- Nowadays the issue of the efficiency of the quasi-public sector is considered. What criteria, in your opinion, can be used to assess the effectiveness of such a development institution as DBK?
- When we speak about the efficiency of the institution, it is necessary to define it from the perspective the tasks that it was called upon to solve. As for the world experience, development banks should serve as growth drivers in strategic sectors, especially in a transit developing economy. The Development Bank was created to lend to projects that could not be financed by private or international institutions. From this point of view, DBK demonstrates efficiency.
However, taking into account that the second-tier banks have not yet recovered from the severe consequences of the crisis of 2008-2009 and they do not have opportunities to finance long-term capital-intensive projects, to a certain extent, DBK replaces commercial banks. At the other end of the scale, the dominance of the state, and in many segments of the economy, not only in the real sector but also in the financial system — is not a very positive sign. It limits the development of private initiative and entrepreneurship. Such total domination cannot be normal on a long-term horizon.
- From your perspective, what should be changed in the activity of the DBK in order to maintain the positive dynamics of credit activity?
- I think that fundamental changes in the strategy now do not need to be made, because important tasks are defined correctly. Maybe it should be more active in renewable energy projects, in the "green" economy in general. The Bank is taking the first steps in this direction, and it has started financing projects of this kind, but such a switch should happen for the entire economy, not just for the Development Bank, because it operates in a common economic environment.
- The quality of the loan portfolio is a matter of topical interest for the entire banking system of Kazakhstan. For DBK, it is of particular importance, given the sad experience of NPL accumulation. What is the situation with it in the Bank today? What has been done at the strategic level to avoid repeating mistakes?
- I think that the load, to some extent, also existing in DBK, is the result of the general macroeconomic problems that our country has encountered, but I believe that the situation in DBK is better than in commercial banks, I can say this on the basis of personal experience. As for the Bank's Board of Directors, the Risk Management Committee and its Chairman Antonio Somma are very active. I am a member of this Committee, and we participate in the discussion of projects, especially those experiencing certain troubles, and in general, the approach that the Bank has chosen and which is supported by the Board of Directors is correct. Standard procedures are introduced to mitigate risks, anticipate risk opportunities, and in case of negative events, to choose measures that allow to minimize and eventually address these negative consequences. Therefore, I believe that this work is at the proper level.
- What should be done to improve the quality of corporate governance in Kazakhstan, to minimize the likelihood of abuse of trust of investors and shareholders?
- There is a big problem, and it is not solved yet: this is the relationship between the owners of banks, Boards of Directors, Independent Directors, who should take care of the interests of institutions. There is another problem - the management often does not report the actual situation to the Board of Directors, decisions are made either in conditions of lack of information or complete concealment of problems. Compared to 2009-2010, there have been major improvements. It is possible, of course, to tighten the legislation, as, for instance, in Russia, where shareholders are criminally responsible for bringing the Bank to a sad state, but for now the government or the Central Bank has to assume the costs for fence-mending. It is possible to move more long, but also more civilized way. I am a member of the working group at the Atameken National Chamber of Entrepreneurs, which develops standards of corporate governance. If the project is implemented and supported by law, then regulatory standards, among other things, and the relationship of boards of directors, owners, shareholders, investors should help.
- The absolute advantage of DBK over international financial organizations is long-term financing in the national currency on attractive business terms. Does DBK have any difficulties using this advantage?
- I think there are no difficulties, and given the volatility of the national currency, the pressure that it is experiencing as a result of both internal and external shocks, the DBK is actively using this advantage. For example, loans of Development Bank clients that are denominated in foreign currency, whether dollars or euros, are converted into tenge, which of course removes this burden from them, especially if the products are not export-oriented, but are intended for the domestic market and the borrowers' incomes are in tenge. This is a very important advantage and even international financial institutions cannot boast of it, although there are some examples of international financial institutions, in particular the EBRD, financing projects in tenge, but this is rather an exception to the rule.
- State subsidies to the economy, including through concessional loans, and unnecessary competition of development institutions with commercial banks and other market actors are the interrelated topics. What should be done to prevent the state from displacing private business from the economy?
- This is a two-pronged problem. On the one hand, I see the shortcomings of the subsidized lending rate, which distorts the market situation and makes it impossible to determine the objective cost of borrowing for end-use borrowers, being discussed at the meetings of the Board of the Association of financiers. On the other hand, both banks and borrowers get used to such benefits and use them for their own purposes. This measure made sense in critical situations. If it is still in use, it begs the question: has the critical phase been overcome and maybe it is time to abandon this measure?
- What fundamentally distinguishes DBK from other companies where you have worked or are working now in the context of your job description?
- The main difference is that there is a single shareholder-a state holding, which has high requirements, given that the Bank operates with state budget resources. It may seem that there are overregulation and strict procedures, but they are inevitable. This leads to the maximum prescriptive decision - making in the DBK, which distinguishes it from commercial banks. Private business should be more flexible. On the other hand, this is a plus point: there is no space or outlets for making subjective or privately oriented decisions.
