What brought Demir
International Bank to Kyrgyzstan; the reason may
be a large number of Turkish companies operating
here, perhaps there are other reasons you can tell
us.
Demir Kyrgyz International Bank is the first
overseas bank of Turkish Demir bank. It was opened
on May 1997. We have been conducting operations
in Kyrgyzstan for 5 years now. The Bank's shares
brake up is as follows: 70% of present belongs
to Turkish shareholders: two individuals, one
of which represents a major Turkish group, Aidin
Duan who owns another Turkish bank and the biggest
newspaper in Turkey. The second shareholder is
the ex-holder of Turkish Demir bank. This keeps
70% of total shares. The rest of the 30% belongs
to IFC (15%) and another 15% is our sales section.
There are a large number of Turkish citizens and
companies in Kyrgyzstan but another reason is
according to the Turkish evaluation, Kyrgyzstan
is highly developed. The opening date of Demir
International Bank was May 29, 1997. Why is our
bank here in Kyrgyzstan? Our ex-Turkish president
Suleiman Demuya met with Akaev and they are good
friends, not only in politics. After discussion,
they decided that a Turkish bank should be opened
in the country because Turkish banks seem to have
recovered after the crisis in Turkey. At the time
there was not an international bank in Kyrgyzstan.
There was one but it moved to Almaty. Demir Bank
was one of the most active ones in Turkey and
the owner of this bank was very close to the president
so based on that acquaintance, the bank was opened
in Kyrgyzstan. The main purpose is of the original.
We brought total capital of 1 million USD. By
that time it was the biggest capital. Our main
aim is to introduce modern bank techniques and
modern bank services, having a style, which displays
modern bank in the country. As you mentioned,
we are different from others because this bank
has a structure and organization like the one
in Turkey. Whatever you see in Turkish Demir Bank,
Demir International Bank Holland, Demir International
Bank Kazakhstan and so on, it has the same structure
and same management everywhere. So we are training
banking staff and other banks to improve the banking
system.
Since you mentioned some of the ways in which
you assist the local banking sector here, what
is your vision of the sector today and the contribution
that it has made towards its improvement There
have been major changes introduced by National
Bank; regulations, standards that not every bank
meets. Perhaps you can tell us your vision of
the banking sector today after those changes.
Our total capitalization of the bank is 13 million
USD and of course it is very small. Russia demands
to concentrate on the budget. There was no big
banking activity in the country but now we have
changed and Kyrgyzstan accepted liberty and democracy.
Kyrgyzstan is a young country.
A totally new era opened for it. But it actually
is far behind the modern banking system. It is
hard, because all laws are mixed. Now they are
trying to clean and to create necessary laws and
legislation of the bank. They have gotten better
in this factor. I think they will continue doing
good work. President of the National bank Mususa
is really keen on that and he is trying his best
but of course there is social contradiction in
the banking system of the country.
Auctions of 6-5% of the money of the banking system
are under exchanges. It makes long extension expensive.
That's the reason why 98 banks went bankrupt last
year. There is no deposition in the country.
Weak banking creates distrust in the minds of
the citizens. But today we are very successful.
Osh branch had mostly users from Poland. But we
are successful now because we have tremendous
increase in local currency and local citizens.
Everybody knows that there was crisis in Turkey
in 2002, our mother Demir bank collapsed. The
bank was sold after that but we kept our theme
and strategy. Based on that our last year was
difficult but the year of money has chosen us
as the best bank of the country, in 2000 as the
best foreign bank in the country and in 2001 the
best bank of the country. And of course, September
11 affected the entire world and all banks here
as well. So our goal is create trust and to introduce
new banking agency. In July, may be, in August
there was absence of visa cards, checks etc. So
we had time to introduce visa cards. We tried
to introduce checks but in this part of the world,
it is new. We encouraged other banks to follow
us, but nobody followed us. Now we are in the
age of international tourism. So it is our task
to bring new technologies used traditionally in
Europe and the USA and to introduce them one by
one, thus creating the desired banking system.
What would you consider to be your competitive
advantages? From reading about Demir International
Bank I have gathered that it is basically its
strong capital shareholders that provide security
and strength. But what would you consider to be
Demir International Bank's competitive advantages
in comparison with other banks here in Kyrgyzstan?
Also, you mentioned some of the products you wanted
to introduce and you are working on this such
as credit cards, telemachines, checks, etc. Do
you think you will be able to provide this all
around the country or will your services be limited
to Bishkek?
Shortly, our services are according to international
standards, we offer trust and security to the standard
shareholders. I forgot to say that we have another
branch in Osh, southern part of the country and
in our expansion plan we are related to the entire
country, which is very hard. In order for to work
out well, you must purchase everything necessary.
Our aim is to go slowly into the country. We opened
Osh branch in 1998, our aim is to open another branch
in Jalal-Abad, which is the 3rd largest city in
the country. But of course, our main activity is
in Bishkek. This product will be spread all throughout
the country: telemachines will be widely used in
Osh, Jalal-Abad and downtown Bishkek.
Right now your main focus and direction for the
future is retail products, correct?
After examining the country's conditions and collapse,
we extended too much of our capital and the result
was totally disappointing. So in 2 years we changed
our strategy with corporate banking, retail banking
and SMS, small and medium enterprises. We started
IBRD program. This country needs small and medium
enterprises but to go for this financing, the result
will be most probably disappointing. The project
of company is enterprises of small and medium size.
Our target is to draw our long portfolio into attention. |
In 2000 you also had
net profit of .5 million USD. It was the best in
the sector. This is some information that I have
gathered. Could you confirm this figures?
