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The new management has quite ambitious goals ahead to attain

16 January 2009 10:13 (UTC +04:00)

Baku - APA-Economics. One of the largest-ever global financial crises broke out in 2008 started to mainly affect the financial sector in Azerbaijan, and many banks stopped lending loans. The interview with Khayal Sharifzadeh, the newly appointed Chairman of the Management Board of Bank of Azerbaijan OJSC, one of the oldest and largest players in the countryâ€™s banking sector, is about any expected changes, crisis and plans for the future.

- With your recent appointment, there was a whole management reshuffle at the bank. Could you please let us know what happened?

- In early December, the new management of the bank was appointed according to a decision taken by he shareholders. Shareholders have set clear and ambitious goals before the new management to attain. In addition to fundamental reforms in the transition to corporate governance, we must raise our bank to the top position in the financial market of Azerbaijan.
At a time when most banks struggle how to survive and how to circumvent the crisis amid the financial system recession, our intention to become one of the largest banks in the country might seem kind of ambitious, nevertheless it is attainable for us., The current staff and a new team of young professionals with enormous experience in banking will help in this effort.
Despite the fact that the management shake-up the bank was not directly related to the global financial crisis, one of the requirements we have undertaken is the correct assessment of new opportunities created during the crisis, prompt adaptation to the new global financial system without any problem.

- As we know, your appointment coincided with the bankâ€™s 15th anniversary. How would you characterize these 15 years?

- For 15 years, our bank worked hard towards the strengthening of the economic potential of our country and improvement of the financial well-being of our citizens. We will offer our clientele a wider range of high-quality services and products, and we will inform the public about all the innovations in the shortest period of time.
During this period, our bank became members of numerous international and internal financial organizations. At the same time, the number of branches reached 20, and our bank now has one of the most extensive networks in the country. Through modern technology, our bank has been developing mobile and Internet banking in Azerbaijan.

- What is the bankâ€™s new strategy for the near future?

- The main goal is not only to minimize the impact of the crisis, and even, on the contrary, to maximally capitalize on the existing opportunities to raise our bank to the top.
A new development plan was prepared and approved by the shareholders through a techno-economic analysis over the past 3 months. According to the plan, we intend to switch to corporate governance, increase the range of services offered to customers, further improve customer service, improve the efficiency of the existing branches and open new branches.

- Is there a plan afoot to launch any new product or service in 2009?

- Taking into account the situation on the market, we will of course make available new products and new services this year. Thus, we plan to offer new types of deposits and loans products and services. I would also like to bring to your attention that, unlike previous years, we intend to further develop our relations with the media and to provide comprehensive information on each new product or service.

- Re-branding, a new logo and slogan is usually put forward by the new management. Do you have any plans on these matters?

- For 15 years, our bank was renamed three times. I would compare this to how our alphabet changed three times in a century. The history of our bank, as well as its name, is very similar to those of our country.
Indeed, more companies have recently rushed for re-branding. Re-branding is a step deriving from the need to change the ideology of the existing brand and a renewal of all components ranging from the name and logo to the slogan, staff uniform and so on. However, we do not change the ideology of our brand, instead we continue our work with the new development strategy, go ahead towards the new goals. For this reason, we do not intend to implement the re-branding. Our slogan will also remain unchanged â€“ â€œBir AzÉ™rbaycan bankÄ±â€ â€“ (An Azerbaijani Bank).

- How did the financial crisis affect on your bank? According to your partner, I mean Qarant SÄ±ÄŸorta Insurance Company, it says the crisis has created new opportunities and a chance to focus on new segments.

