ABN AMRO BANK IN KAZAKHSTAN
“… it is very exciting for us that we have a real bank here,” – said Richard Matzke, Vice Chairman of the Board of Tengizchevroil during the official opening of the Cash Office of ABN AMRO Bank Kazakhstan in Tengiz village on April 13, 2001. For the Bank it was acknowledgement and appreciation of its efforts to ensure that its clients are provided with the highest standards of banking services wherever business takes them. The newly built ABN AMRO Cash Office is fully equipped with modern computer equipment, ATM and all of the other facilities which one would expect to find in a similar office in Amsterdam, London or any other major center. The staff are professional and confident, and keen to provide the best advice and financial solutions both in the English and Russian languages. Only after leaving the office and observing the typical shift village houses located on the coast of the Caspian Sea, surrounded by endless steppe, does one realize that “the civilized world” is thousands and thousands of kilometers away. This was the latest major project of ABN AMRO Bank in Kazakhstan.
ABN AMRO’s pioneering entry into the Kazakh financial market dates from 1993, when the Management Board decided to establish ABN AMRO Bank Kazakhstan. At that time ABN AMRO was the first major international banking group in the Republic of Kazakhstan, which had become an independent state only two years earlier, with its national currency introduced in November 1993. The overall banking system was chaotic at this time with many features of the former Soviet Union financial system. It was risky and it was challenging. The Government of Kazakhstan welcomed one of the major international banking groups, but an easy life could not be promised.
ABN AMRO Bank Kazakhstan was established as a Joint Stock Company with 51% of shares held by ABN AMRO Bank N.V., 29% - by Kazkommertsbank, the largest local commercial bank, and 20% by the International Finance Corporation, the private sector arm of the World Bank. In July 1994 JSC ABN AMRO Bank Kazakhstan commenced its activities offering the full range of banking operations, and being completely aware of its commitments towards developing in-country financial market. It is well known that currently the banking system in Kazakhstan is considered as the most advanced amongst the former Soviet Union Republics, and ABN AMRO is proud of the fact that it has contributed in no small way to this development.
In addition to the latest technology and know-how, ABN AMRO has introduced the modern western business approach and philosophy, that has penetrated the local market through its own local staff. Training and education of the local staff has been, and still is, the prior task. The Bank commenced operations in 1993 with 30 professionals, who included 9 foreign specialists, and by 2001 the number of employees had increased to over 180, with only 4 expatriate specialists. Most of the top executive positions within the Bank are occupied by local staff, who have been intensively trained both overseas and within the Republic of Kazakhstan. Some specialists who have left the Bank, have continued their careers in other local banks and financial institutions, in top management positions.
After commencement and consolidation of its initial operations, the next major step was the establishment of ABN AMRO Asset Management Company in February 1998, following the issue of a new law entitled “Pension Insurance in the Republic of Kazakhstan”, to become one of the first AMC’s in the Republic of Kazakhstan. (It received License No 2 on the same day as License No 1 was obtained by another AMC). From the very beginning it became the market leader and currently it manages 3 private accumulative pension funds.
To accomplish its activities in the local pension market, ABN AMRO founded the ABN AMRO Pension Fund in February 1999. Its highly professional and efficient operations in the market guaranteed continuous growth both in terms of contributors and pension contributions. Its successful development may be demonstrated by the merger with CaspiMunaiGas Pension Fund in January 2001. This gave ABN AMRO CaspiMunaiGas APF over 80% of the share in the Mangistau Region pension market. Currently the Pension Fund accounts for 79,000 contributors and KZT8, 700 billion of assets. Both ABN AMRO Asset Management Company and ABN AMRO Accumulative Pension Fund are the only institutions of this type that were established with foreign participation.
Opening of a branch in Atyrau City, the hub of oil and gas industry in western Kazakhstan, in May 2000, was the next important step in the development of ABN AMRO in the Republic of Kazakhstan. This action was based on one of the main principles of the Bank, ensuring convenience to its clients and also supporting integration of international banking services within the remoter regions of Kazakhstan.
ABN AMRO Bank Kazakhstan currently operates within the Global strategic review undertaken by the ABN AMRO Bank N.V. in 2000, with the objective of better serving client needs, and enhancing shareholder value. Operations of ABN AMRO Bank Kazakhstan are limited to services provided to its corporate clients. In accordance with the strategic review the structure of the Bank is now composed of three Separate Business Units.
The relationship managers of the Business Unit Clients have overall responsibility for developing the bank’s business with corporate clients, and coordinating the efforts of various product groups in order to ensure a tailored approach and a high quality of services for its clients. Business Unit Products offers various banking products and services that are being continuously enhanced in line with the requirements and demands of the local market. With vast distances to cover and manage, many companies are relying on the bank’s state-of-the-art cash management services to keep track of their local subsidiaries’ operations. In the local treasury market, ABN AMRO is one of the market-makers, and with its comprehensive Euroland presence, has become the key Euro trader in the market.
During 2000 the Bank granted credit facilities of over $70m, and major deals included the provision, jointly with Kazkommertsbank, of a $7m credit facility to Shymkent Refinery; a $5m credit facility to OJSC Kazakhtelecom; a $5m credit facility to State Railway Company Kazakhstan Temir Zholy; $7m of pre-export finance to JV Dan, the major grain trader; and a $7.5m facility to Kaztransoil, the national pipeline operator.
ABN AMRO Bank Kazakhstan was also active in the Local and International Securities Markets. Its major deals include acting as (a) Joint Lead Manager for a $25m domestic bond issue for CJSC Kazakhoil; (b) Joint Lead Manager for a domestic bond issue for Shymkent Refinery and OJSC Kazakhtelecom; (c) Joint Lead Manager for a $100m eurobond issue for Kazkommertsbank (ongoing), and also (d) a private placement and rating advisory for OJSC Kazakhoil.
ABN AMRO Bank Kazakhstan has continued at the same pace in 2001, and this was demonstrated through arranging of the largest syndicated loan facility finalised in the country this year, that of $62m for Kazkommertsbank, officially signed on May 25, 2001. ABN AMRO was the agent and joint arranger. This year ABN AMRO has received a mandate to arrange $100m debut eurobond issue for Kazakhoil, and a mandate to provide financial advisory to Kazakhoil with respect to its $300m Atyrau refinery reconstruction project.
ABN AMRO Bank Kazakhstan has been awarded numerous recognitions of its performance and development. During 1997 - 2000 ABN AMRO Bank Kazakhstan was awarded the “Best Foreign Bank in Kazakhstan” by the leading CEE financial publication Central European and also received the “Euromoney Award for Excellence” in 1997, 1998, 1999 and 2000 as “Best International Bank in Kazakhstan”.
“In the overall history of ABN AMRO, the seven-years of operations of ABN AMRO Bank Kazakhstan may seem of relatively minor importance. But its successful operation in this developing market, backed by 175 years of expertise, guarantees that its further achievements will create a very real and positive impact on the economy of the Republic of Kazakhstan. I strongly believe that since our establishment ABN AMRO Bank has proved its strong commitments towards the development of the Kazakhstani banking sector, and we are determined to continue this development and also the enhancement of our services,” said Jan Willem van den Bosch, Country Representative of ABN AMRO Bank Kazakhstan, at the meeting of the Foreign Investors Council (FIC) headed by the President of the Republic of Kazakhstan, on 13th June 2001. ABN AMRO has actively participated in the FIC since its establishment, and its regular and positive input has been highly appreciated by the Government of the Republic of Kazakhstan.
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