Taleh Kazimov, CEO of Azerbaijan’s Pasha Bank, tells Ronan McCaughey how the bank is catering to the growing interest in wealth management among the country’s investors. Kazimov explains the bank’s collaborative approach to growing Azerbaijan’s private banking market, which involves partnering with Swiss players.
Private Banker International (PBI): What is the state of the private banking and wealth management sector in Azerbaijan?
Taleh Kazimov (TK): Private banking is new to Azerbaijan. However, things are changing, the economy is changing and the whole country is changing. Private banking is a new business area, and with growing interest in wealth management, banks are preparing to service this area. Pasha bank is one of the market leaders and currently the only financial institution providing a private banking service to the market.
PBI: What steps is Pasha Bank taking grow its private banking business in Azerbaijan?
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TK: A key area we can improve is asset management services. Clients are enquiring about asset management services in Azerbaijan. Pasha bank is investing significantly to grow in the private banking sector. We have peers in Switzerland who we are also working together with.
This is because Swiss banks are specialised and really active in private banking. By partnering with them we are trying to understand which product will be best applicable to the Azerbaijani market in the early stage.
PBI: What wealth bracket does Pasha Bank target in Azerbaijan?
TK: The entry threshold to become a private banking client with Pasha Bank is around $100k. While this threshold is low compared to other banks, we have to understand the reality of the market and the average income of customers in the country.
There is potential for this threshold to increase as long as the average income of the country grows. Increasing our requirement to for example to $500k means that we will not be able to talk to the customers are in the $100k bracket, yet also have the potential to spend. So we may have to segment customers.
PBI: What type of services do you offer your clients in Azerbaijan?
TK: Right now, we are trying to actively develop our asset management business so that we can provide fully-fledged private banking services to all our customers. We do offer traditional private banking services.
PBI: How important is digital investment for Pasha Bank?
TK: We are investing heavily into digital, considering the maturity of the market. Many clients in Azerbaijan have started to use private banking services for the first time in their lives and they need time to understand what it is about. It is about educating and advising people on the private banking services. We will invest in providing digital services, but relationship management will be key for the next couple of years.
Predominantly, we will be focusing on simple products such as cash management and unstructured products of the bank, but mainly it will be on cash management. We need to build a team first to focus on cash management for the next year.
PBI: How are you educating the market about private banking and wealth management?
TK: In comparison to retail banking, private banking is all about relationships, and this allows trust to be built.
Our strategy involves being a relationship-based bank with simple low risk strategies and products for our customers.
PBI: What is Pasha Bank’s AUM based on its private banking activity?
TK: Currently it is around $150m and we have 450 private banking clients. The plan is to double our AuM in two years as well as the number of our clients.
PBI: How big a challenge is it to recruit and expand your team?
TK: As I said earlier, private banking is new for the country both as a business and as a discipline. Therefore, we are mostly developing our internal human resources. For example the whole private banking team has been sent to Geneva to take a specially designed course for private banking professionals from the world renowed Institute for Studies in Finance & Banking (ISFB). Although Having said that we are also looking out for high potential candidates from outside the bank as well.
PASHA Bank is headquartered in Baku and has a total of 6 business centres across Azerbaijan. The bank was established in 2007, and offers all major financial services, including investment banking, trade financing and asset management to a range of clients, from large corporates to small and medium enterprises.
In 2013, the company opened their first office in Georgia and office in Turkey in 2014.
The Bank’s long-term regional vision envisages creating interconnected banking operations that will facilitate rapidly growing trade and deal flow between Baku, Tbilisi and Istanbul, the three most vibrant markets of the region.