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Tajikistan: No. 2 Lender Seeks EBRD Bailout

It has been an open secret for months that Tajikistan’s No. 2 bank is completely broke, but the lender has finally come out into the open with a plea for international assistance.

bne Intellinews reported on May 11 that Tojiksodirotbank this week discussed a possible cash injection with officials from the European Bank for Reconstruction and Development in exchange for a 50 percent equity stake.

Tojiksodirotbank chairman Pirzoda Tojidin told the financial news website that he had already met with EBRD top brass and agreed on an assistance program.

"We have another meeting with them [on May 12], but it remains to be seen if we can meet the EBRD's conditions,” Tojidin told bne Intellinews.

This marks the first time Tojiksodirotbank has admitted to its severe liquidity problems, which has been no mystery to anybody unlucky enough to have their savings in the bank.

The lender tried in vain to downplay insistent media reports about its difficulties in March, when it issued a statement attributing interruptions in its services to a switchover in its money-processing system.

“Short-term disruptions in the functioning of bank cards are possible. We apologize for the inconvenience,” the statement said.

Countless deposit-holders at Tojiksodirotbank remain unable to get their cash to this day, however.

Negotiations with EBRD to facilitate some kind of rescue package have been in the works for some months.

In March, Tajikistan’s National Bank announced it was in talks with the EBRD over the state of the banking system in general and the plight of Tojiksodirotbank in particular. Feedback at the time seemed to be positive, although it should be noted there is only the word of the notoriously slippery Tajik National Bank to go on.

“The EBRD welcomed Tojiksodirotbank’s new strategy, which is aimed at increasing capitalization, bolstering growth and quality in credit for real sectors of the economy and attracting new foreign institutional investors into the [bank’s] capital structure,” the National Bank said in a statement.

EBRD, meanwhile, has been slightly more circumspect. In late March, George Orlov, director for Financial Institutions in Russia, Central Asia and Mongolia at the EBRD, told RFE/RL only that his bank was prepared to provide funds to Tojiksodirotbank in the event of firm reforms.

Some streamlining has already started. In April, Asia-Plus news website reported that Tojiksodirotbank was forcing “some of its employees” to take unpaid leave.

Whether that sort of token gesture is going to be enough to persuade the EBRD to commit itself deeply into a banking sector as disaster-stricken and mired in opacity as that of Tajikistan will have to be seen.

Tajikistan: No. 2 Lender Seeks EBRD Bailout

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