ANNUAL REPORT 2005
Dear ladies and gentlemen!
On behalf of the Administrative Board and the Board of Directors I am bringing to your notice Annual report of the State Bank for Foreign Economic Affairs of Turkmenistan, which is considered to be one of the largest financial institutions of our country. Being founded in 1992 by the Decree of Saparmurat Turkmenbashi the Great, President of Turkmenistan, to develop foreign economic relations and national industry, the Bank has been acting as a reliable guide of state policy in the sphere of social and economic transformations.
The distinctive feature of the State Bank for Foreign Economic Affairs of Turkmenistan among other credit institutions is performing of the functions of Turkmenistan Government's Agent to attract foreign borrowings into the economy and further servicing thereof. Being a specialized financial-credit institution, the Bank has vast international relations. The Bank has accumulated unique experience in rendering financial services to interstate agreements and governmental programs, as well as implementing large-scale investment projects. Acting as the Government's agent in the intergovernmental agreement signed between Turkmenistan and Chinese People's Republic, the State Bank for Foreign Economic Affairs of Turkmenistan entered into various loan agreements with Chinese' Banks in order to implement the projects, which are included in the strategic development program up to 2020.
Going on its development as a unique credit institution, the Bank has actively operated at the financial market segments being traditional therefor within the period under review, keeping top positions in the sphere of international settlements and payments, at the interbank deposit and currency markets. Rendering services to corporative customers, as well as retail services further development were paid a great attention. The last year proved once more that the State Bank for Foreign Economic Affairs of Turkmenistan is a backbone one due to its assets, equity capital and profit size, quantity of customers, scope of operations being held, as well as functions thereof, which promote a national banking system sustainable development. As of 01.01.2006 the Bank assets made up 6,64 trillion manats according to the national accounting standards. The balance sheet profit made up 91,4 billion manats, exceeding a 2004-result by 18 percent. The Bank own capital reached 499,9 billion manats, being increased by 10 percent within a year, while a net revenue is considered to be the only source of equity growth as within previous years. The operational results of the Bank, which upholds a reliable partner reputation both inside and outside the country, serve as a basis to keep and to strengthen its leading positions.
The inauguration of a new ten-storey building, which has been constructed, taking the latest architectural and functional aspects into consideration, turned out to be of great significance for the State Bank for Foreign Economic Affairs of Turkmenistan in 2005. Saparmurat Turkmenbashi the Great, President of Turkmenistan, took part in the official ceremony to inaugurate the Bank new building. Once again it proved the Great Serdar's specific attention and care to a further development of the State Bank for Foreign Economic Affairs of Turkmenistan and national banking system as a whole.
Within period under review the Bank attached a special attention to the social direction of its activity. The Bank acted as a customer to construct five high-storey buildings of increased comfortability and better layout in order to implement objectives specified by the National Program headed as "Turkmenistan Economic, Political and Cultural Development Policy up to 2020" and to further improve the architectural and urban-planning make-up of Ashgabat, the capital of independent neutral Turkmenistan. Those objects are planned to be commissioned in 2006-2007.
In 2006 the State Bank for Foreign Economic Affairs of Turkmenistan faces objectives being of no less importance. The Bank priority objective as well as within previous years is to secure an efficient implementation of Turkmenistan Government's agent duties. The Bank other priority is to participate actively in implementing investment projects for the national economy being further strengthened. A great attention will be paid to increase the partnership relations with corporative customers and developing a complex of retail services. A specific attention will be attached to the improvement a methodological basis and development of the corporative management system.
A long-term mutually fruitful cooperation with our partners and customers is a guarantee of the Bank objectives to be successfully implemented. We would like to express you our sincere gratitude for trust and support. We appreciate highly Bank staff for bona fide operations thereof. We are sure that out joint efforts will promote a further prosperity of Neutral Independent Turkmenistan and strengthening positions thereof at the world markets in the Golden Age of the Turkmen nation.
Sincerely yours,
Chairman of the Board
G.B. Geoklenov.