In 2000 we were the most profitable bank and our
net profit was 597.000 USD.
That's quite an achievement, what are your projective
profits for the company? Do you see these profits
increasing?
This year we already reached 705.000 USD with net
profit of 520.000 USD. Next year our target is to
reach 700.000 or 800.000 USD net profit, which is
highly manageable and realizable.
Do you think that your bank has the influence
to point exchange rates and power of influx in Kyrgyzstan?
We already dominate 20% of the country's influx
market so our sector contains foreign currency and
our deposit in foreign currency is very high in
a comparison with local currency. Our answer to
your question is yes. We dominate the market and
if we want, we can be totally affecting it but we
are called an international bank, we don't want
to create mass in the market. We think of the market
as a small authority.
In your plans to expansion, there is a possibility
of moving into investment banking, so my question
is directly to the possibility of foreign investors
coming to Kyrgyzstan. They always seek local partners.
You have been here for 5 years, you know the market,
economy, and all the sectors so will you be ready
to cooperate with foreign investors to join for
partnership, whatever project, or would you rather
just assist foreign investor in managing their investments
here?
And how would you describe investment climate in
Kyrgyzstan?
Actually at present we are helping and directing
foreign investors into the country. But big shares
of foreign investment are not in our target. Unfortunately,
it is not so promising and first reason is corruption.
Kyrgyzstan is the most corrupted country in the
region. It needs be controlled, which the president
is trying to do. Also he is said to be centered
on foreigners, so that should be a reason to come
to Central Asia. We have one sector in Uzbekistan,
one sector in Tajikistan, and China but our main
strategy is in Kyrgyzstan. It is the most liberal
country in the region, which makes sense. But as
I mentioned there is not incentives for any foreign
assistance to come here. We are trying to create
a favorable climate for foreign investors. Otherwise,
tax holiday. When foreigners come to the country,
they look at the protection of their capital and
incentives.
From our discussion with Mr. Aduraliev, he thinks
that the economy of Kyrgyzstan should be directed
into a number of sectors, but he was very keen about
highlighting the possibility of developing the banking
sector in Kyrgyzstan to serve the region. Of course,
many changes need to take place; one of them would
be to increase the capital base of these banks.
What is our opinion, what is your advice, or your
observation about what needs to be done?
Actually, banking is a vital sector in economy.
If there is no bank, it is difficult to improve
economy. We had 3 million USD and it is not a big
amount of money but still 3 million USD. In 1993
it seemed like there was no protection for the capital,
our capital was 1.2 million USD. I am still trying
to reach my initial capital by weighing each profit
but it is still does not make it up. So in order
to attract foreign investors you must provide protection
of their capital somehow. It is not easy. Foreign
investors check different kinds of markets. If the
market is promising, they come to the country. Improving
bank s a nice idea. We also need to create trust
in the banking system. So the protection of capital
and trust in the banking system should be combined
into one. And of course, regulations. If I go to
the court for some reason, I will lose. I know it.
That's another issue of legal system. They should
a better legalization of banking system because
it is in a very difficult position. In general,
we need to teach banking techniques. Banks are in
very poor conditions so that makes a problem. I
can't talk about Russia but in this country, banks
are totally out of modern techniques.
I would like to know your opinion about which
sectors you think are the future for Kyrgyzstan?
Which sectors of the economy do you think will support
nation in the future?
First of all, there is a well-known truth about
Kyrgyzstan. There is Lake Issyk-Kul in the east
of the country and it is a very nice region but
there is not competition for recreation places there.
This is the main holiday region for Kazakhstan and
Russia. It needs to be upgraded. Another issue is
agriculture: cotton, tobacco and other products.
By nature, country is surrounded by mountains, rivers
and other good natural resources. I am talking about
electricity and energy supply. Out of 13 dams, only
8 or 7 are conducting operation. At present, power
supply is sold to the neighbors but it should be
expended even more, especially to Afghanistan. It
is a long-term project but once it is done, it will
provide a better future for the nation.
One last question and it is more about you. Dermir
International Bank has success stories, it is profitable,
it gives guidelines to other banks here, it is buying
some small and medium enterprises and it has a huge
impact on economy here. The success of the bank
comes out of success of people running it so we
would like to know about the person who is conducting
these operations and tell us a little bit about
yourself, your previous experience, what brought
you here, what do you feel most satisfied with,
perhaps, what you would like to accomplish.
I have been working with banks for 25 years. I was
born in Turkey, all my banking life happened in
Turkey. I started working in the Turkish State bank
and then I switched to the private sector of Garant
Bank, which is one of the leading ones in Turkey.
This total experience was for 7 years. A little
later I worked for an American bank. After working
there for 2 years, I joined sub City bank, which
is totally managed by City Bank. I worked there
for my last 13 years. After Turkish crisis in 1994,
the bank decided to close. So I was fed up with
Turkish bank system. Then it was quite interesting
to disclose Central Asia and new challenges.
Then I came here and opened bank here. It is a big
challenge as I mentioned to introduce check, which
is a traditional product for Europe but new for
this country. Part of daily life in Europe and USA
is new here. These challenges. Also reception of
banking, we are the leading bank; we are a sample
bank trying to create trust in banking system. In
the future, a lot is needed to be done, the country
is new. Our aim is to teach other banks also. We
employ only inexperienced staff and train according
to our standards. By the way, all overseas bankers
are expert bankers. They create ministers of bankers
in CIS countries, Demir Bank of Kazakhstan, Demir
Bank of Holland, Germany. We are trying to attract
all markets. |
Mr. Ahmet
Parmaksiz