New Silk Road Finance Awards 2019: Central & Eastern Europe and Central and West Asia
Best regional bank for BRI: ICBC
ICBC became the first Chinese bank to open a subsidiary in Vienna in May this year, to promote cooperation between China and Austria and serving as a gateway to central and eastern Europe (CEE).
The step shows ICBC’s deep and increasing commitment to the region, with its many key Belt and Road countries.
The Chinese lender already has branches in Poland and the Czech Republic, so the Austrian operation will focus on markets such as Hungary, Bulgaria, Slovenia, Serbia and Croatia.
It will also complement ICBC’s operations further east along the Belt and Road route, which include subsidiaries in Russia and Turkey, as well as a new representative office in the Kazakh capital Astana and a long-standing branch in Almaty.
ICBC has leveraged this extensive on-the-ground presence to establish a leading lending franchise across CEE and central and west Asia. In the last year, the bank was involved in 21 syndications across the combined region and disbursed a total of $1.2 billion, according to Dealogic, putting it well ahead of its Chinese rivals.
Turkey proved a particular focus, reflecting ICBC’s commercial banking presence in the country. The Chinese lender purchased a controlling stake in Tekstilbank in 2015 and now has 44 branches and 20 offices in 18 Turkish cities. In the 12 months to the end of May, ICBC Turkey provided financing to leading local financial institutions, including Akbank, Isbank and Yapi Kredi, as well as to public-sector entities.
ICBC also supported financial institutions in Russia and the Czech Republic. Other sectors in focus included telecoms, energy and chemicals across a range of jurisdictions from Poland and Hungary to Azerbaijan and Kazakhstan.
Best Chinese bank in the region for BRI: CICC
With the inauguration last year of Astana International Financial Centre (AIFC), Kazakhstan is rapidly emerging as a hub for Belt and Road financing, as well as for transportation. China International Capital Corporation (CICC) has positioned itself at the heart of this initiative and as a key conduit for Chinese investment and financing into Kazakhstan. In 2017, the bank signed a strategic cooperation agreement with AIFC to provide advice on the development of local capital markets and technical support for Astana’s new stock exchange.
In June 2018, its Hong Kong subsidiary obtained accreditation as a recognized non-AIFC member and in October became the first international investment bank to obtain trading membership of Astana International Exchange (AIX).
CICC has also established close ties with Kazakh government institutions, including with the sovereign wealth fund Samruk Kazyna, which is overseeing an ambitious programme of sales of state assets.
In November, it was the only Chinese investment bank tapped to lead the first public privatization under the initiative, the $450 million IPO of uranium mining company Kazatomprom. The firm was listed on the London Stock Exchange and AIX, with CICC providing market liquidity on the latter.
CICC has also undertaken to assist Kazakh authorities in promoting AIX and AIFC in China and Hong Kong, and in July it helped organize the Astana International Capital Markets Forum for the second consecutive year.
In addition, the bank has established close ties with financial institutions and enterprises at all levels in Kazakhstan, and has committed to actively invest resources to promote Belt and Road-related investment and financing in the country.
Best local bank in the region for BRI: Belgazprombank
Belarus has been an important partner for China in central and eastern Europe for nearly two decades, and the level of cooperation has intensified since the announcement of the Belt and Road Initiative in 2013. This in turn has created an increasing need for financial services to support rapidly expanding trade, economic and tourism links between the two countries.
|Viktar Babaryka, Belgazprombank
On the Belarusian side, Belgazprombank has emerged as a pioneer. The Russian state-owned lender signed a cooperation agreement in February 2018 with Great Stone, a landmark Belarusian-Chinese industrial park near Minsk, to provide a variety of banking services to investors in the park. Belgazprombank holds direct correspondent accounts with leading Chinese lenders, including Bank of China and Agricultural Bank of China, through which international payments are settled in renminbi and US dollars for trade transactions between Belarusian and Chinese entities.