The social-economic transformation policy being held by Saparmurat Turkmenbashi the Great, President of Turkmenistan, is aimed at reforming Turkmenistan into a dynamically developing strong power, which meets a high world level due to the social and economic development indexes, providing high living standards for the population.
The country's growing integration into the system of the world economy, rise of business activities in the country, growing extension of domestic demand, as well as favorable world market conditions for the Turkmen export basic commodities promoted a sustainable development of Turkmenistan economy. In accordance with "Turkmenmillihasabat" State Statistics Agency data Turkmenistan GDP made up 120,509 trillion manats in 2005, thus, demonstrating growth by 20,7 percent as compared with 2004. Meanwhile, industrial production growth made up 19,6 percent, agriculture - 19,8 percent, construction - 17,5 percent, transportation and communication - 19,4 percent, trade - 26,1 percent and services - 22,9 percent.
A cost increase for the Turkmen export basic commodities, as well as Turkmenistan growing demands in highly technological equipment for production process promoted the foreign trade turnover growth by 19,3 percent as compared with 2004, made up 8 billion 577,4 million US dollars. The export made up 4 billion 939 million US dollars., demonstrating 27,6 percent increase. The commodities and services' import in Turkmenistan increased by 9,6 percent, thus, reaching 3 billion 638,4 million US dollars.
Within 2005 Turkmenistan trade balance surplus increased up to 1 billion 300,6 million US dollars. A currency stable inflow to the country allows to provide due servicing of foreign borrowings, to reduce debt burden and to increase investments into the national economy development by means of own funds. By 2005 results the volume of investments intended for the country production and social-cultural spheres made up 19 trillion 190 billion manats, being increased by 11 percent as compared with 2004. The major sources of investments were as follows: enterprises' own funds, direct foreign investments, centralized and local budget funds and population funds.
The State Budget of Turkmenistan for 2005 has been fulfilled with a surplus. By the way, the task stated for the State Budget revenue and expense has been fulfilled for 101,6 percent and 100,0 percent, respectively. A priority direction of Turkmenistan budget policy was to finance the country social development.
The growth of consumer activities turned out to be a specific feature for 2005, which is proved by 26,1 percent - increase in retail commodity turnover as compared with 2004. The growth of population consumer activities and dynamic construction of increased comfortability and better layout high-storey buildings stimulated rise in demand for consumer and mortgage loans.
The previous year was marked with significant amendments in Turkmenistan legislation, in order to stimulate further development of national economy and, firstly, the private sector thereof. It was reflected in continuous implementation of tax reform, where significant amendments have been made in Turkmenistan Tax Code within frameworks thereof. The tax structure adjustment, tax rates' reduction and tax numbers' curtailment caused a tax burden real facilitation and made an obvious influence on business development, particularly, in the private sector of national economy.
A favorable economic situation positively affected indicators, which characterize a state of the Turkmen banking sector as a whole, being represented by 11 commercial banks with 128 branches and 434 agencies thereof.
On the basis of 2005 results the commercial banks' joint assets comprised 17 591,7 billion manats. The assets' basic part consisted of loans, obtained by enterprises, organizations and population, which specific weight was 78,5 percent. Loans issued in the national currency comprised 8 989,1 billion manats, being increased by 13,7 percent as compared with 2004. By the way, growth rate of loans extended in the national currency to the private sector of economy amounted 113 percent, which testified the banking system activation in developing a small and middle business in Turkmenistan.
If compared with 2004, funds at the settlement, current and deposit accounts of enterprises, organizations and population increased by 18,6 percent. Meanwhile, the population deposits in the national currency were highly growing, being increased by 34 percent and amounted to 1 465,3 billion manats.
With the purpose to provide sustainable functioning of the banking system and to protect interests of investors and creditors certain measures has been undertaken in increasing the banks' own capital. If compared with 2004 results, the banks' own funds amounted to 1 259,1 billion manats, being increased by 8,1 percent.
