve the bank’s profile?
At that point in time, the bank became fully independent from its parent in Moscow and turned into a truly local Azerbaijani bank. The shareholders developed a new strategy that entailed an increased focus on corporate clients and also bet heavily on innovative products for the emerging local financial market. These changes have us to believe that a major rebranding exercise was essential to reflect the strategy change and new approach to doing business. Success followed the rebranding, and today Bank Standard has become one of the top brands in the industry.
What are you targeting in terms of loans for SMEs, consumer, and corporate credit?
The goal is to further grow along these business lines. Consumers are being targeted through the introduction of new product ranges that cover diverse consumer segments and their expanding needs. Aside from classic corporate credit, we have also made significant progress in offering our clients a variety of trade finance arrangements. Our SME expansion strategy is in the final stages of development.
The IMF has noted that the Azerbaijani banking system needs to address the rising level of non-performing loans (NPLs) in the sector. What is Bank Standard’s strategy regarding NPLs?
We put an extra focus on due diligence work with newcomer clients and our main strategy is to improve pre-screening procedures prior to loan allocation. We have a system in place for the regular monitoring of our corporate client business activities. The level of NPLs at the bank in mid-2010 was less than 10%. Generally, we are very conservative in our approach to the bank’s portfolio.
With such a limited number of foreign banks in Azerbaijan, do you expect to see a rise in foreign banking activity here in the near future?
It would be very much to the benefit of the system to have more foreign banks. This would help introduce new operational standards, improve competition, and serve the ultimate goal of offering clients the best possible service and products.
What is behind the Central Bank of Azerbaijan’s delayed adoption of Basel II standards?
I think Azerbaijan’s banks still have a way to go here. Technical capabilities are yet to be developed and a quality statistical legacy is yet to be generated. I could say that between three to five years is a realistic term for the industry to adopt Basel II standards.
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