AWAY GAME

Azerbaijan 2012 | FINANCE | B2B: UP & COMERS

As Azerbaijan begins to outshine its neighbors in terms of financial stability and banking infrastructure, local banks are looking to flex their muscles overseas.

Ali Jam
ALI JAM
CEO & Owner
Royal Bank
Farid Akhundov
FARID AKHUNDOV
Chairman
Pasha Bank

What have been the landmark achievements of your bank?

ALI JAM I acquired the bank at the end of 2003. At the time we had one office and around 13 people were employed. The development of the country was so strong I couldn't keep myself out of the current, and it is that current that has brought us to where we are today. Starting at the beginning of 2004, we began developing the core strategies that would drive the bank's penetration of Azerbaijani society. Back then we focused on the retail business and proceeded to expand the number of branches in the country. Currently, Royal Bank has 32 branches and nine sub-branches. In addition, we now have 630 employees. Over the last few years, we have been growing at a faster pace than Azerbaijan's GDP: 207% in 2007, 179% in 2008, 89% in 2009, and then due to the crisis in the banking sector we focused on consolidating our achievements. Royal Bank's assets are close to $250 million, its deposits are at about $100 million, and its portfolio is around $120 million. Fortunately, the economic policies implemented by both President Ilham Aliyev and his team—as well as the Central Bank of Azerbaijan (CBAR)—have been very successful and have protected our banks from the crisis, keeping them on their feet.

FARID AKHUNDOV We are very pleased that after five years of full operations we have reached the goals set forth in our first business strategy. We have built the bank both as an institution and as a brand. Pasha Bank now has a name, operation, image, and reputation as well as a capable and young workforce. Our brand is rightly associated with steadfast financial stability, transparent operations, and quality of service. Pasha Bank has become a strong player in the corporate banking sector. We are active in treasury operations and building our securities portfolio, taking into consideration the importance of the securities market for Azerbaijan's future growth. Another of Pasha Bank's achievements during this period has been our geographic expansion—we have come to realize the great opportunities other markets offer. Thus, in September 2011 we opened our representative office in Georgia, while preparatory work for the opening of our office in Switzerland is in full swing. Another reason for going regional is to support our customers' expansion strategy in neighbouring countries. We have done a lot, but there's a lot of work ahead to gain the capacity to tap opportunities inside and outside Azerbaijan.

What are your views on the state of development in the banking sector in Azerbaijan?

AJ Thanks to CBAR's guidance, Azerbaijani banks are now in a much better position than their regional counterparts. Azerbaijan, as a young country with a young banking sector, has a lot to learn from its fellow bankers in the West and the Middle East. In order to achieve this, Royal Bank opened a new bank in Dubai called Royal Investment Bank in 2011. It is an independent entity that allows us to gain more experience from the banking sector in the Middle East and expand our vision to North Africa as well. It is important for us to think regionally rather than locally.

What opportunities do you see in the bond market?

FA We observed positive moves in terms of bonds and corporate ratings in 2011. We see Pasha Bank as a market maker and as a liquidity provider in the security market. In 2010 we issued a few corporate bonds with financial companies as well as with leaders of industrial sectors operating in Azerbaijan. Our activities in the corporate bond market have intensified in 2011. However, it was very crucial to educate the market and to let businesses understand bond-related issues better. For this reason we realized a wide-scale education project in cooperation with the State Committee for Securities. We have financed the publication of books on capital markets and the stock exchange, published in local media articles by experts in these fields. Our main aim in bonds issuing will be cooperation with the companies that have reached a satisfactory level of transparency in the their operations and possess clear development strategies. Properly audited financials are an essential prerequisite as well.