In order to secure a sustainable development and strengthening its position, as well as to render all possible support to the national economy development the State Bank for Foreign Economic Affairs of Turkmenistan strives for keeping financial results on a high level and to increase the level of own capital.
In accordance with the national accounting standards the Bank's balance sheet profit amounted to 91,4 billion manats. within the period under review, being increased by 18 percent against 2004.
The Bank's total own capital increased by 12 percent within a year, reaching 523,4 billion manats. The equity profitability comprised 17 percent.
Within period under review the Bank's assets amounted to 6,64 trillion manats and loans extended to non-financial sector of economy amounted to 4 790 billion manats.
The main financial results for 2005 prove that the Bank held leading position within the banking system of Turkmenistan as to the following positions: amount of own capital, amount of assets, volumes of investment being contributed to the economy, scopes and quantity of services being rendered at the corporate and retail level, scopes and quantity of transactions on money and currency markets.
The Bank operational scopes, its development as a universal financial institution and financial results obtained prove once more that the State Bank for Foreign Economic Affairs of Turkmenistan is one of the system forming institutions in the national banking system.
Since its formation and within frameworks of operations related to acting as Turkmenistan Government agent at the international financial markets, the basic objectives of The State Bank for Foreign Economic Affairs of Turkmenistan have been as follows:
- To attract foreign investments by means of long-term borrowings in order to finance large-scale projects and to promote national economy accelerated development;
- To provide a proper accounting and due servicing of foreign borrowings, formed by the Bank and being supported by Turkmenistan Government.
Within 14 years of its activity the Bank relying on the strategic long-term partnership with international development banks, export-import and insurance companies and top foreign banks has attracted foreign loans into development of national economy amounted over 1,6 billion US dollars. The reported year was characterized by the Bank restraints in exercising large borrowings at the foreign markets due to Turkmenistan development level, which allows financing projects by means of own funds. As 2005 results demonstrated, the State Bank for Foreign Economic Affairs of Turkmenistan has implemented foreign credits amounting to 23,53 million US dollars.
On the basis of intergovernmental treaties, signed between the Government of Turkmenistan and Government of People's Republic of China, the Bank has activated its cooperation with the Chinese banks. It has indeed resulted in the Bank various new agreements signed to finance new investment projects as follows:
- Interbank agreement with China Eximbank amounting to CNY 100 million for Turkmenistan Ministry of Communications to extend digital exchanges' capacities;
- Interbank agreement with the Bank of China amounting to CY 30 million for "Turkmengas" State Concern to supply drilling equipment;
- Agreement with the Bank of China for providing a grant amounting to CY 15 million for "Turkmengas" State Concern constructing an overhaul-mechanic plant;
- Interbank agreement with the Bank of China amounting to CY 50 million for the Ministry of Textile Industry constructing a factory to produce velvet and silk fabrics.
The Bank has been also entrusted with accounting a gratuitous grant, amounting to CY 10 million, issued by PRC Government in the name of Turkmenistan Government.
Within the period under review the Bank has made a feasibility study of various large projects as follows by order of Turkmenistan Government:
- A project to finance construction and equipment of Ashgabat textile complex amounting to 80 million US dollars;
- A project to finance Maryazot Concern extending production as of 210 million US dollars.
As far as the Bank acted as the Governor's office of Islamic Development Bank on behalf of Turkmenistan, the agreement with IDB and OPEC Fund has been worked out with Turkmenistan Ministry of Health and Medical Industry within period under review to finance project extending Archman sanatorium and its subdivisions in Yily Suv, totally amounting to USD 18,8 million . Thus, Turkmenistan Ministry of Health and Medical Industry signed the agreement with those financial institutions, and the State bank for Foreign Economic Affairs of Turkmenistan was entrusted to keep those agreements' accounting and servicing.
Within the period under review the Bank actively participated in working out and adjusting of foreign loans repayment conditions and schemes, which allowed optimizing costs related to reimbursing both a principal debt and interest thereof. Fulfilling obligations undertaken for due servicing foreign borrowings, within 2005 the Bank has made payments in favor of foreign creditors amounting to 181,2 million US dollars.
