Chairman of the Management Board of EDB Andrei BELYANINOV:
THE DECISION ON THE BANK'S NEW SHAREHOLDERS MUST BE TAKEN BY THE PRESIDENTS
The issue of expanding the number of the shareholders of the Eurasian Development Bank (EDB) is within the remit of the heads of state participating in the bank. If the presidents decide to put new shareholders in, the bank's top management will handle the process straight away. Chairman of the EDB Management Board Andrei BELYANINOV, who has been heading up the development institute since December 2017, talked about that in the interview with Interfax-Kazakhstan.
- What objectives do you set to yourself upon taking up the post of the EDB chairman?
- Nothing new, the bank is in good shape. Our main objective is to work within the territories of the bank’s member states, these are Belarus, Kazakhstan, Kyrgyzstan, Russia, Armenia and Tajikistan. Infrastructure projects, integration projects in the field of industry [and] mandatorily energy, road construction and mining [projects] are of interest to us. We are now finding opportunities where solid cooperation ties between Kazakhstan and Russia are seen. Kazakhstan is implementing projects, and components supplies come from Russia, for example, for the gas pipeline and telecommunications equipment, road construction, or, say, supplies of kits for assembling cars in Kazakhstan come to the [car maker] Asia Avto. We regard the objective so that we can lend both suppliers and consumers to strengthen control over the targeted use of funds we allocate. On the other hand, we enjoy peace of mind, realizing that our money is in safe hands.
We want interbank settlement arrangements; we want to open a settlement cash desk for servicing our customers in order to secure a relatively risk-free zone before conducting transactions. We will comply with all international norms and laws, for us it is absolutely beyond all dispute and I believe that this will seriously expand our product line.
- When do you plan to open cash desks?
- The first transaction has already taken place, we are carefully preparing for that and will solemnly announce it. For the time being this is under way in test mode, we are testing it out with our long-standing clients. The first transfer was from Europe to Russia and Kazakhstan. We have very well-balanced plans.
There was a discussion about "megablocks" at the Astana Economic Forum. Certainly, we cannot cope with those projects that get into our hands, because our bank is not big, equity capital is only $ 1.7 billion, although $ 7 billion was announced. Of course, we will and already cooperate with banks, first of all, with development banks of our founding countries. For us, these are loyal and reliable partners and, I hope we will not let them down, I am even sure that this will never happen. There are several more development banks, which are important to us - the Asian Infrastructure Investment Bank , the International Investment Bank, the International Bank for Economic Cooperation, and the Russian Export Center. There are such plans to expand cooperation with them.
- At what stage is the discussion on expanding the number of the bank’s shareholders?
- I consider that this is not our remit. This is a political issue and up to the leaders of our states to agree on whom and how to put in what banks. If we are given a command, then we would put it into practice since we are good at doing that and doing very well. And in general it is possible to talk about some prospects, but to make statements on this matter - this is not within my remit.
- Does the bank need to replenish capital?
-Yes, of course. We have a large number of applications, mainly [for amounts] in dollars and tenge. There are not so many people willing to get free currency because there is the big risk of facing currency losses. We would be extremely interested in having our founders provide additional capitalization for us in national currencies or in rubles. I think that this would be most welcome because we would be more competitive in the market, having our serious ruble-denominated liability. This is about the stated equivalent of $ 7 billion, I believe that we would cope [with that].
- Are negotiations under way on this matter?
- We are working with the shareholders, we are in dialogue. These are not negotiations; the shareholders are our bosses, so what kind of negotiations may be. They have been scrutinizing the issue. I do not have to think about that, we put forward everything what is needed, and then the shareholders would make decisions. They have their own level of competence, we have our own, maybe, we do not understand something.
- What are your profit expectations for 2018?
- In the four months we were coming up with the profit of $ 31 million. Last year’s figure was $ 41 million. The year has not yet been closed, so it's hard to say. We do not have a profit indicator as criteria for assessing the effectiveness of our work. We must be up to those challenges for which the bank was created. But I think that the profit indicator is quite a significant thing. The bank working without profit is not very good.
- What are your expectations in terms of increasing the number of provided loans?
- At heart, of course, I want to be above the target, and we are preparing for that. But the main objective is to reach the target and there is every reason for that. On this occasion we are ready to meet with you in October so that we can really sum up some preliminary results. If we increased the balance sheet portfolio over $ 3 billion it would be good. We have already signed totaling $ 600 million so far this year. I am an optimist though there is a certain amount of superstition.
- Did EDB's forecasts on Kazakhstan’s GDP change?
- Why do we need to make these forecasts? Have they ever come true? Working on the ‘finger-floor-ceiling’ formula is a thankless job. Why should we do that? Our portfolio will not increase, the amount of profits will not increase, new credit facilities will not show up even if we guess the development pace right. To show off that can we guess? This issue must be thoroughly studied. At one time there was such mathematical modeling in economics. And this is really serious and painstaking work related to mathematical statistics. Often predictors make such predictions without bearing any responsibility before themselves.
- In April you started a road show on issuing tenge-denominated Eurobonds. What are the results of the road show?
- We have not yet finished our work. I cannot say anything. I think that by the end of June it will become known.
- In connection with the sanctions announced against a number of Russian companies has any analysis been conducted and how can they affect inter-country projects?
- All the time long. This is our work. We have been trying to avoid negative consequences within the framework of our bank's activities, which are linked with these kinds of actions. For us, there are no consequences, because we do not violate anything and will not. The sanctions against Russia, they are against our country, of which I am a citizen. For some reason it is tactfully kept quiet that sanctions are mostly against Russia and no one is going to help it. It is strange, isn't it? Everyone thinks how to help each other. And the main affected party is Russia and China, after all.
- If we talk about the bank's projects, at what stage are the agreements on financing Ekibastuz GRES-2 [power plant], Asia Avto [car maker]?
- On GRES-2, we are not moving yet on, we are not planning. No comment for now. On Asia Avto, this is about to come out but without details. I think in June it will be known.
– Thank you for the interview!
June, 2018
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