TBY talks to Dauren A. Zhaksybek, Chairman of the Management Board at Tsesnabank, on strengthening SMEs, restructuring the banking sector, and market penetration rates.
TBY Many banks have their headquarters in Almaty. Why did Tsesnabank (TSB) choose the capital Astana as its home base?
DAUREN A. ZHAKSYBEK It is good to be closer to the decision makers and major national companies. We work with Kazakhstan Temir Zholy, the state railway company, various oil companies, Samruk-Kazyna, KazAgro, and so forth. The list is huge. We try to work with all major players, as any bank of our size would do. We feel that our advantage is in our being located here in Astana. It gives us the advantage of being close to the decision makers and the main bodies of the financial sector. This could create discomfort for some, but we feel comfortable here. This isn’t to say we only work with the government. If you look at our loan portfolio, government entities constitute only a small percentage.
TSB has a historically strong presence in northern and central Kazakhstan. What strategies have you developed to replicate its regional success countrywide?
We serve the entire country. After 19 years of existence, we call ourselves a universal bank. We have branches in all regions. We also have around 90 service points that operate under these branches. We are present in all cities and regions of Kazakhstan. We serve all sectors of the economy and are highly client focused. Due to the fact that we started up in this region, we are stronger in the north and center than in the south of Kazakhstan. Our short-term strategy is to increase our penetration in Almaty and southern Kazakhstan. We do retail, SME, and corporate banking. Our retail branch is strong, and constitutes around 30% of our loan portfolio. It did, however, shrink due to the crisis, and we concentrated more on our corporate banking efforts. But overall we still have plans to grow in retail, and that is why we are opening offices across the country.
TSB opened a representative office in Russia. What are your targets for TSB’s operations abroad?
We opened that office to help our clients better penetrate the Russian market. We have a lot of clients working in Russia, and are going to open another representative office in Beijing, China. The conditions there are more challenging, but we believe that it will be a successful venture. Our operations abroad follow the operations of Kazakhstani businesses abroad.
What role will SMEs play in light of the government’s plans to promote the non-prime sectors of the economy?
Services definitely have a big role to play in diversification. SMEs are going into services and growing well. There are lots of services that you can get in the West that still don’t exist here. There will be a lot of progress in this area. Also, big national companies are outsourcing more and more, and that is good for the country because that role is going to be taken by SMEs. SMEs that support the oil and gas and mining industries also have a bright future. We do, however, have to make sure that SMEs are well defined in this picture, and have all the necessary support from the government.
What measures can be taken to increase the resilience of SMEs?
We need to introduce more flexibility for smaller companies. Laws need to be changed in that direction. We need laws that will protect individual entrepreneurs so that they are less harassed by government entities like tax agencies. We also need cheaper resources. Compared to other countries, I wouldn’t say that we have the highest interest rates, and the government has definitely made the right decision to offer low-interest SME funding.
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