Due to the operations done as the Government's agent within period under review, the amount of foreign credits being on the balance of the State Bank for Foreign Economic Affairs of Turkmenistan made up 843,49 million US dollars, which looks like as follows regarding countries and currencies:
- Japan 45.88%
- Germany 35.58%
- France 6.84%
- China 4.96%
- Turkey 3.83%
- Malaysia 1.01%
- Great Britain 0.37%
- Others 1.53%
Currencies
- Japanese yens 45.88%
- EURO 33.30%
- American dollars 14.64%
- Chinese yuans 4.95%
- Others 1.23%
The credit policy of the State Bank for Foreign Economic Affairs of Turkmenistan is closely related to implementing agency functions and is being formed in compliance with the national program of Saparmurat Turkmenbashi the Great, President of Turkmenistan, headed as "Turkmenistan economic, political and cultural development strategy up to 2020".
The main directions of the Bank credit policy within 2005 were as follows:
- The Bank participation in implementing investment projects and programs;
- A quality increase of loan portfolio formed.
Striving for being developed as a universal financial institution, the Bank paid a specific attention to developing such perspective directions as:
- Assistance to develop a small and middle business;
- Consumer crediting.
Thanks to implementing its credit policy, the Bank has formed a loan portfolio amounting to 4 791 billion manats by the year results. A specific weight of overdue loans in the bank loan portfolio reduced from 5 percent to 3,2 percent. The certain measures have been undertaken for obtaining finance facility from the Islamic Development Bank to develop further small and middle enterprises, totally amounting to 5 million US dollars. Operations studying a market of consumer credits and issuance thereof on the experimental basis have been done.
As of January 1, 2006 the Bank's loan portfolio structure with a breakdown by sectors of national economy was as follows:
- Oil and gas industry 73,8%
- textile industry 7,6%
- agriculture 7,3%%
- transport communications 5,7%%
- power industry 2,8%%
- medicine 0,3%%
- others 2,8%%
The State Bank for Foreign Economic Affairs of Turkmenistan is striving to establish long-term partnership relations while working with corporate customers, offering a whole spectrum of banking products available. The Bank priorities cover state enterprises of the national economy basic branches, enterprises of developing private sector, foreign companies, which are considered to be active members of foreign economic relations.
874 legal entities were served by the Bank as of 2005 end. Turnovers under those customers amounted to 14361 billion manats.
Within 2005 the Bank extended loans to its corporate customers for implementing production and trade projects, purchasing highly technological equipment and raw materials, developing infrastructure, replenishing turnover facilities. Depending on project implementation periods, the loans were of long-term and short-term nature. Besides extending loans, the State Bank for Foreign Economic Affairs of Turkmenistan exercised a complex settlement-cash servicing, implemented salary projects, offered a full set of conversion operations, including participation via the Bank at the Interbank Currency Exchange of Turkmenistan.
Since its foundation acting as a member of the international market and keeping partnership relations with banks from over 30 countries, the Bank has greatly experienced in conducting international settlements upon the foreign trade contracts of its customers. The Bank offered documentary operations to its corporate customers while exercising international settlements, which allowed them:
- To reduce non-payment risks and to shorten terms for export proceeds entry;
- To minimize risks related to goods' non-delivery;
- To reduce the share of advance payment;
- To optimize costs for foreign trade transaction;
- To extend a possibility of entering to the world commodities markets.
By the previous year results the international settlements on documentary operations amounted to 155 million US dollars.. Moreover, the Bank operated under various guarantees issued by foreign banks in favor of enterprises of oil and gas complex, transport and communications, public health and other customers.
