The State Plans to Shrink Its Stake in the Uzbekistani Banking Sector

Shares in six commercial banks should be sold out

According to the president’s edict on reforming the Uzbekistani banking system for the years 2020-2025, the government has to sell out its assets in commercial banks.

The document also provides a road map for the country’s banking system reformation. Thus, the state’s ration in the banking system should be downsized from the current 85% to 40% by the year 2025. According to the plan, the volume of liabilities of all commercial banks to the private sector should increase from the current 28% to 70% in the same period.

When this process will be finished, three major banks with the government’s stakes must instead attract at least three strategic investors. In addition, the market share of non-banking crediting organizations should also be increased from the current 0.35% to 4%.

In the near future, the government of Uzbekistan plans to start gradually selling shares of Ipoteka-bank, Uzpromstroybank, Asaka bank, Alokabank, Kishlokkurilish bank, and Turonbank. Before the deal, all banks have to raise their efficiency, which state officials plan to achieve with the help of international consultants. To ensure this task, the Ministry of Finance will create a special Project Office on transformation and privatization of the commercial banks that the government owns a stake in.

However, the state will not sell shares of the other three banks: National Bank of the Republic of Uzbekistan for Foreign Economic Activity, Agrobank and Mikrokreditbank.

Finance officials should assess financial conditions using the Financial Sector Assessment Program (FSAP) criteria developed by the International Monetary Fund and World Bank no later than the year 2024.

That said, state officials are prohibited from interfering with banking activities such as business risk management.

At the moment, there are 31 commercial banks in Uzbekistan, 13 of which have a state’s stake (government’s stake in five banks is more than 51%). Among major banks are National Bank of the Republic of Uzbekistan for Foreign Economic Activity, Uzpromstroybank and Asaka bank, with 55% cumulative assets in total.

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