The Business Year

Farid Akhundov


So Far, So Good

Chairman, Pasha Bank


From 1996 to 2003 Farid Akhundov held various positions at the British Bank of the Middle East including Head of financial control, Head of customer services, and Deputy CEO. From 2003 to 2005 he worked as the CEO of Bank Standard, and between 2005 and 2007 he was Director of F.T.F MMC, before becoming the Chairman of the Executive Board at Pasha Bank.

How would you assess the bank’s first five years in Azerbaijan? Pasha Bank’s first five years have been a period of physical as well as institutional development. Our three main […]

How would you assess the bank’s first five years in Azerbaijan?

Pasha Bank’s first five years have been a period of physical as well as institutional development. Our three main principles—transparency, integrity, and profitability—have been the foundations of our growth during this time, and they inform a very clear strategy as we look to the future. Thanks to these principles and the vision of our shareholders, Pasha Bank has established itself as a brand associated with ethical conduct and openness. The corporate sector, including SMEs as well as larger companies, has been at the center of our focus, and we have earned the trust of the business community. We have also invested our time, effort, and resources in boosting financial education in Azerbaijan. We feel we have a responsibility to the market, and we want to become a driving force for good corporate governance so that our commercial sector is as healthy and transparent as our financial sector. We also help universities that teach business and train financial journalists. We want to be known for our efforts in extending the market and encouraging competition, because we believe competition is a good thing; it brings depth and quality to the market.

What is your strategy looking forward?

We are now well into our second three-year strategy plan, which again is focused on corporate banking. Our operations are seeing robust growth, and we are excited about the future. Total banking assets are very low in Azerbaijan, occupying just 5% of GDP. This presents a great opportunity for overall sector growth. Nevertheless we plan to outgrow the sector. This is part of our strategy to increase our market share from its current 5%. Central to this strategy is the development and support of SMEs, which we believe are the backbone of the economy. Our intention is to make our client base 60% SMEs and 40% corporates. Pasha Bank supports small players to help them grow and develop in the market, and at the same time we want to split our activities fairly evenly. We are also developing private banking, which is part of our strategy to establish merchant and investment banking. We met our private-banking targets in 2012 and are putting into place even more ambitious objectives for 2013. We are now entering the third successful year of our seven-year private-banking strategy.

What differentiates Pasha Bank from its competitors?

We are not a transaction-driven bank. Instead, 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 Azerbaijan, to open accounts at other banks, and to handle deposits. This is something we are promoting in the market. Ideologically, it is different from what we have traditionally seen in Azerbaijan, but we are always with our clients.

“Our intention is to make our client base 60% SMEs and 40% corporates.”

What are your current expansion plans within Azerbaijan?

We believe that regional development is important for Azerbaijan, so for the first time in the bank’s history we will expand throughout the country. First, we will start with the West and North-West, and in the coming two years shift our focus to the northern and southern regions. Specifically, we will be opening new business centers, which is what we call our offices since we are not a retail bank. Currently we have four business centers, including a head office, and they are all located in Baku. Instead of opening branches throughout the country, we will be opening regional centers to oversee our operations in each city. The immediate plan for 2013 is to open business centers in Ganja and Zaqatala, which will cover a wide region extending to Sheki and the Georgian border.

How are your international operations progressing?

In December 2012, we opened Pasha Bank Georgia. We are currently finalizing the documentation and acquiring all the licenses in order to be fully operational in 2013. We are also investigating the Swiss market for private and corporate banking opportunities as well as looking at possible entry points in the Turkish market. Aside from this, 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 Turkey, 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. We are equally ambitious about moving forward both regionally and internationally.

How does Pasha Bank provide diverse banking services?

We do this in a number of ways. For example, we are issuing cards that offer our clients a number of features that previously didn’t exist in the market. We have both Visa and MasterCard, and this ancillary service brings significant value and convenience to our corporate and SME clients. Internet banking is another important dimension of our diverse product and service mix. We began offering fully operational internet banking services in 2012, and we believe that in terms of ease of use, customer friendliness, and security, it is one of the best platforms in the local market. One-on-one contact will remain at the heart of our customer-based model. However, we will continue to develop this direct online banking model in order to provide better service. The movement toward the use of remote access models is a trend that we will closely watch and pioneer in Azerbaijan. Again in terms of customer service, Pasha Bank offers a 24-hour concierge service, whereby our customers enjoy services and features anywhere in the world. The response has been tremendous. For example, many of our clients purchased tickets to the UEFA Euro 2012 championship in Kiev or sent presents from across the Atlantic. Other features include insurance for medical incidents or accidents while traveling. We are continually exploring services that may bring value or opportunity to our clients. For example, we are currently investigating the development of Azerbaijani legislation regarding Islamic finance, particularly in terms of investment funds. If we see the right environment for this, we may offer these new services to our clients.

How would you characterize changes to the banking sector over the past decade?

Since 1995, when I first began my career in the banking sector, I have witnessed 17 years of dynamic changes. The pace of change has also increased since the beginning of 2003, when President Aliyev took over and his policy to grow the economy was enacted. The economy has become viable and capable of weathering storms such as the financial crisis during 2007 and 2008. The argument can be made that Azerbaijan lacks certain regulations and liberalization, but in comparison to what is being seen in other post-Soviet nations in just 20 years, we have made progress. Imagining the next 20 years of our future, I am very positive about the business climate in the country. The administration actively supports private sector development. We also have an entrepreneurial spirit as a country, and this combination will make the country very strong and competitive in the world.



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