The cooperation of the State Bank for Foreign Economic Affairs of Turkmenistan with corporate customers is not limited with operations under orders thereof, credit issuance and guarantees. The Bank in every possible way promotes developing its customers business. The Bank renders professional consulting assistance to its customers. Under the clients' request the Bank have talks or takes parts in negotiations between customers and partners thereof in order to work out optimal settlement mechanisms under contracts, financing schemes and collateral forms under the customers' obligations.
In 2005 the State Bank for Foreign Economic Affairs of Turkmenistan went on rendering retail services to private customers. The Bank specific features of servicing such clientele category are as follows: appliance of modern information technologies and facilities to effect payments, a flexible price and interest policy, a high culture of servicing and Bank reliability.
Within the reported period the Bank rendered its customers a wide range of retail banking products and services as follows:
- Settlement-cash servicing;
- Various types of transfers and payments;
- Exchange operations;
- Deposits operations;
- Consumer credits extension;
- VISA international card issuance and servicing;
- MILLICART, ALTYN and KUMUS KART own cards issuance and servicing;
- Travelling checks acceptance for collection;
- Sale of coins made of precious metals;
- Operations with banknotes.
Due to the negotiations held with the American Express Company, a principal agreement has been made to extend operations with travelling checks of that company in Turkmenistan.
Following a new building commissioning, the Bank is ready to offer its customers depositary cells for keeping values.
At the end of 2005 a number of accounts in a foreign currency, which have been opened by private customers, comprised 12 168, with balance on those accounts amounting to 3,3 million US dollars. A number of accounts opened by private clients in the national currency was 12 290 with a balance thereon amounting to 40 678 million manats.
Due to the Bank specific tenor, the private customers' accounts do not serve as a foundation of its resource basis. Nevertheless, the external conditions being amended, in which the Bank operates, require to actively develop a retail business and to strive for occupy top positions in the present segment of Turkmenistan banking service market.
Within 2005 the State Bank for Foreign Economic Affairs of Turkmenistan has actively made operations at the forex and money market, both inside and outside the country.
Since its establishment the Bank as a member of the Interbank Currency Exchange of Turkmenistan, has been acting as a buyer of the foreign currency under its customers orders to hold settlements under foreign trade contracts and loans extended in a foreign currency. On the basis of the previous year results at the domestic currency market volumes of foreign currency bought by the Bank amounted to 51,1 million US dollars.
While making transactions at the international currency market, the Bank uses Reuters-Dealing-3000 informative-trade system, which allows responding quickly to any changes of the market conditions. Limits, stated by foreign counterparties for the State Bank for Foreign Economic Affairs of Turkmenistan, allow being a full-right member of the international currency market, acting on behalf of its own name as well as on behalf of its corporate customers. In accordance with 2005 results the volume of concluded transactions amounted to 350 million US dollars.
Meeting a domestic demand in cash foreign currency, the Bank is the biggest supplier of foreign banknotes to the domestic market among commercial banks. According to the previous year results the Bank has purchased foreign currency banknotes at the international market amounting to USD 2,4 million and EURO 5,6 million . By the way, the volume of imported cash American dollars increased by 60 percent against 2004, and EURO by 17 percent. The volume of the old banknotes collected by the Bank within a year amounted to USD 0,1 million.
In 2005 the State Bank for Foreign Economic Affairs of Turkmenistan was the biggest operator at the domestic interbank market of short-term deposits. In order to refinance its active operations and keeping liquidity at the level required by the Central Bank standards, the Bank attracted deposits totally amounting to 75 billion manats. Attracting a foreign currency at the domestic interbank market was held in order to further placing at the international money market and earning profit by the interest rates' difference. The volume of deposits attracted in a foreign currency amounted to 9 million US dollars by the end of 2005, exceeding the previous year results in 10 times.
Within the previous year the State Bank for Foreign Economic Affairs of Turkmenistan actively hold operations depositing funds in a foreign currency at the international money market. The purpose of those operations was to manage a surplus liquidity in a foreign currency and obtaining a higher profitability if compared with profitability earned by funds balance at the Bank "Nostro" correspondent accounts. The volume of deposits in a foreign currency placed at the international money market amounted to 57 million US dollars. by the end of 2005, which exceeded 2004 results almost twice.
