EMIN BABAYEV Vice-President AB Standard Group

Emin Babayev heads Azerbaijan’s largest private financial group, AB Standard. Founded ten years ago, its image is based on Western standards of quality. “We offer a new way of banking,” says Mr. Babayev.

Mr. Emin Babayev, as the Vice-President of AB Standard Group, can you give your own introduction of this flagship group of companies?

AB group of companies started with the banking sector. Initially, Bank Standard was called " Most Bank". It started in 1996 as a Russian branch of Most bank, which was one of the leading banks in Russia at that time. A couple of years after, local investors took some equity shares and in 2004 we did a re-branding of the company and we renamed it. At that time, other companies like Standard Insurance, were created as well. Standard Insurance is one of the leaders in the insurance market right now. We have a company called Standard Capital. It is the only proper company that deals with security in the market. It is the first company of this kind in Azerbaijan opened last year. These 3 companies are most important to us. The insurance, the bank and Standard Capital- they work very close to one another. This is the core activities of the whole group. A part from the financial sector, we have a brick factory based in another city, 1 hour away from Baku. It is one of the top 5 factories in all CIS countries. So, it is quite a large company. We have a pipe factory based in Baku. It is a polyetilen pipe factory. We have started to be involved in the travel business recently. We have a travel company called AB Travel. It is part of FCN flight center management branch. It is an international company like American Express and BTR. It is a new Australian company. We are part of it as well. We have been recently involved in the IT communication sector. Our bank- Bank Standard has been working for 10 years. We are the leaders of the private banking sector right now. We are twice larger than any other private bank in Azerbaijan. Above us there is only International Bank of Azerbaijan. We are involved in regional development as well. We are opening branches of our bank in different regions of Azerbaijan. We have opened different factories as well in different regions. We have a four stars hotel in the Southern part of Azerbaijan, in Lankaran. We are doing our best in developing the regions. Azerbaijan is a new country and independent for 15 years. There is a gap between Baku and the regions and we are putting effort in bridging the gap..

In which business unit are you running efforts?

Our priority is banking and insurance. That's our core activity. All of our companies are important to us of course, but we invested more in the financial sector. That is our main priority- to be a leader of this market. Economy is growing and consequently the financial sector is growing. Banking and insurance is the main priority we are involved in.

What have been the main reasons for the repositioning of Bank Standard?

We did not have any connection with Most Bank since 1998 and 1999 but we kept the name for a while, because we did not want to scare our clients. Most Bank had some problems with the Russian government. Finally between 2003- 2004 we decided to rename it. First of all, we did not want to be associated with the former Russian bank, so we rename it to Bank Standard. The reason why we rename it "Bank Standard" is because we are aiming towards Western level service. We would not say that we repositioned ourselves too much in the market. We have always been a universal bank with a stronger position on the retail market. The corporate market is very interesting to us right now but we are mainly a retail bank. It is important for us to provide people with good service and stability.

Standard Bank is indeed the largest private bank. The profit of Bank Standard stood at 18 billion Manat for the first three quarters of 2005 against 3.5 billion Manat during same period of 2004. The number of active commercial and corporate accounts increased by 70% in 2005. What have been the key drivers behind those impressive performances?

There was a change in the bank management a year ago. Additionally to this, we have been very active in the media. Eventually, we were trying to achieve real good standards of services with customers, as I mentioned before. Maybe all of these reasons made the way of progress for us. I don't want to criticize other banks in Azerbaijan, but the problem is there are so many banks here - 45 banks. For such a small country I think it is too much. But there are 7 or 8 normal, proper banks. All the rest are very small. These 7, 8 or maybe 10 banks will remain in the future, but for others I do not think they will have a good future. Because, as I said we are a new country, people are not so acquainted with banking services. Many people in Azerbaijan do not know what loans, saving accounts are. So, we are trying to educate people and convince them to trust banks. We have done researches as well that show that 90 % of the money people are not kept at banks. There is huge potential for clients at banks. But the opinion is starting to change right now, because people see the progress banks made. It will be even much better.

As Vice-President of the group, in your opinion what are the key aspects and qualities that make Bank Standard unique and attractive to retail and corporate customers?

We are doing the right thing at the right time; you can say it about advertisement, new products we have developed. Generally, if you compare our services with other banks, I think it is much better. Every client demand respect, even if he has a very small amount of money in his account, every single client has to be respected, we are training our personal in that way. We provide every single customer with an excellent service. In the last year, there has not been any single complaint about any of our staff so that is a great achievement for us. We always try to produce something new: new types of banking products, credit cards, loans… We have the largest loan portfolio as well, especially automobile loans. We are the first bank who started to give mortgage. That is one of our advantages as well.

The bank is growing at a very fast pace. Bank Standard opens one more branch in 2006 in the capital, the ninth office in the Republic and sixth in Baku. How are you planning to grow without alienating your personalized and innovative approach, which has been your mark of success until now?

We are trying to achieve Western standards and serve better our customers. We do not open our branches only in Baku, we have them in different regions. In a month we will open a branch in Sumgayit, it is an industrial city outside of Baku. We are also opening a branch in Quba, which is in northern part, near the Russian borders. Unlike other banks, we do not want to open branches in every small village just to show that Bank Standard is there. We have branches in every single part of Baku, so we can cover the whole city for them. But the main reason for opening new branches is only for customers, not for us, because it is not always financially vital; we have some branches, which are based in regions of Azerbaijan and they are not profitable. We keep them there, because we have clients there. That is the reason; we are opening for our customers, not for us.

What is your contribution in turning the black gold into human gold?

