MALCOLM EASTWOOD CEO of HSBC Kazakhstan

"There’s a yawning gap between London and Hong Kong that Almaty can fill"

In 2007, HSBC celebrates its tenth anniversary in Kazakhstan by opening three new branches. As the market expands and diversifies, HSBC Kazakhstan has changed its raison d’être to include retail banking, home loans and commercial business with Kazakhstani companies. Malcolm Eastwood, the CEO, sees Almaty emerging as a future financial services centre. But will it be able to bridge the gap between London and Hong Kong?

The government deserves credit for early financial sector reforms. How have they impacted on the overall economy?

Just look at the statistics—there was an increase of 87 per cent in bank lending here in 2005-2006, fuelled mostly by growth in retail and SMEs. This reflects a rapid development of the economy, which is now diversifying steadily. Money is filtering out into other areas, creating individual pockets of wealth in sectors like real estate. At the same time, house prices are up and so is car ownership. We have one office in Almaty and will be opening three new branches in 2007. It’s clear to me that Kazakhstani companies not only want to do business domestically, but also build their reputation abroad—that’s really where the regional financial centre comes in.

The vision is for Almaty to become a financial services hub. As a banker, do you think it can aspire to the status of a Singapore or a Dubai?

I think it has every chance of succeeding. If you look at those financial centres, where they are located geographically and the languages spoken, you’ll notice not only a geographic spread, but also a linguistic sphere. All the big financial centres are far from each other. There is a yawning gap between London and Hong Kong, for example. For CIS countries, Almaty can fill that gap by meeting international standards and simplifying its regulatory framework. Certainly the drive from within the country is very strong.

What are some of Almaty’s competitive advantages?

Kazakhstan is strong in this part of the world. It has a stabilizing influence. So the move to diversify away from natural resources is a good thing. The regional financial centre is one way of doing that. If it can be created it will not only support Kazakhstani business, but also improve living standards of the 15 million people living here. That is why you need a broader economic base. The banking sector is well-developed and the interest level in Kazakhstan right now is high. I’ve met a steady stream of people looking to invest or expand into the country. We just had a delegation from the Hong Kong financial centre. They came here to learn about Kazakhstan and were surprised at how sophisticated the market has become.

HSBC is celebrating its tenth anniversary in Kazakhstan this year. What is the bank’s future competitive strategy?

Initially, we focused on corporate business. If our customers were interested in setting up shop here, we helped them navigate the system. But as the market has grown, we’ve found ourselves working a lot with domestic companies. There’s been such an increase in demand that we’ve evolved from just a corporate bank to a retail and commercial institution. Within our world, the CIS is a really big opportunity. We are expanding the work that we do with our corporate clients to include more commercial and personal banking. HSBC, after all, is an international bank that strives to facilitate international business across markets.