The correspondent network of the State Bank for Foreign Economic Affairs of Turkmenistan is the most developed one among Turkmen banks, which allows the Bank effecting payments using payment routes being efficient for the customers, within the shortest periods.
In 2005 the Bank continued its work on the direction of improving accounts' operational regime and reducing costs while making settlements through the Bank correspondent accounts in the banks of CIS, Europe, North America and Asia. Strengthening partnership relations with the correspondent banks, being considered, as a rule, the biggest financial institutions in their countries, allows the Bank to obtain net limits and credit lines holding conversion and trade operations.
The purposeful activity to extend services spectrum promoted to increasing number of "LORO" accounts in a foreign currency, opened by local banks in the State Bank for Foreign Affairs of Turkmenistan. According to 2005 results 7 local commercial banks signed agreements to open and holding a correspondent account in a foreign currency, which assists extending the Bank resource basis. It may be surely said that a new operational direction of the bank has been developed, which essence is to make the Bank as a clearing center in a foreign currency for local banks. Giving the possibility to the local banks to pay for the Bank services in the national currency, a new "insurance deposit" product in the national currency has been worked out and offered with interests being accrued on the account daily balance.
The important direction of the State Bank for Foreign Economic Affairs of Turkmenistan in the sphere of cooperation with financial organizations is to develop partnership relations with national export-import and insurance agencies, international banks and development funds. The long-term partnership relations have been established with Eximbanks of China, Czechia, Turkey, Malaysia, and the Japan Bank for International Cooperation, as well as Germes, Kofas and OND insurance agencies. Such financial institutions as European Bank for Reconstruction and Development, Islamic Development Bank, OPEC Fund, Abu-Dhabi Development Fund and Saudi Development Fund are notable among international banks and development funds.
The basic results of cooperation with those financial institutions are as follows:
- Conclusion of credit agreements with Chinese banks for financing projects in various fields of Turkmenistan economy;
- Conclusion of cooperation agreement with the Japan Bank for International Cooperation;
- Approval of Ministry of Health and Medical Industry project extending Archman and Yily Suv sanatoriums, followed by further signing finance agreements with Islamic Development Fund and OPEC Fund.
In 2005 operations to further strengthening coordination with financial institutions on counteractions legalizing profits resulted from criminal way and financing terrorism went on.
The State Bank for Foreign Economic Affairs of Turkmenistan strived to strengthen its positions at the international market, being a unique "calling card" of Turkmenistan banking system.
Presently, the latest technological solutions based on the modern software and hardware facilities are presented in the State Bank for Foreign Economic Affairs of Turkmenistan.
The automated banking system (ABS), which is based on the client-server technology and uses ORACLE system to manage data base, is operating in the sphere of software provision. Implementation of the present system allowed to practically automate all the Bank operational directions, namely, accounting of clearing, credit, cash, international, trade and dealing operations, analysis of the Bank activities, administrative-household costs and budget, holding salary/staff/warehouse/ materials and SBE accounts, fixed assets, the bank ledger has been introduced. A local calculating network has been installed with automatic reservation of basic switchboards, network monitoring, a flow speed to transmit data is 1 Gbit/sec. A communication link with external systems such as electronic interbank clearing system of Turkmenistan, SWIFT and plastic card system have been arranged. IBM servers with RISC-configuration have been installed for that system to function.
Introducing a clearing system under plastic cards allowed to issue and to maintain MILLICART system national plastic cards. The Bank is a full member of VISA international system. A special equipment to arrange a direct communication with MILLICART authorization and clearing system has been installed in the Bank. The VISA card authorization is held by IP-protocol via a satellite communication system.
A system of electronic documents circulation has been arranged in the Bank allowing to keep an automated registration of all the Bank correspondence. The system of documents circulation is based on IBM Lotus Notes programmed product.