We always do lots of different trainings, not only here in Baku. We send lots of our employees to Moscow to Russian banks and German banks. My main idea is that progress should be made by training our staff. Also, we have to learn languages as English. Also, when we hire staff, it is obligatory to know both - Azerbaijani and Russian. Because 30 % of population is Russian speaking. So, it is important to us to know both languages. English is important as well and our staff should speak at least one foreign language. That is a point I emphasize on. For training in insurance we send our employees to Germany, Russia and to London as well. We do not usually hire people form other banks; what we do is to train our own employees. 90% of the people we hire have just finished university. We train them for a couple of months and then they start to work. If you look at the head of our departments, they all came from lower positions. So, human resources are very important for us. In our country education is not at the level it should be.

Are you looking for foreign companies to invest in your bank?

Today we are not on the outlook for foreign banks to come into our capital. Maybe in 3 years it will happen when we have reached a critical size. We would rather work with a foreign private bank. Many banks in Azerbaijan- Unibank, Bank of Baku, started to work with EBRD. It's not the kind of participation we are looking for. On the other hand, we are looking for foreign investors in other areas. We are now creating an investment fund. We already got some foreign investors coming from the UK. These people want to invest in construction, property and agriculture in Azerbaijan. We have 67 very good projects in Azerbaijan. We do not want to finance them on our own, so we are looking for foreign investors as well. We are planning to build an important business-commercial center. It is a very big project outside of Baku. We want to get involved in the communication sector. We provide telephone and internet services for now. In the future we are thinking of expanding it as well. Foreign investment is very important, because right now we are building and we have to apply for loans to build them. Loans rates are high right now in Azerbaijan. Attracting money from abroad is our priority now. It is cheaper money.

Are you looking for American investors as well?

Yes, we are. Our president, Mr. Kriman, is directly involved in that. He has just been to America and London to talk to those investors. We are waiting for them to come and we can show them our projects. I think there have not been a lot of foreign investors in non-oil sector. There have been some Turkish, Russian companies, but real big companies have not invested yet. There is a huge potential, because business centers, commercial centers, shopping malls are non-existing right now. The population is going to get richer and in the future there will be a big potential.

As the former marketing director of the group, how important is image-building in your vision and how do you want to be perceived abroad?

For the next couple of years, we are looking for stronger and deeper relationships with foreign partners, investors. Our bank's image which is based on the Western standards is number 1 for us. We are trying to bring these standards to Azerbaijan and practice them. Our work is to educate people also here. When I first came here, the advertising of our bank was in a low level. What we have done before was achieved without advertising. I think advertising is a very important factor. Some people, some banks in Azerbaijan still do not realize that advertising is important. We always positioned ourselves open to customers, corporate customers and retail as well. We always emphasize that we have a good service here. We try to create good advertisement as well. We have some adds with famous people of Azerbaijan, f.ex: Teymur Rajabob, a chess player, Chingiz Abdullayev, a writer. In my opinion, we were the first to make such adds in that quality in Azerbaijan. That helped us a lot probably. We have the largest advertisement budget here also. We try to produce qualitative advertisement.

You have been studying in the U.K. To what extent has this experience abroad influenced the importance of image-building in your vision?

I think image is the most important. Because for people who put money in the bank, stable image of the bank is more important. So, we are trying to build our image like that: good service, open to customers, stable. We have been around for 10 years and we are the largest commercial bank. I think that gives to clients a sense of stability as well. In early 1990s, there were banks but they blew up and bankrupted. So, stability is very important for people. To make advertisements, persons walking in here is very important to us. After he walks in, it is up to him whether he wants to work with us or not. After people come in, if they are satisfied, they are going to come again. We learn lots of things from researches.

Would you say that you offer a new way of banking?

I think we do offer a new way of banking, but I would not say that we are the only bank which does this. As I mentioned before, there are 7-8 important banks on the market. All of them offer something new. We may have a better service when other banks may have better loans. We all offer different kind of services. In Soviet Union times people did not know about all of these. They were not acquainted with them, but now they are getting acquainted. It is also an educational process as well. There are people who might be very good clients for us, but they are still not acquainted with banking. We always try to do something new. People now are more trustful to banks than they used to be. These small things changed the mentality of the people.

What is your ambition for the future of Bank Standard?

I want this company to become a very respectful company, not only in Azerbaijan but abroad. Of course, we want to grow. But our growth is closely related to the stability and performances of the country. I think if the country does well, we are going to do well too. We have a good management here, we know what we do. Our positioning is good in the market. I hope we will grow in order to be one of the largest companies in the whole Caucasus region, Turkey and so on. In the future we will look for in investors from abroad as well. I think we are not big enough to think about it now. For Azeri standards our bank is a large bank, but in terms of international banks it is a small size bank. What we want to become in the next 10 years is to be a medium-size bank with good ratings. Political stability is also important. I think we have a good political stability in Azerbaijan. Some of the things shown in EuroNews, CNN, shows Azerbaijan as if non-stable country, but people living here understand exactly what position we have here. It is just radical people trying to break the whole country. I do not know why they do it, but 90% of population supports the regime, the President. Everybody knows that he takes the country into the right direction. Of course, you can not expect the American type democracy from the 15 year old independent country. I have seen how political stability reflects on the banking sector. Then people feel comfortable and stable; they do not feel to keep money on the pillows.

What is the final message you would like to deliver to the readers of USA Today?

I hope by reading this, people will know more about Azerbaijan, its people, culture and traditions. Although we have been independent for 15 years, we are actually very ancient nation with lots of interesting traditions and history. So, we are planning to become very important nation in next years. The opening of the pipeline Baku- Tbilisi-Jeyhan is a very important step in that direction. My message to American people is that if they want to invest, they can come to Azerbaijan. They will not see any problems, because the economy is open right now and we want these investors to come; it is important to our country as well. The situation here is stable and we are growing as a democratic country. So, they do not need to be afraid.

Thank you for this interview, and we wish you the best of luck for the future!