The strategy and process of bank transformation discussed
Today, on July 6, President of the Republic of Uzbekistan Shavkat Mirziyoyev chaired a meeting to deliberate on the implementation of the 2020-2025 Banking System Reform Strategy and processes of transforming commercial banks with an eye to uplifting the private sector share in banking assets from 15 to 60 percent.
In order to achieve the goals set, it was noted during the meeting, a number of key issues have to be addressed.
It is of paramount necessity, for example, to intensify the process of transformation of banks.
Currently, 6 commercial banks, namely, Ipotekabank, Sanoatkurilishbank, Turonbank, Asakabank, Alokabank and Agrobank have begun cooperation with international financial institutions in matters of financial diagnostics, development of long-term strategies and privatization. However, work on the transformation of other commercial banks has barely been progressing well enough, the head of state pointed out.
To change the situation, it was entrusted to conduct a stocktaking of functions not inherent to banks, to arrange training programs at the Corporate Retraining Center under the Central Bank to explain the tasks of bank transformation, primarily for local employees of banks. These tasks are assigned to the Central Bank.
The meeting participants discussed issues of improving the quality of the loan portfolio and bank projects. It was indicated that the share of problem loans, as shown by the results of stress tests, can grow several times, to pose a serious challenge for the banking system.
In this regard, instructions have been given to analyze problem loans by region and create an effective mechanism to maintain the quality of loan portfolios. It was underscored that once the banks’ loan portfolios undergo stocktaking, the Central Bank should devise specific measures to restore the financial capabilities of each customer in a difficult situation.
A separate aspect during the meeting was the discussion of the need to eradicate corruption in the banking sector.
The head of state insisted that bank chiefs take tough measures to stamp out corruption, introduce compliance control and other effective mechanisms.
The President slammed the fact that the share of public funds is still high in commercial banks with state assets.
In particular, the share of such loans is 41 percent in Kishloq Qurilish Bank, and 32 percent in Ipotekabank. Last year, credit lines worth about $ 600 million were attracted under the state guarantee, this year this figure will be $ 570 million. Meanwhile, the share of individual savings and fixed-term deposits in large banks averages only 5 percent. Given this fact, the Central Bank was instructed to come up with additional proposals for attracting household deposits in banks.
Shavkat Mirziyoyev stressed the need for independent attraction of financial resources by commercial banks without state support.
The heads of the Central Bank and commercial banks provided information on the issues discussed at the meeting.