The equipment and software of electronic dealing and Reiters system, installed in the Bank, allows making actively operations at the international currency and money markets.
The Bank has got its own system of internal telephone communication, which is based on the modern SIEMENS telecommunication equipment. The external communications have been built on the optical fiber cable, which allows providing a high level of safety.
A centralized computer system has been installed for settling the Bank physical and electronic safety, covering a system to differentiate the staff entry in special premises, a system of telemetric observation and fire-proof system have been also installed in the Bank.
Taking the objective stated into consideration, in 2005 ABS modules have been redesigned to automate new functions and to correct previously revealed shortages, considering the system consumer desires, operations related to tax new settlements have been modified and the reported base has been replenished.
A special attention is paid to SWIFT international fiscal settlement system. In 2005 the Bank has successfully implemented a new option of SWIFT net programmed product. The present programmed product possesses a higher level of safety, entry differentiation and management.
As a modern financial-credit institution the State Bank for Foreign Economic Affairs of Turkmenistan pays a great attention to enhancing corporate management, which quality is mostly defines the Bank operational results. The Bank corporate management system reflects specific features of its status as the agent of the Government of Turkmenistan.
The bank is headed by the Chairman of the Board, who is, as well as his deputies, appointed by President of Turkmenistan. The Board of Directors being composed of managers of departments and heads of independent divisions of the Bank is a collective advisable body, which significantly influences on taking management decisions.
The constantly operating working groups accountable to the Chairman and the Council of Directors have been formed in the Bank, namely, Credit and Attestation Committees, Balance Committee, constantly operating Inventory Committee and a newly formed Purchase Committee. Objectives to be fulfilled by every Committee, as well as their operational regime are to be specified by the Bank relevant internal procedures.
Within frameworks of enhancing a corporate management special attention is paid to developing further risks management system, taking into consideration approaches and standards applied in the international practice, requirements of the Central Bank of Turkmenistan and auditing companies' recommendations. Firstly, it refers to settling objectives in the sphere of managing credit, market and operational risks, as well as liquidity risk.
Within frameworks of its risk management policy the State Bank for Foreign Economic Affairs of Turkmenistan strives to maintain its liquidity on sufficient level, achieve well-balanced structure of assets and liabilities according to the maturity and kinds of currencies, ensure the required diversification level depending on regions, branches of economy, customers and investments size. A specific attention is paid to increasing its own capital, which proves the Bank reliability.
The volumes of Bank operations, extension of bank products and services spectrum offered, as well as a forthcoming transition of Turkmenistan banks to forming financial statements in accordance with international standards require further developing of corporate management system, particularly, the Bank internal control and audit.
The system of internal control being regularly improved at the State bank for Foreign Economic Affairs of Turkmenistan allows securing:
- The reliability and the integrity of information;
- The safeguarding of assets;
- The economical and efficient use of resources;
- Compliance of operations held with legislation currently in force, internal procedures and plans stated;
- The accomplishment of established objectives and goals for operations and programs.
The independent division of supervising-auditing service, performing internal audit function, operates in the Bank. The Division is entitled to monitor efficiency of internal supervision current system procedures, to exercise a preliminary, current and further control of operations done.
Improving of organizational structure, being one of the key elements of the Bank management system, is aimed to perfecting coordination between subdivisions, adaptation to any changes related to developing legislative basis, occurrence of new operational directions and increase of clients' demands to the servicing quality.
Managing personnel is considered to be one of the critical points in the corporate management system, as the Bank operational results directly depend on the human factor. Measures being held in the sphere of staff management are aimed to implement modern operational forms and methods, to strengthen cooperation between the management staff and specialists, to increase efficiency of deployment system, to improve personnel motivation system, to develop a corporate culture. The corporate culture is aimed to form a solidary and professional team, where each one has been aware of its personal responsibility for the Bank and its subdivisions activities' total result.