It has also been authorized as a servicing bank within the bilateral current swap arrangement concluded between the People’s Bank of China and the National Bank of Belarus.
In the 12 months to the end of May, Belgazprombank issued 40 letters of credit in favour of Chinese enterprises. The lender was also the first in Belarus to offer processing for UnionPay cards. Belgazprombank deepened its relationship with the Chinese card services company in February when it became the first Belarusian entity to issue UnionPay cards.
Belgazprombank is jointly owned by Russian state-owned gas firm Gazprom and its banking arm, Gazprombank. Led by chairman Viktar Babaryka, it ranks sixth in the Belarusian banking sector by total assets and has a market share of 5.1%.
Best bank for infrastructure/project finance in the region: Development Bank of Belarus
The expansion of Minsk National Airport is a crucial part of local policymakers’ drive to position Belarus at the heart of the Belt and Road Initiative. Belarusian president Alexander Lukashenko officially opened the second runway at Minsk National Airport in May. The new facility, which took three years to complete and was built using state-of-the-art technology, is big enough to accommodate the largest commercial aircraft and doubles the airport’s capacity for passenger traffic.
|Andrey Zhishkevich, Development Bank of Belarus
Minsk National Airport is located next to Great Stone Industrial Park, the Chinese-Belarusian project inaugurated in 2012, which already hosts nearly 40 firms from China. The new runway will support the rapid growth of trade and passenger traffic between Belarus and China, as well as other Belt and Road countries, and will enhance Belarus’s appeal as a regional transit and transportation hub.
The project was financed by the Development Bank of Belarus, which provided more than $170 million of funding, and was completed exclusively by Belarusian construction companies in line with best international practice.
Development Bank of Belarus has long been a key player in Belarus’s cooperation with China as part of the Belt and Road Initiative. Since 2015, the public sector lender has offered $700 million of Chinese financing to Belarusian industrial companies and to small and medium-sized enterprises. The bank’s involvement in the second runway project at Minsk National Airport cements its central role in driving Belarusian-Chinese cooperation and supporting trade. In December, president Lukashenko appointed experienced banker Andrey Zhishkevich to the post of chairman of Development Bank of Belarus.
Best individual BRI project or initiative in the region: Great Stone Industrial Park
Created in 2012 by the Belarusian government with the support of policymakers in Beijing, Great Stone Industrial Park is the largest international industrial park with Chinese investment and a cornerstone of Belarus’s commitment to the Belt and Road project.
|Alexander Yaroshenko, Great Stone Industrial Park
The park leverages Belarus’s strategic location on one of the main transport corridors connecting Europe and Asia, as well as its access to two of the world’s largest consumer markets, the European Union and Eurasian Economic Union.
Situated 25 kilometres from Minsk, Great Stone has excellent transportation links via international rail lines, the Berlin-Moscow transnational highway and Belarus’s main international airport.
Residents can buy or rent land plots, and can benefit from a number of incentives, including exemptions from income tax, real estate and land tax, customs fees and VAT on raw materials and components, and dividend tax.
Work on the first stage of the park, which covers 8.5 square kilometres, is well under way and will be completed by the end of 2020. The facility already boasts warehouses, a business centre and the largest exhibition centre in Belarus.
By the end of May, the park had attracted 56 residents, including 31 from China, as well as others from Austria, Germany, Switzerland, Estonia, Israel, Lithuania, Russia and the US. Together, they have pledged to invest more than $1 billion in the facility, of which more than half has already been spent.
During the current awards period, 10 firms moved to Great Stone, while another 10 commenced production.
Last year, a one-stop-shop for potential residents was introduced, resulting in a doubling of the number of applications, as well as the start of construction work on the park’s first residential building and a centre for cooperation on R&D.
In the 12 months to the end of May, Great Stone’s head of administration, Alexander Yaroshenko, also oversaw the establishment of partnerships with the EBRD, IFC, the Eurasian Development Bank and Priorbank.