, 
What actions do you take in order to secure your activities and capital from financial crisis?
The main work in our bank has been done long before the destabilization started on the financial market. We have developed several plans for different external threats. So, we managed to foresee the panic several weeks before it started and took necessary actions. We have been constantly making expert measures of instability level. In order to do it, the risk management department had developed a system of crisis indicators (market relations, synthetic interest rates, etc.), it had also developed several new indicators showing destabilization level among the clients and forecasting different scenarios of systematic stresses. The models that were developed by these preventive actions allowed the bank avoiding the necessity to take excessive measures (such as closing all credit limits or breaching agreements with partners).
Currently Temirbank is considering diversification of its sources of financing through securing a part of lending portfolio. This will increase the financing planned for 2007.
Firstly, we don’t agree that there is a financial crisis going on. Secondly, we mainly work in consumption sector, which wouldn’t be influenced very much by a financial crisis. Though, of course, current will influence us somehow. The main measures are the appropriate strategy and correct principles of corporate governance. However, possibly next years we will suffer from the problems, which the banking sector has now. The reason is that currently we observe a growth of production business. Companies invest into expansion of their production capacities. The problem in financial sector may restrain this process. And in turn, it maybe somehow will influence our business. We don’t see anything else scary and critical.
The latest world financial crisis showed that neither institutional investors nor ordinary citizens can fully predict their losses in such situations. However, the effective actions of the National Bank of Kazakhstan during recent period showed that Kazakhstan has some protection against financial crisis in the world economy. Our planning also has several measures that can protect us from unpleasant consequences of such short-term shocks.
First of all, the situation in Kazakhstan is not a crisis at all, there just was a correction of risky mortgage loans, and in some time the market will be restored; we prefer to wait. During such time it is better not to make any financial activity – investing money into conservative instruments with fixed interest or arranging large transaction. We try to find out the direction of the crisis, in order to correctly choose the preferred currency. Secondly, during such periods, as a developing company and as private persons, we try to be careful in terms and volumes of borrowings. Thirdly, the consequences of financial market corrections don’t threaten us, because we don’t try to earn on everything, for example we don’t make real estate and land deals. Though, there is something to improve in our business - most importantly, increase efficiency of use of our own resources.
The company takes measures within standard procedures of risk management, which lower the risks of some negative consequences, such as currency risks or the risks of insolvency of counteragents. Talking about the numbers of passengers and flights, it is a global business-risk, which should be considered on a higher level. With respect to little corrections in August, we differentiated the investments of our temporarily free assets. Our company works within the limits set on each bank. Ratings from independent rating agencies and the pool of shareholders, with banks among them, ensures us in the correctness of our actions. We don’t see any financial crisis; we saw a little shake to the market, which resulted in some financial institutions to reconsider their policies and positions.
Of course, we considered hedging with respect to currency risks. But for now we don’t have separately considered instruments for this. With respect to business-risk, if the volume of flights decreases, we will reconsider our plans for development and expansion. But I don’t think that it is a threat. On the contrary, we hope to increase our air freight in 2008.
The changes to the market are probably positive for us, because, as a big corporate client of the banks, we saw how they reacted to a difficult situation. We saw how the financial institutions overcame the problem and resolved their questions of liquidity.
Now we can be sure that there are no special problems with this correction to the market. At least, there are no problems that would bother us. However, the events made us look at the practice of risk management once again and assess its quality, and also assess possible consequences in case of further turbulence on external markets.
I don’t take any actions. Because the aspects of this crisis don’t influence the sphere of my activity.