The Bank staff is composed of highly qualified professionals in various fields of the bank business. The employees with a higher education comprise 73percent of the staff, while 20percent have got a secondary special education. Moreover, the Bank envisages a system of measures aimed to increase employees' level of knowledge, covering participation in training workshops and conferences, holding probation trainings, which are arranged by the Bank partners, both in and outside Turkmenistan; holding internal economic training on a regular basis, arranging courses to study languages. The Bank pays a special attention to a spiritual growth of its staff. Thus, the Bank holds lessons on a weekly basis studying "Ruhnama" Sacred Book, written by Saparmurat Turkmenbashi the Great.
A motivation system applied in the Bank includes promotion, incentive and non-incentive privileges and stimulations, which contribute to successful job and achieving uniform objectives.
In order to strengthen the staff corporate spirit, to assist developing a healthy life of its staff, the Bank actively participates in public actions arranged by the financial sector. The Bank sport teams regularly take part in mini-football, volleyball, table tennis and chess competitions, as well as in the national kinds of sports. The Bank team of "knowalls" actively participates in intellectual games, which require knowledge not only in economy and banking business, but in history, culture and other fields. The Bank team is considered to be one of the cleverest ones among the financial sector experts. The concerts, being devoted to the holiday dates, are mostly held with the bank ensemble. The Bank annually participates in the exhibition devoted to the Introduction Date of the national currency circulation. Measures held allow joining the bank staff, creating a positive atmosphere, which favorably influences the Bank successful operations.
The State bank for Foreign Economic Affairs of Turkmenistan is actively involved in implementing various state social programs.
In order to implement objectives stated in the National program headed as "Turkmenistan Economic, Political and Cultural Development Policy up to 2020", to further improve the architectural urban-planning appearance of Ashgabat, the capital of independent and neutral Turkmenistan, the Bank acted as a customer to construct five high-storey dwellings of better comfortability and improved layout. A total number of flats would amount to 177. The Bank envisages providing not less than 60percent of flats to its employees on privilege conditions, including 50percent cost discount and payment at least half of the utility services by the bank funds formed.
In order to improve the ecological situation in Ashgabat and its suburbs, the Bank takes an active part in implementing "Green belt" program. Within 9 years of participation in that program the State Bank for Foreign Economic Affairs of Turkmenistan has planted over 50 thousand of decorative and fruit trees in the Kopetdag foothills. Based on the year results the Bank area to plant greens occupies 340 hectares.
A charity activity is one of the elements of the Bank social program. Thus, the Bank has been wholly supporting within some years "Nyazli" teenager dancing group , which is one of the most popular in Turkmenistan. In accordance with tradition the Bank went on rendering sponsor assistance to invalid children and kindergartens. Totally in 2005 over TM 800 million . has been spent for sponsor objectives.
Within the nearest future the basic objective of the State bank for Foreign Economic Affairs of Turkmenistan is rendering all possible assistance to developing national economy by active participation in implementing the National program headed as "Turkmenistan Economic, Political and Cultural Development Policy up to 2020". In order to successfully implement that objective the Bank plans to develop following directions in the field of crediting:
- To extend loans to corporate customers, including that one on behalf of Turkmenistan Government;
- To extend loans to middle and small enterprises;
- To extend loans to physical entities.
The Bank strives to increase quality and to extend spectrum of bank products and services rendered in the sphere of retail services. Thus, the Bank would pay a specific attention to a complex servicing, developing bank cards, introducing operations with travel cheques and safe business.
In the sphere of international business the Bank concentrates its attention to attract funds from foreign financial institutions in order to further invest them in developing Turkmenistan economy. Documentary business would be further developed while exercising settlements on foreign trade contracts.
In order to increase the Bank reliability certain measures will be taken in the direction of further increasing its own capital. It would mostly occur by the profit, but we should not exclude the opportunity forming own capital by means of other sources.
Developing active operations, the Bank would improve risk management system, including managing market risk, credit risk, liquidity risk and operational risk. Following a collegiality principle while taking decisions upon risk operations, the Bank would strengthen responsibility of its subdivision managers and staff, who perform those operations.
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