VZCZCXRO1134
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #1002/01 2141016
ZNR UUUUU ZZH
P 011016Z AUG 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 1273
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 4103
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1918
RUEHKO/AMEMBASSY TOKYO PRIORITY 1783
RUEHIT/AMCONSUL ISTANBUL PRIORITY 2352
RUEHVEN/USMISSION USOSCE PRIORITY 2746
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ASHGABAT 001002 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ETRD EFIN BEXP TX
SUBJECT: TURKMENISTAN'S COMMERCIAL BANKS 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2. SUMMARY:  Turkmenistan's banking system consists of 11 banks. 
All Turkmen banks are owned and run by the state, which controls 
virtually all economic activities.  The primary goal of these banks 
is to serve as financial clearinghouses for state and private 
enterprises' trade and investment operations in Turkmenistan.  While 
all seem to function well enough in Turkmenistan's current, closely 
controlled environment, most are organized along old Soviet models 
and will need to change to meet the demands of a more international 
clientele.  END SUMMARY. 
 
BANKS IN TURKMENISTAN 
 
¶3.  (SBU) During its visit to Turkmenistan the financial enforcement 
team of the Office of Technical Assistance from the U.S. Department 
of Treasury met with the Central Bank and three commercial banks in 
Turkmenistan on July 21-25, 2008.  The main focus of the meetings 
was to identify possible areas for U.S. technical assistance to 
enhance the enforcement and effectiveness of anti-money laundering 
policies and procedures that will soon be required of all financial 
institutions. 
 
¶4.  (SBU) Aside from the Central Bank of Turkmenistan, there are a 
total of 11 banks operating in Turkmenistan: 
 
- Five state-owned banks: the State Bank for Foreign Economic 
Affairs of Turkmenistan, the Turkmenbashy State Commercial Bank, 
Dayhanbank State Commercial Bank, and Halkbank State Commercial 
Bank; 
 
- Two joint stock commercial banks: Senagatbank and Garagum 
International Joint Stock Bank; 
 
- Two foreign banks: the National Bank of Pakistan and Bank Sedarat 
of Iran; 
 
- One joint venture bank: Turkmen-Turkish Joint Stock Commercial 
Bank; and 
 
- One specialized real estate bank: Presidentbank State Commercial 
Bank. 
 
¶5.  (SBU) According to Turkmenistan's banking legislation, all 
commercial banks must register with the Central Bank of 
Turkmenistan, which awards them a license allowing commercial banks 
to handle hard currency operations.  After the Central Bank of 
Turkmenistan set the single official exchange rate of 1 USD to 
14,250 Manats, all banks in Turkmenistan were authorized to buy 1 
USD at 14,215 manats from the Central Bank and sell it for 14,240 
manats.  The state commercial banks focus on certain areas of 
economic activity.  For instance Dayhanbank deals with agriculture 
related projects, Turkmenbashy Bank with the financing of industrial 
projects (particularly in the oil and gas sector), and 
Presidentbank, with real estate financing. 
 
SENAGATBANK 
 
¶6.  (SBU) State Commercial Bank Senagatbank is one of two banks 
(along with the State Bank for Foreign Economic Affaires -- 
Vneshekonombank) that produces financial statements according to 
international accounting standards.  Because it is a joint-stock 
bank, Senagatbank offers only business accounts, and no personal 
accounts.  It has 350 employees and eight branches throughout the 
country.  Since 2000 it has operated a Western Union office that has 
been working successfully.  To the enforcement team's question about 
the likelihood of money laundering, the Chairman of the Board 
Eyeberdi Atayev stated that not even a one-dollar transaction leaves 
or enters the banking system without proper documentation.  In order 
to make payments for goods purchased from abroad, the list of proper 
documents a firm must submit to make a financial transaction 
includes the copy of the contract, certificate of origin of the 
product, and the customs declaration.  (NOTE: Payments for goods can 
be made only after the goods have crossed the Turkmen border and has 
 
ASHGABAT 00001002  002 OF 002 
 
 
been cleared through customs.  END NOTE.)  Atayev came across as 
extremely confident, outgoing, and supportive of Western banking 
practices.  In the middle of the meeting, he even pulled out a book 
he was reading on Western banking practices. 
 
HALKBANK 
 
¶7.  (SBU) Formerly called "Sberbank" (Savings bank), the State 
Commercial Bank, Halkbank, is one of the largest banks in 
Turkmenistan and has branches all over the country.  It has some 
182,000 private accounts and 5,000 business accounts.  In contrast 
to his Senagatbank counterpart, Halkbank Chairman Gurbanmurad 
Begmuradov was reserved and careful, but well read-in and 
knowledgeable, especially about the operations of a Financial Action 
Task Force (FATF).  Unlike Senagatbank Chairman Atayev, Begmuradov 
was quite well aware of the draft law on anti-money laundering and 
financing terrorism and was extremely supportive of the idea of 
creating a Financial Investigation Unit.  He even was curious 
whether or not the unit would be under the Central Bank or Ministry 
of Finance. 
 
PRESIDENTBANK 
 
¶8.  (SBU) The state commercial bank, Presidentbank, was established 
in 2000 by an initiative of the late President Niyazov. This 
relatively new bank was set up with the primary goal of extending 
loans to small and medium-sized commercial projects.  However, now 
Presidentbank largely focuses on financing mortgages for "Elite" 
apartment candidates.  Presidentbank's Chairman of the Board, Dovran 
Babayev, said that, at present, the mortgage program is solely 
focused on the financing of elite housing in Ashgabat, but the 
financing will soon be extended to the rest of the country.  (NOTE: 
The president has been very critical at recent cabinet meetings of 
the bank's slowness to extend their loans outside Ashgabat.  END 
NOTE.)  Currently, the bank holds the mortgages of 1,700 private 
citizens, worth some 560 billion manats.  Presidentbank continues to 
support small and medium enterprises as well, and provided 70 
billion manats ($5 million) to finance the "Gush Toplumy" chicken 
farm not long ago. 
 
¶9.  (SBU) COMMENT:  Each of the banks appear to have been created to 
meet some specific financial service need of the state, and each has 
developed its areas of service to meet those needs.  As the banks 
gradually take on international financial accountability obligations 
and interact more with international financial institutions, it will 
be interesting to see whether they will be able to adapt to these 
new requirements.  END COMMENT. 
 
CURRAN