At a conference in Tashkent, Pavel Kaptel, Deputy Director of Fitch Ratings for Financial Institutions, offered insights into the potential postponement of the privatization of state-owned banks in Uzbekistan. This announcement sheds light on the complexities surrounding the country's banking reform initiatives.
Kaptel highlighted the ambitious plans to reform Uzbekistan's banking system, with a key objective being the privatization of several state-owned banks. International development institutions such as the EBRD, IFC, and ADB are actively involved, providing technical assistance, consultancy, and even considering minority shareholding in these banks for subsequent sale to strategic investors.
Comprehensive Reform Approach
Beyond privatization, Kaptel emphasized the importance of enhancing corporate governance procedures and risk management across all banks, not just those slated for privatization. Furthermore, regulatory improvements, especially concerning bank capital standards, are integral to the reform agenda.
While some progress has been made, with non-state banks now constituting about a third of the sector's assets, there are challenges ahead. The government's target of non-state banks holding 60% of sector assets by the end of 2025 remains distant. Only one of the three large banks, Ipoteka Bank, has been sold thus far, with SQB and Asakabank awaiting privatization.
Potential Postponement
Kaptel suggested the possibility of extending the deadlines for privatizing SQB and Asakabank, originally set for the end of 2024 and 2025, respectively. The ongoing preparations for the sale, coupled with the banks' transition to more diversified lending models, may necessitate more time.
To enhance sales prospects, banks must demonstrate greater profitability, requiring active lending growth, especially in retail. Capital injection from international organizations like the EBRD and IFC could facilitate this growth, making banks more attractive to investors.
Future Outlook
Kaptel emphasized that securing anchor investors would signal the completion of the initial transformation stage, instilling confidence in potential buyers. This alignment of interests is crucial for the successful privatization of state-owned banks.
The potential delay in privatizing state-owned banks underscores the complexities of Uzbekistan's banking reform. While challenges persist, collaboration with international institutions and strategic planning are pivotal for achieving long-term success in the sector.
Earlier, it was reported that Deputy Chairman of the Central Bank, Abrorhuja Turdaliev, has announced the forthcoming establishment of microfinance banks in Uzbekistan during the "Fitch on Uzbekistan" conference on March 6.
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