Articles/Mikhail Lomtadze gave an interview to Expert Kazakhstan

"Expert Kazakhstan", February 2008

Mikhail Lomtadze, the Chairman of the Management Board of the Caspian Bank, gave an interview to “Expert Kazakhstan”

Commenting on the situation in the banking sector of Kazakhstan and the reputation of the Caspian Bank within that sector, Mikhail Lomtadze provided depth on the following issues:

The financing problems, caused by the global banking crisis, affected not only Kazakhstan banks, but the Kazakhstan economy as a whole. Combating this pressing issue is now the objective of most banks, regulatory bodies, the National Bank and the State. In the long term perspective, the dependence on foreign borrowings will decrease. As a consequence, the competitiveness of Kazakhstan banks will increase.

The main pattern in 2008 will be for foreign investors to enter the Kazakhstan market mainly as a result of a reduction of the assets value of national banks.

The involvement of foreign investors will bring certain advantages, such as, solving the problem of funding sources. On the other hand, disadvantages exist as well from international financing. In other words, we may come across such foreign investors purchase stocks of shares strictly for the sake of dividends or as a way to wait for a better time to sell shares for a profit margin.

It is important for investors to have significant influence over the policies and strategy of a bank. There is a need for funding, introduction of corporate governance, improvement of the quality of services, upgrade of qualifications of the management and an expansion in product lines. A positive example of investor involvement in bank’s activities has been observed in the Caspian Bank. A team from Baring Vostok, a direct investments fund, having a share in the bank’s capital, has been actively engaged in such a project jointly with Vjacheslav Kim, a partner in the Caspian Bank, and the Chairman of the Board of Directors who recently headed the investment committee of Baring Vostok in charge of Kazakhstan.

The Caspian bank is known for having one of the highest capital levels and one of the lowest foreign indebtedness among all of Kazakhstan banks. Over the second half of 2007 the bank’s deposits increased by 25 percent. The Caspian Bank has one of the biggest regional networks in Kazakhstan with 150 branches and offices. Although inferior in comparison to some other banks in balance sheet figures, the Caspian Bank is very active in such segments as consumer lending, loans to medium and small size companies, plastic cards and express credits. The structure of the bank’s balance sheet allows for dynamic growth and expansion.

The business strategy of the Caspian Bank for the next three to four years envisages the creation of a retail services network, introducing new lines of products, such as insurance, leasing and credit cards. Once we achieve a stable position in Kazakhstan, we plan to expand beyond the nation’s borders. Most probable at this time appears to be involving markets of Central Asia and Russia.