- I think that the world financial crisis has not so much influenced our country. Unlike other countries, there is no â€œdestructiveâ€ impact on our banks, and none of our banks went bankrupt. On the contrary, the National Bank has issued licenses to new banks, bringing the number of commercial banks 46 in Azerbaijan.
In 2008, amid the deepening of the global economic crisis, the dynamic development of our economy continued apace and double-digit economic growth rate was maintained. Azerbaijanâ€™s foreign exchange position further improved and the foreign exchange balance surplus reached $15 billion. Our bank welcomes the National Bankâ€™s decision to cut the key interest rate to 8% from 10% and trim down the interest corridor ceiling to 13% from 15% from December 1 as part of the preventive monetary policy measures in order to neutralize foreign risk factors.
I believe that these measures create conditions for the preservation of the liquidity and asset quality, and further deepening of financial stability in the banking system. The maintenance of liquidity at a reasonable level ensures the stability of banksâ€™ lending activities and thus plays an important role in maintaining the momentum of economic growth in the non-oil sector.
However, at the same time, we should be prepared for some negative influence of the most dangerous period of the crisis in the first quarter of this year. As President Ilham Aliyev said, I quote â€œAzerbaijanâ€™s economy is part of the world economy, and the trends can willy-nilly have an impact on Azerbaijanâ€ unquote.
Of course, we will to some extent fell the impact of oil prices dipping from $147.3 to $40 a barrel, the problems facing the largest financial institutions around the world, as well as the crisis â€œragingâ€ in our key partners, like Russia, Turkey, the United States and European countries.
We may see home prices drop in the first half of this year. Home prices declined more than 40% in Russia in the fourth quarter of 2008. Of course, I do not think that we expect so critical changes. However, the demand for apartments is declining gradually, and this will ultimately hit the construction sector. Construction companies are the debtors of Azerbaijani banks, and their difficulties in paying their loans may have an impact on banks.
However, It is our pride that crisis bypasses us as much as possible a result of correct policies of the countryâ€™s leadership. Interestingly, Russia spent about $160 billion to maintain the ruble at the pre-crisis level, but, on the contrary, we see out manat further strengthening.
Due to the fact that some of the local banks are dependent on â€œcheap credit linesâ€ they borrowed from abroad, the problems facing their foreign partners are affecting them. However, the National Bank offers credit lines to banks in need, and thus prevents the aggravation of the problem.
As for the Bank of Azerbaijan, we do not feel the negative impact of international financial crisis because we do not have foreign debts. On the contrary, as you mentioned, we try to weigh up the newly emerging opportunities and to adapt to the new rules of the global financial system.
I view the crises as â€œself-treatmentâ€ of the world economy. In this case, the strongest survive the crisis, the weakest are taught to students as case-studies.
In fact, the crisis is creating new opportunities. Soon after the crisis in the United States in 1970s, FedEx, Microsoft, Apple, Genetch, Oracle and other giants did spring up. The model of global business has hanged. As a revival after the storm, we must closely follow changes that will occur in the world economy after the crisis in order to take advantage of all the opportunities for our young country.

- Due to the crisis, many banks, including Citibank are cutting jobs. Will your bank cut jobs?

- Of course, no! We do not intend to cut jobs, instead we plan to increase the number of our employees. As I mentioned above, we intend to grow both in vertical and horizontal directions, and we need young, intellectual and dedicated professionals for this. We are working on a staff professional development program and we intend to invest more in human resources.

- What do you think should the Government of Azerbaijan do to help local businesses amid the crisis?

- I am of the opinion that the National Bank provides enough support to local banks. However, I think such reforms would be very important for not only banks but also other spheres of the economy. For example, during the mortgage crisis, Russia financed the uncompleted construction projects to reduce the burden on the construction companies, and these apartment buildings will be used for social purposes. In my view, the Mortgage Fundâ€™s intensified activities, sale of apartments on more favorable terms, exemption of individual mortgage loan interests from income tax, and other kinds of reforms to overcome the stalemate in the mortgage sector would support local entrepreneurs.

- As we know, Societe Generale chose Bank of Azerbaijan among the countryâ€™s 46 banks to take a stake. As far as we know, you rejected takeover bid. Why?

- Well, we really suspended negotiations with Societe Generale on its bid to take a stake in our bank. Societe Generale wanted to acquire a controlling stake in our bank, taking into account the satisfactory financial performance and great development capacity of the bank.
However, we wanted to see the French bank as a strategic investor holding a stake.
And, taking stock of the negative impact of the global financial crisis on many international financial institutions, Bank of Azerbaijanâ€™s shareholders suspended the negotiations in order to rescue the 15-year bank out of this influence and to embark on an individual reconstruction and development project.
Moreover, several other foreign banks take interest to acquire a stake in our bank but we donâ€™t intent to attract a strategic investor next year.